Satellite broadband provider SpaceX is demanding that Virginia redo its final proposal for a federally funded deployment project, in favor of its Starlink internet service.
The state’s Department of Housing and Community Development, which administers broadband deployment, published its Broadband Equity, Access and Deployment awards program recommendations last week. It proposed $613 million in federal funding, which Gov. Glenn Youngkin’s office said represented a $200 million savings from a previous housing department estimate.
SpaceX, however, in a public comment email Wednesday, called the proposed expenditure “a massive waste of federal taxpayer money” and claimed that the state broadband office treated SpaceX unfairly. The company said in the email that the commonwealth “has put its heavy thumb on the scale in favor of expensive, slow-to-build fiber bias over speedy, low cost, and technology neutral competition.”
The program known as BEAD passed Congress during the Biden administration to reach homes, businesses and community buildings that don’t receive proper broadband, or whose connection is weaker than the federal standard of 100 megabits per second download and 20 megabits per second upload.
SpaceX, which President Donald Trump’s onetime confidante Elon Musk owns, did not submit any BEAD funding applications initially. But after Trump’s Commerce Department changed the eligibility rules in favor of a “technology neutral” approach that deemphasized fiber-optic cable, SpaceX applied across the country, including in Virginia.
The state housing department recommended that Starlink serve 5,579 locations through a $3.3 million award. That figure includes 3,137 locations in Southwest and Southside Virginia, with an award of $1.6 million. Another low-earth orbit satellite provider, Amazon’s Project Kuiper, would receive $4.5 million to reach 6,957 locations, including $970,000 to reach 1,132 locations in Southwest and Southside Virginia.
The vast majority of the remaining 133,500 unserved locations would be covered by fiber.
Kuiper, which did submit applications before the Trump administration rule changes, did not submit any public comment about the final proposal. The comment period ended at midnight Wednesday.
Most of the feedback, which the broadband office provided to Cardinal News, came from internet service providers, some advocating for non-deployment funds such as expanded cellular service, some expressing concerns with technical aspects of the recommendations, and some lodging complaints about work they lost due to the rule changes.
Of the three citizen-submitted comments, two were from far Southwest Virginia residents complaining that they would receive Starlink internet instead of fiber optic cable.
Joshua Stanley of Wise County wrote that nearby neighbors have broadband, while he and other neighbors “will be left with the worst option.”
“This program was meant to bridge the divide that we face in rural areas but without support for fiber programs from government funds no company will ever update the infrastructure in my area to truly put us on a level playing field,” he wrote. “As the rest of Virginia gets future proof options, we in Pound once again get left behind and the digital divide will only grow more pronounced [in] the coming years. … You might as well give us a phone line and dial up because in a few years [that’s] what satellite will be like compared to fiber.”
SpaceX disagrees with that premise. The company said that if Virginia doesn’t change its proposal, then the Commerce Department’s National Telecommunications and Information Administration should reject it.
After the housing department released its proposal last week, Gov. Glenn Youngkin’s office said in a news release that, upon federal approval, the plan would connect the final 133,500 Virginia residences, businesses and community buildings that high-speed internet has not yet reached. Youngkin’s news release stated that the Trump administration’s revised BEAD application rules eliminated “red tape” and allowed for a 25% savings from the commonwealth’s previous cost estimate, which was $815 million.
A Thursday afternoon email requesting comment from Youngkin’s office was not returned by the end of working hours. Nor did the DHCD reply to a request for comment.
How can houses and trees impact satellite signals?
Where low-earth-orbit satellites are concerned, Virginia took into consideration its ability to support future speeds that surpass the current federal standard of 100 megabits per second download, 20 megabits per second upload and 100 or fewer milliseconds for information to travel from a browser to a server and back (called latency).
According to a map on Starlink’s website, the service provides 87 to 243 Mbps download speed and 13 to 26 Mbps for uploads, with 25 to 34 milliseconds latency at various Southwest and Southside Virginia sites. By comparison, fiber-optic cable providers in Southwest and Southside Virginia offer multiple gigabits per second (one gigabit equals 1,000 megabits per second) download and about 100 Mbps upload.
Two things that can impact that measure for satellite service are project area density and tree canopy. The housing department’s BEAD proposal showed that it considered both when deciding whether to recommend awards for SpaceX and Kuiper. Rugged terrain and slope were factors, too, according to the proposal.
