Riddle me this, would SpaceX not have built out Starlink if they didn't get this subsidy?
Since they already put Starlink satellites in orbit without any guarantees of subsidies, was this good use of government funds?
Since they already put Starlink satellites in orbit without any guarantees of subsidies, was this good use of government funds?
Given this goal, it’s simply unreasonable to deny funds to a company that has already set up that access, but only grant funds to new entrants. That clearly screws over the existing companies, which now can’t afford to compete on price with the new government funded entrants.
The only way to establish a level playing field and not penalise companies that already invested heavily is to give the grants regardless of past investment. Then you can genuinely allow the competitive market to establish fair and competitive prices for these customers. Free market principles should in theory ensure that this price competition should recoup a significant proportion of the subsidy costs for consumers and tax payers.
The RDOF grants are not there to establish competition. RDOF grants exist purely for some company to provide broadband service where there is none.
If anything it's funding a local monopoly.
For the avoidance of doubt, here's the link to the FCC RDOF auction and the relevant quote:
"... Rural Digital Opportunity Fund to bring high speed fixed broadband service to rural homes and small businesses that lack it."
Money to launch more satellites will give the company the ability to get broadband for more people in more of the rural USA much more quickly. It also helps Starlink through a chicken and egg problem where they can't make money unless they have satellites up, and they can't put satellites up unless they get money.
The subsidy isn't large enough to pay for all the satellites they need. They have money to launch more satellites and will be doing more launches subsidy or no subsidy.
The subsidy will only go directly to their bottom line.
First, the fact that they have the money to launch more satellites does not mean that they have the money to launch ALL the satellites that the full system needs. Indeed their projected cost for fully setting up Starlink is $10 billion dollars, which is more than the projected operating profit that they have had over their entire history. So it is easy to see that they won't be able to complete unless they get more money along the way.
In fact there is a significant risk that if they make less than they hope, that the company runs out of money and goes out of business. This subsidy reduces that risk, and therefore makes them more likely to complete, and likely to complete faster.
To achieve this purpose, the subsidy should be sized to help them over the hump, and not to pay all their costs. (Whether we should be handing out subsidies is a different question that I'm ignoring. Our government has chosen to, and the question is how to succeed.) Therefore there is nothing odd about the fact that it is less than 10% of the total amount of money that they think they will need. They aren't doing Starlink in the hopes of getting the subsidy. But the subsidy improves their odds of succeeding at Starlink.
And finally, you claim that the subsidy will only go directly to their bottom line. Which is to say that it shows up as profit and goes to Elon and other shareholders in the company.
It is true that plenty of companies operate that way. However after 20 years of running companies, it is extremely safe to say that Elon does not. In fact he tends to take every scrap of money that his company is generating, finds ways to borrow or raise more, and then reinvests it into even more ambitious projects.
So he won't be taking it as profit. What will he use it on?
Well, the three big projects that Elon is working on right now is building Starship, building Starlink, and preparing to settle Mars. Of those, Starship is required to finish Starlink at a price point where it is a viable business, and Starlink is required to fund Mars. Therefore it is essentially certain that he will pour this money directly into Starship and Starlink, rather than taking any of it as immediate profit.
Therefore we have good reason to believe that this money will be used for its intended purpose. We have good reason to believe that this money will in fact improve the odds of success, and enable them to deliver that success sooner. And therefore this money actually helps achieve the goal that the US government has set.
As noted, there is a significant risk of Starlink going out of business. The RDOF grants are not venture funding, and should not be used as such.
The FCC's Rural Digital Opportunity Fund exists to bring high speed fixed broadband service to rural homes and small businesses that lack it.
I do not believe that Starlink would have excluded the areas it got subsidies for from service had it not gotten the subsidies.
Starlink must have ALL the money to launch and operate ALL the satellites it needs to become profitable. The subsidies do not even cover the cost of replacing deorbiting satellites.
> It is true that plenty of companies operate that way. However after 20 years of running companies, it is extremely safe to say that Elon does not. In fact he tends to take every scrap of money that his company is generating, finds ways to borrow or raise more, and then reinvests it into even more ambitious projects.
This is not proper use of RDOF money either.
There is a large difference between putting up a few percent of their constellation to reach initial minimum viability and putting up enough satellites to properly cover the rest of the world (a very expensive endeavor that will take years).
