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After the Federal Communications Commission (FCC) rejected its $885 million award to provide internet coverage to rural areas, Space Exploration Technologies Corporation (SpaceX) submitted its appeal to the decision late afternoon on Friday. In the application, SpaceX outlines that the Commission's Wireline Competition Bureau overlooked facts and relied on incorrect internet speed tests to determine the merit of the Starlink application. It argues that the decision should be reversed as not only does SpaceX have adequate funds to cover rural areas, but the internet speed tests used by the Bureau are not representative of true Starlink performance that will cover areas starting from 2025.
SpaceX Cites $125 Billion Market Valuation, Redacted Information To Boost Its Case Of Providing Rural Internet Coverage
SpaceX's application covers several areas which the company believes were inadequately analyzed to withdraw the $885 million in funds. It starts out by stating that not only was the awarding body's decision to use internet speed test provider Ookla's tests incorrect but that the Bureau also used these tests to evaluate Starlink without informing SpaceX.
Ookla's speed tests have shown that despite consistently launching satellites, Starlink's speeds have dropped in the United States - a fact that is also supported by several disappointed user reports on social media. Its latest report, which came out in June and covered data for the first quarter of this year, outlined that while Starlink continued to heavily outperform broadband internet globally, median speeds across the United States dropped.
In its appeal application, SpaceX says that Ookla used this data incorrectly - and without informing SpaceX - to disqualify it for the rural broadband subsidy. It goes on to argue that this data is unrepresentative of the performance that Starlink will achieve in 2025. The company then shares redacted figures about the percentage of capacity used to serve rural areas and conservative estimates of peak period data usage and annual growth in peak usage to state that it is well equipped to provide services to rural users as per the FCC's requirements.
SpaceX's head of satellite policy, Mr. David Goldman argues against the decision to use Ookla's data by highlighting that:
Notably, at the time of Ookla’s Q1 measurements, SpaceX had launched less than half of the licensed 4,408 satellites in the Starlink Network, and some of those were still in orbit raise and not yet contributing to available capacity. Equally important, Ookla’s data reflects only the technologies deployed to the existing satellites. [REDACTED]
Second, the Bureau Decision ignores that SpaceX was given no notice that its nationwide speeds in 2021 and 2022 would be used as a proxy for determining its ability to meet 2025 speed requirements for its RDOF territories. SpaceX was neither advertising nor attempting to offer a 100/20 Mbps service during the time period Ookla surveyed the network speeds. [REDACTED]
The Bureau Decision ignored these circumstances with no explanation. Third, the Bureau relied on Ookla speed test data for the United States as a whole, not SpaceX’s winning bid areas. [REDACTED] But SpaceX was not required to take these steps before 2025. For all of these reasons, the Ookla data lacks any predictive value in assessing whether SpaceX is reasonably capable of meeting its RDOF performance obligations by 2025. Indeed, the Bureau appears to be penalizing SpaceX for making an initial broadband service available to under-served Americans ahead of its RDOF deployment milestones.
Another implied reason in the filing appears to include a doubt by the Bureau that SpaceX would be able to meet an aggressive satellite launch cadence to meet the capacity requirements for rural areas. However, since this is where the bulk of the redaction in the document starts, we can not determine what doubts were cast. SpaceX has launched more than 3,000 Starlink satellites to date and plans to launch even more over the course of this year as it aims to double its launch cadence in 2022 over 2021.
The Bureau also cast doubts on SpaceX's financial ability to meet its rural broadband application, and on this front, the company insists that it has sufficient cash and a strong revenue backlog. These figures are also redacted, and SpaceX insists that the Bureau "misread" the total cost to deploy all satellites for the rural coverage. It quotes depreciation expenses as being part of the estimate that it provided to the body as being irrelevant to actual costs. Depreciation is a non-cash, accounting charge on a company's assets that reflects their value drop due to usage over time, and it is added back as part of the financial analysis to determine a project's feasibility.
Finally, the last two arguments that SpaceX makes against the decision state that federal broadband programs in the areas that it won the bid for will not materialize anytime soon, and that it has secured adequate financial support from an unnamed bank for the project through a letter of credit. It argues that despite the Commission's requirement that a letter of credit is evaluated favorably as part of an award process, the Bureau refused to take it into account - an omission that Mr. Goldman dubs as 'remarkable'.
SpaceX is set to launch its next Starlink mission later today as part of an aggressive launch cadence that has put it on track to launch one mission per week this year. It aims to expand its satellite internet constellation through its Starship rocket by launching larger second generation spacecraft capable of communicating to mobile phones in case of emergencies and for other uses as well, and it is also fighting efforts to restrict its use of the 12Ghz spectrum for the Starlink satellite terminals.