Multiple observers have agreed that when a large number of users in a compact area are attempting to access the internet, satellite speeds can be slowed. The broadband office checked the number of locations in areas where Starlink applied, saying in its report that “the existing customer base should not be negatively impacted by the award of BEAD locations for a given technology to be considered scalable.”
Regarding tree cover, the report read: “Broadband technologies with obstructed line-of-sight, specifically wireless and LEO technologies, can have signal degradation, increased latency, and reduced reliability.”
Such determinations could preclude the Commerce Department’s order for states to accept the lowest bidder.
Satellite bids were much lower than those from fiber optic cable providers, whose costs include wire installation and the labor required to do that work. On the other hand, Starlink’s and Kuiper’s infrastructure consists of dishes worth a few hundred dollars apiece, costs the companies will incur to serve BEAD locations.
The Commerce Department released its notice changing the BEAD policy on June 6. It canceled all applications and required a new round, with Virginia’s final proposal due in late October. But by mid-July, the state broadband office was sending out provisional award notices.
SpaceX quickly disagreed with the commonwealth’s decisions, a series of emails between the company and the broadband office shows. After a recent request under the Virginia Freedom of Information Act, the broadband office provided Cardinal News with those communications.
SpaceX bid $750 for each location, and its senior manager for global government affairs wrote on July 16 that the company found it “highly unlikely that, but for the 4,841 locations included in SpaceX’s provisional award spreadsheet, all program locations (94%+ of all locations) received a bid under, or within 15% of, $750 per location.”
The manager, Erica Myers, asked that the housing department “confirm that all provisionally awarded locations not included in the SpaceX provisional award spreadsheet are provisionally awarded at a price below SpaceX’s bid price of $750, and, if not, explain how this provisional award decision was reached consistent with program rules.”
In a response the next day, Office of Broadband Associate Director Chandler Vaughan wrote that under federal law and BEAD regulations, the office considered aspects including foliage, topography and density of eligible locations. The office had asked applicants to consider those factors in their letters of intent.
After reviewing both the applicants’ responses and independent research, along with a review of technical specifications that applicants provided, the office rejected some applications, including “a portion of SpaceX’s applications as a priority broadband project,” Vaughan wrote.
“These specific criteria and considerations will be published in Virginia’s BEAD Final Proposal when it is issued for public comment,” he added.
The broadband office next heard from one of SpaceX’s lawyers.
“To be clear, SpaceX considered foliage, topography, and density of eligible locations in its bid,” senior counsel Shea Boyd wrote on July 21. “SpaceX is highly confident that the ‘independent research’ referenced by the Office is neither accurate nor independent.”
Boyd added that about 15% of locations excluded from its application have a Starlink customer within 100 meters, about 12% of excluded locations “are actively served via Starlink today” and about 95% of all Virginia’s BEAD locations have a Starlink subscriber within a mile.
“These facts conclusively demonstrate that the research used to support the Office’s findings does not accurately reflect SpaceX’s technical capabilities,” Boyd wrote.
A follow-up email July 24, signed “Office of Broadband Team,” advised that the review process was concluded and welcomed additional comments during the public comment process.
A SpaceX document dated July 26 stated that the company had done tree cover analysis of the commonwealth and that “Starlink network can, and does, serve all areas of Virginia.”
Another document sent the same day stated that SpaceX had reviewed a study titled Starlink Capacity Analysis v0.2, led by a Penn State professor. The study claims that Starlink’s subscriber density limitation is 6.66 households per square mile. SpaceX said the study is “demonstrably false and invites a misapplication of these findings that generates highly inaccurate results.”
SpaceX reiterated those arguments in the public comment email.
Among other comments sent to the broadband office was one from Junior Stacy, a Grundy resident who will be getting Starlink service under BEAD.
Stacy wrote that one of his neighbors in Buchanan County has a Starlink subscription and was forced to retire from her telehealth job due to disconnects caused by the area’s obstructions.
“It is extremely disappointing that Starlink has won the BEAD awards for my local community,” Stacy wrote. “My area is heavily mountainous and wooded, as such Starlink has extreme issues with obstructions here. Even partial obstructions are enough to seriously degrade service.”