Plus, the US Government may directly benefit in a very big way from utilizing Starlink and that may make it a bargain compared to the alternatives. If US defense contractors were building that constellation, they'd be spending ten times what SpaceX is.
And that's before we get to the potential for intelligence gathering globally. The powers that be will be all over that, no matter what SpaceX claims to the contrary (SpaceX will have a gun to their head and will not have a choice, just as the Prism gang had no choice).
The US ISP market is already fairly diverse. There are some 3000 ISPs in the US.
> $886m is a bargain if it helps meaningfully with that (assuming it's not a frequent subsidy).
Aye, therein lies the rub. Starlink will require a frequent and recurring subsidy, unless it can become profitable on its own.
Each and every satellite they put up will burn up in five years.
> There is a large difference between putting up a few percent of their constellation to reach initial minimum viability and putting up enough satellites to properly cover the rest of the world (a very expensive endeavor that will take years).
Maybe Starlink should have been required to demonstrate viability before allowing it to qualify for government subsidies?
> Plus, the US Government may directly benefit in a very big way from utilizing Starlink and that may make it a bargain compared to the alternatives. If US defense contractors were building that constellation, they'd be spending ten times what SpaceX is. > > And that's before we get to the potential for intelligence gathering globally. The powers that be will be all over that, no matter what SpaceX claims to the contrary (SpaceX will have a gun to their head and will not have a choice, just as the Prism gang had no choice).
If the DoD wants Starlink then they should pay for it themselves.
The fact is, starlink is the absolute best option in quite a few places - sparsely populated, far from dense urban areas. This is actually the best way to spend government money for that purpose even if it ends up in subsidizing terminal purchases.
If it were only subsidized there. Some of the Starlink areas are next door neighbours to subsidized fiber builds.
In the age of COVID-19, any investment in ISP infrastructure is beneficial.
> In the age of COVID-19, any investment in ISP infrastructure is beneficial.
Not if you end up having nothing to show for it.
Can the subsidy be used to accelerate making the service available to more users sooner, and at higher quality? Most likely yes, because with the design of Starlink, more satellites gives better service.
A related question: Were early subsidies into solar power a big help in climbing the learning curve while solar power had uncompetitive performance/$, or did advancements in related disciplines like chip manufacturing carry most of the weight?
City/population-center living is wildly inefficient for a host of reasons, and a dollar of urban development towards a major metropolis goes much less far than a dollar of urban development for a rural community.
We deal with the inadequacies of living in such big population dense areas because we want to; not because it's efficient.
Turns out it's not efficient to stack up as many people vertically as possible.
It over-burdens local municipal systems to the point of skyrocketing economic costs, creates more job scarcity due to sheer population and high real-estate costs, and creates untenable situations during times where population density is a net-negative, like during a pandemic.
Rural living has major problems too; lack of access to high quality services and travel come to mind -- but these are things that can be improved upon, and by every metric these things are improving.
There is no such game-plan for dealing with the burdens of heavy density populations mid-city; it's considered to be a fact of life.
>Turns out it's not efficient to stack up as many people vertically as possible.
>It over-burdens local municipal systems to the point of skyrocketing economic costs, creates more job scarcity due to sheer population and high real-estate costs, and creates untenable situations during times where population density is a net-negative, like during a pandemic.
These are all exactly the opposite of true? It's very efficient to stack people vertically. What's not efficient is delivering sewer service to people whose houses are a half mile apart or having someone drive 60 miles round trip in a single occupancy vehicle to get to work every day.
As https://rameznaam.com/2020/05/14/solars-future-is-insanely-c... explains, Wright's law says that while a technology is improving, we generally get a fixed percentage drop in cost every time we double production. Therefore the production increases thanks to subsidies caused those cost drops to come much sooner than they would have otherwise.
I feel like that's a rhetorical question, but the obvious answer is yes.
>Since they already put Starlink satellites in orbit without any guarantees of subsidies, was this good use of government funds?
I suppose that depends: if Space-X's original timeline was 10 years... is it more or less valuable to the US to have broadband access on an accelerated timeline? My guess is, especially in the face of covid, the more access to high speed the better.
Would you rather have had those funds going to Frontier and Comcast? The funds are GOING to be spent, the only question is how. Not having rural broadband has been deemed an unacceptable outcome by the majority of Americans. The way the funds have been spent to date have definitely been a mixed bag.
https://www.washingtonpost.com/technology/2020/12/07/fcc-dig...