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SpaceX Starlink awarded $885 Million out of $16 Billion Total from FCC for Rural Broadband

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A massive broadband infrastructure build-out starting in 2021 is confirmed

FCC announced on Monday that the Rural Digital Opportunity Fund Phase I auction concluded on November 25, 2020.  Now, the 180 winning bidders in the auction were announced, with the 10-year support amount totaling $9.23 billion and covering 5,220,833 locations in 49 states and one territory.

In total, 180 providers yielded an allocation of $9.2 billion out of the $16 billion that was set aside for phase one of the auction. The remaining $6.8 billion that was not allocated will be rolled over into the future phase two auction, the FCC said, which will now have $11.2 billion remaining funds  earmarked to establish services in what they term “partially-served areas.”

Among the 180 winning bidders was SpaceX Starlink ($885 Million awarded).

Three other companies were also awarded large sums and all were wireline / fiber based broadband providers: Charter received $1.22 billion;  LTD Broadband got $1.32 billion; and Rural Electric Cooperate Consortium, was awarded $1.1 billion. 

The rise of real competition, between various providers and, with Starlink, alternative systems, is a big step forward

The real headline here is, as we have been reporting for some time, Starlink will be a major force in increasing competition among internet service providers. And with the added competition, including from 5G and other satellite systems, due to come online this decade, the coverage and speed will move overall internet access in the US to the next level.

The FCC estimates that, due to these awards,  only 0.3% of these locations would not receive broadband speeds of at least 100/20 Mbps, and that over 85% are expected to get gigabit-speed broadband.

This main thrust of the FCC program is the increase in service availability in rural areas, and for that, Starlink is particularly well positioned. 

While fiber or wireline providers have huge construction costs and difficulty to re-coup those via fees (which is the reason these areas are under-served in the first place) Starlink is building a system that will ultimately have nearly planetary coverage and, with approval in place for 1 million earth stations in the US alone, will be able to provide service to nearly any domestic location.

With a plan to have up to 42,000 satellites in orbit, the ability to serve rural areas with high speed internet at a reasonable cost is an integral strength of the system. The government assistance only makes it more viable and could accelerate starlink’s adoption and buildout.

”This auction was the single largest step ever taken to bridge the digital divide”

— FCC Chairman Ajit Pai

The work-from-home revolution will explode into cost effective areas as the pandemic fades

This news is also confirmation that there will be a trend toward faster cheaper internet access beginning in 2021. Further, that this will likely coincide with a mass exodus, which in reality has already begun, away from overpriced locations such as Silicon valley and “silicon beach” (in LA) to virtually anywhere that costs are favorable, as long as there is also fast enough internet access. 

There may even be an urgent need, due to flooding caused by global warming, to move inland away from dangerous costal areas. With the work from home revolution underway and software and internet cloud based jobs increasing exponentially, having inexpensive fast (gigabit+ in best case scenario) broadband internet access will complete the feasibility of this migration. 

While these grants, ultimately, may fall short of the funds needed to fully build-out affordable broadband for the entire country (or planet in the case of Starlink), the forces of market competition, including 5G and other space based systems, can kick-in as the viability of living and working in internet related businesses begins to converge. 

We structured this innovative and groundbreaking auction to be technologically neutral and to prioritize bids for high-speed, low-latency offerings.  We aimed for maximum leverage of taxpayer dollars and for networks that would meet consumers’ increasing broadband needs, and the results show that our strategy worked. This auction was the single largest step ever taken to bridge the digital divide and is another key success for the Commission in its ongoing commitment to universal service. I thank our staff for working so hard and so long to get this auction done on time, particularly during the pandemic.

— FCC Chairman Ajit Pai

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