SpaceX to FCC: $4.5B Broadband Program Is Unnecessary. Starlink Has It Covered

May 15, 2026

SpaceX is telling the Federal Communications Commission to consider ending a $4.5 billion fund that subsidizes voice and broadband in rural areas, arguing that Starlink has solved the connectivity gap by offering fast speeds at competitive rates.

“The Commission’s universal service programs must adapt to a reality where the long-standing problem of high-speed broadband network access has effectively been solved, rendering most legacy High-Cost support mechanisms redundant,” the company wrote in the Wednesday letter.

The FCC is moving to modernize the High-Cost program under the Universal Service Fund, which subsidizes access to voice and broadband services. The High-Cost program specifically distributes funding to telecommunications providers in rural and remote areas to not only deploy their services but also keep prices down for local consumers.

Next week, the FCC will vote on whether to kick off a process to update the program’s rules, which cover about $1.6 billion of the $4.5 billion annual budget. The commission noted that 249 local carriers received almost $1 billion in subsidies for voice and broadband, but were only required to offer speeds reaching at least 25Mbps downloads and 3Mbps uploads.

Another portion of the funding has shrunk from $700 million to $200 million as customers shift from voice to broadband-only services. The FCC now wants to consider the emergence of satellite internet providers, such as Starlink. This includes whether subsidies for an area should be effectively removed, signaling that the FCC is wondering whether the High-Cost program is even justified when alternatives exist, the Benton Institute for Broadband and Society notes.

In Wednesday’s letter, SpaceX’s principal for satellite policy, Joseph Bissonnette, told the commission it should consider scrapping the High-Cost program. “Satellite broadband already delivers comparable performance to terrestrial broadband at competitive rates in line with the objectives of the High-Cost Program, and it will only become more capable over time,” he says.

Bissonnette also noted that the US government’s Broadband Equity, Access, and Deployment (BEAD) program is spending $21 billion—about $700 million of which is going to SpaceX—to fund high-speed broadband in underserved areas. He then pointed to recent data from Speedtest.net parent Ookla showing that Starlink’s download speeds have been increasing and are consistently over 120Mbps in the US.

“These developments should enable the Commission to establish a plan to sunset the High-Cost mechanisms with confidence that the objectives of these programs have been achieved,” he wrote, adding: “Establishing a plan to wind down these programs will enable the Commission to return universal service funds to consumers through reduced contributions or redirect them to other universal service programs that will deliver meaningful benefits to the public.”

Joe Kane, a director at the Information Technology and Innovation Foundation think tank, has also been urging the FCC to wind down the High-Cost program. “Ending the High Cost program is especially important since it is the primary driver of the sky-high USF contribution factor, a regressive tax on Americans’ phone bills,” he told PCMag.

Kane argues taxpayers shouldn’t be subsidizing “failing ISPs indefinitely when new technologies, such as LEO [low-Earth orbit] broadband constellations, can serve the same areas without ongoing subsidies.”

“Low-income Americans still face affordability challenges in both rural and urban areas. But affordability challenges could be better addressed by targeted consumer-focused vouchers through a reformed Lifeline program, rather than by ISP-focused handouts like the High Cost program,” Kane adds.

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Still, the FCC’s proposed rulemaking asks whether a satellite internet provider might exploit the lack of competition if subsidies are withdrawn in rural areas. “Is there a concern that if terrestrial network carriers are no longer supported in these areas, satellite providers would increase their rates significantly above the reasonably comparable rates charged for similar services in urban areas?” the commission writes. “Given the economics of satellite deployment, do rates for satellite-based broadband service in rural areas exceed rates in urban areas by a significant amount? How could the Commission address such concerns?”

SpaceX noted in its letter that Amazon’s Starlink challenger Leo is poised to launch soon. Currently, Starlink offers plans at $50, $80, and $120 per month for residential subscriptions. But in congested areas, Starlink can charge a one-time demand surcharge of $500 to $1,500, while limiting new customers to the pricier $120 Residential Max plan.

The Rural Wireless Association (RWA) argues that SpaceX “fundamentally misstates” the purpose of the FCC’s program.

“These programs exist because market forces alone have not delivered reliable, scalable broadband in rural America—and that reality has not changed,” says Carri Bennet, Outside General Counsel for RWA. “If SpaceX has truly solved the long-standing challenge of universal high-speed broadband, it is difficult to explain why it is seeking relief from BEAD performance testing and capacity requirements—core safeguards designed to ensure networks can consistently deliver high-quality service—and why it continues to pursue federal funding in the first place.”