SpaceX has been awarded $885.51 million by the Federal Communications Commission to provide Starlink broadband to 642,925 rural homes and businesses in 35 states.
SpaceX has been awarded $885.51 million by the Federal Communications Commission to provide Starlink broadband to 642,925 rural homes and businesses in 35 states.
> Funding is distributed over 10 years, so SpaceX's haul will amount to a little over $88.5 million per year.
Note: a traditional cable company got more than $1B is subsidies, so maybe the distributed model is actually cheaper. Depends on replacement costs and lifecycle (in both cases).
However, I wonder what the alternative strategy costs for rural broadband are. My guess is that laying a lot of cable to remote locations could possibly be even higher than the $1376.52 per customer cost? It seems like something like Satelite internet connections could be less to set up, but it's not clear to me the cost of the equipment, installations and upkeep are in that case?
Also 1376 / 12 months averages out to only about $110 per month per customer for just one year. Which honestly doesn't sound too bad.
From burying the lines or stringing them on poles, to wiring up each drop into each dwelling, all the splices and repeaters and what-not, to the central office building and equipment and power and stuff, and maintaining that entire physical plant for years, it's all got to add up.
I'd imagine it's well within an order of magnitude.
For the level of service they're offering that seems pretty reasonable honestly, and a much more efficient use of dollars than typical efforts (though WISPs might do even better in certain areas, they have different trade offs). Since it appears how the companies make use of the money is fairly flexible SpaceX will probably deploy it towards a few different metrics. The $500 upfront capex is probably the biggest impediment for a lot of people so getting that down is important, but if internally they had any issues with getting their sat shells filled out that'd be a good upfront usage too.
This is also spread out over 10 years, so where the most bang for buck is delivered will probably vary over time, by 2025 let alone 2030 SpaceX's economics will certainly look quite different with Starship deployment and filled shells/done ground stations.
In other words, they get all the money, even if no one subscribes.
>FCC funding can be used in different ways depending on the type of broadband service. Cable companies like Charter and other wireline providers generally use the money to expand their networks into new areas that don't already have broadband. But with Starlink, SpaceX could theoretically provide service to all of rural America once it has launched enough satellites, even without FCC funding.
>One possibility is that SpaceX could use the FCC money to lower prices in the 642,925 funded locations, but the FCC announcement didn't say whether that's what SpaceX will do.
SpaceX is still in the painful bootstrapping phase of things, and their cost structure right now is still higher then what they ultimately hope for. But from the sound of it they've got a lot of flexibility in how they deploy this money so long as they ultimately meet service targets, and they're only one player amongst many even for this subsidy money. If they're satisfied with service people don't tend to casually switch providers, so there is real value in being first. I think therefore SpaceX may consider using some of the money at least to lower the bar of someone signing up and try to get currently underserved households onboard as customers faster.
Additionally, don't forget this is only the first round, there is even more money available next time. Given the nature of bidding, I assume strategic calculations about how to win more next time will also play a role.
The $2.4B they paid to ST Micro is not for terminals, as ST Micro doesn't manufacture electronics, they are a foundry and so they only make the chips. The $2.4B includes the costs for the chips for the first million receivers, but the assembly and non-chip costs add a lot on top of that. So in that sense, $2400 per terminal is a serious underestimate.
But it's also wrong in the other direction, because the $2.4B didn't just include the chips, it also included the development and mask costs for those chips. This should be considered to be NRE and not considered as part of the price of the terminals, as SpaceX will not have to pay that for the next million terminals.
So the real number is above or below $2400 depending on what costs more, the motors, pcbs, the antenna layers, the chassis and the assembly of a terminal, or 1/1000000 of the NRE of developing the ASICs for Starlink. Who knows.