Feds still aren’t fully backing satellite for BEAD grants

Just days before President-elect Donald Trump retakes office and potentially changes how broadband is funded, a federal agency said states can look beyond fiber to help reduce the digital divide, but stopped short of fully backing satellite-based internet offerings.

In its final guidance released earlier this month, the National Telecommunications and Information Administration gave states and territories what it described as “additional flexibility and simplified processes” for when they can use money from the $42 billion Broadband Equity Access and Deployment program.

Now, states can fund internet service providers who use unlicensed fixed wireless spectrum, as long as they also use licensed spectrum. But there still is a limited role for internet providers that use low-earth orbit — or LEO — satellites to provide connectivity, which includes the likes of Starlink and Amazon-backed Project Kuiper.

NTIA’s guidance said the technology still does not meet its threshold to be deemed reliable internet, as it does not fulfil its speed and capacity requirements. States can now award “LEO Capacity Subgrants,” which means they can put BEAD money towards reserving space on satellite networks and can reimburse providers when they reach a certain number of subscribers or serve a certain number of locations in an area.

States can only fund satellite networks via subgrants if an area cannot be connected by any other method. This may be especially helpful in areas not conducive to fiber.

NTIA had come under fire previously for expressing a preference for prioritizing fiber projects under BEAD, and calling them the “gold standard.” This new guidance, which has been under discussion since last year, does not change that preference for fiber. Few were more concerned than Trump’s billionaire advisor Elon Musk, the CEO of satellite internet company Starlink, who wanted a piece of the $42 billion BEAD pie and appeared to have Trump’s support.

“We’re spending a trillion dollars to get cables all over the country, up to upstate areas where you have two farms, and they are spending millions of dollars to have a cable,” Trump said during a podcast appearance last year. “Elon can do it for nothing.”

Federal grantmaking for satellite internet has been a controversial topic for many years, even as the technology has continued to evolve. The Federal Communications Commission in 2020 awarded Starlink more than $885 million through its Rural Digital Opportunity Fund to subsidize its deployment, then rejected the longer version of its application two years later and reaffirmed that rejection in 2023. That decision rankled some in Congress and on the FCC, who accused the agency of playing politics.

Some appeared reluctant to allow satellite internet to play a bigger role in BEAD, based on comments submitted to NTIA.

Bridger Mahlum, general manager of BroadbandMT, an association that represents broadband providers in the state, said satellite is an option “of last resort” and should only be used after providers “have prioritized the deployment of fiber infrastructure to as many locations as possible, followed by other reliable broadband technologies.

“Alternative technology providers may have a case to serve isolated locations where more scalable broadband may be cost-prohibitive, but any participation beyond that undermines BEAD's intent of maximizing reliable broadband service in rural America,” Mahlum continued.

And the California Public Utilities Commission, which regulates broadband in the state, said there is a lack of competition in the satellite internet space beyond Starlink, and that the promise of widespread service is not validated by government entities as the company has been unwilling to share data.

“As NTIA knows, there is only one commercial LEO satellite provider in the market, with no likelihood of a competitor emerging during the BEAD subgrantee selection process,” the CPUC’s comments said. “As a result, states that use LEO satellite as an Alternative Technology provider under the new policy will have a single option only, Starlink, with no competition to constrain the prices proposed or enable effective negotiations.”

California did suggest that satellite and other technologies “will be necessary to achieve complete coverage, especially for the most remote and hardest to reach locations,” a view shared by Alaska Strategy, a consulting firm in the state, which said fiber must exist as part of a “multi-modal approach.”

“For instance, in Alaska, it is cost-prohibitive to deploy fiber in the ground due to a variety of risk factors including environmental, seismic, sensitive tribal lands, and melting tundra,” the group wrote. “These risks impose significant construction, technical, and operational risks for broadband deployments that rely solely on fiber.”

The Illinois Office of Broadband offered a national strategy as an alternative approach to grantmaking around satellite internet, which it said would be beneficial due to the “interstate nature of [satellite] deployment, service provision, and cost structure.”

The state argued in its comments to NTIA that a national approach, rather than leaving it to states to make grants or subgrants to satellite providers, could result in reduced prices from buying in bulk; alignment on designing a nationwide network that does not conform to state lines; streamlined negotiation between providers and a single government entity; efficiency; and greater expertise that can be found at the federal level.

“A nationally centralized program could offer a range of service packages (from a low-cost option to enterprise level), purchase of user terminals on an adoption basis, and vouchers for every eligible location that must be used within a certain timeframe,” the office wrote. “A single, uniform contract could stipulate critical factors applicable to all states.”