Star link Loses Government Subsidies – What Happens Now?

601 Views

Star link was going to be the standard of satellite internet when the company’s full array of satellites finally made it into orbit. But unless something changes, Star link’s dreams are unlikely to become reality. Its future may even be in jeopardy after losing more than $800 million in government subsidies.

The Elon Musk-owned company was approved for $886 million in grant money back in 2020. It was money earmarked for expanding internet access in rural areas. But in early August, the FCC made it known that they had changed their minds. They pulled the Star link subsidies after determining that the company “failed to meet program requirements.”

A Risky Investment

Digging through the FCC announcement reveals that the Commission decided Star link was too risky an investment. There are not enough subscribers to keep the service viable. Those that do sign up are charged nearly $600 for equipment along with a $110 monthly access fee. Not only that, but Star link recently raised its monthly rates.

Star link already has about 2,000 low-orbit satellites in place. They had plans to launch several thousand more. But without government assistance, they may not be able to generate enough revenue to get all those satellites in the air.

For the record, Star link is not the only company that lost its subsidies. LTD Broadband also lost about $1.3 million with the recent FCC decision.

Star link’s Future in Doubt

With the news of lost subsidies, one cannot help but wonder about Star link’s future. Like so many other industries that are built on government money, the broadband industry cannot seem to make a go of it in rural areas without subsidies. That is not hard to understand when you consider why ISPs are unwilling to run cable internet or fiber-optic out to rural communities.

Star link’s future is now in doubt because there are not enough subscribers willing to pay for the service. Meanwhile, Houston-based Blazing Hog is making a go of it with 4G rural internet access. Where Star link relies on satellites, Blazing Hog provides high-speed internet through cellular networks.

Infrastructure Is Costly

Expanding rural broadband internet requires finding a viable solution for reaching faraway places without spending a ton of money. Therein lies the problem. Physical infrastructure is costly. It is so costly that ISPs will not run service to rural communities without financial assistance from state and local governments. They have no intention of losing money on infrastructure builds.

If we are not going to build physical infrastructure though, providing rural internet requires looking to something else. Enter satellite and 4G technologies. Both work well enough. So it is puzzling that governments at all levels are willing to continue pouring billions into failed infrastructure projects yet are still quick to yank the plug on companies like Star link.

While we puzzle that question, consider this: 5G cellular technology has arrived. It has now been deployed in earnest. There is a good chance that 5G will eventually replace wired broadband entirely, in the same way cell phones have all but obliterated landlines. Is it wise to continue dumping money into physical infrastructure when there’s a very real chance that we won’t even need it a decade from now?

Maybe There Are Private Investors

Getting back to Star link, perhaps there are private investors willing to pick up the slack. If not, the company could very well be on its last legs. All the customers now paying for Star link service could be left to go with a different satellite provider or try 4G rural internet. Either way, the fallout of losing more than $800 million in subsidies is not going to be pretty.