SpaceX gets $886M from FCC to subsidize Starlink in 35 states • Hacker News Board

Re: SpaceX gets $886M from FCC to subsidize Starlink in 35 states

#41

Post by dcolkitt » Mon, Dec 07, 2020, 8:54 PM UTC

liquidise wrote: post #7

This headline is only part of the story, looks like ~10 ISP's were awarded sizable subsidies. While i am not a fan of subsidies in general, the ISP space is particularly tricky for free-market forces to ensure competition. The capital requirements are overwhelming in many cases for a traditional startups, leaving the only other option as local/municipal votes, which have been successful in some areas. Long-term, i co…

> The capital requirements are overwhelming in many cases for a traditional startups, leaving the only other option as local/municipal votes, which have been successful in some areas.

I disagree. Especially today, capital is highly abundant and dirt cheap. The markets are starved for yield on any sort of fixed income product, especially when it's secured by tangible assets with predictable cash flows. Every day the market sees new successful covenant-lite bond and loan sales raised with payback periods measured in decades.

The larger issue is that many municipalities explicitly enforce the local cable co's monopoly. This takes the form of exclusive "pole attachment" contracts. The local governments took kickbacks from the first broadband company that came along. For a quick payday upfront, they screwed their constituents out of any sort of competitive marketplace.

Re: SpaceX gets $886M from FCC to subsidize Starlink in 35 states

#42

Post by elihu » Mon, Dec 07, 2020, 8:54 PM UTC

I read a theory once that one of the reasons why so many Boomers were able to buy land or houses cheaply that later appreciated substantially in value was the interstate highway system built during WWII. Suddenly, a lot of real estate was in easy driving range of employers, and so there was a period of over-supply of highly desirable real estate.

I wonder if Starlink (and changes in work expectations due to the pandemic) will have a similar effect; a lot of rural land that people might have been inclined to move to if only they had some way to do their work remotely is now suddenly a realistic option.

Re: SpaceX gets $886M from FCC to subsidize Starlink in 35 states

#43

Post by martinald » Mon, Dec 07, 2020, 8:57 PM UTC

tzm wrote: post #14

I live in the Mission hills of SF Bay and pay $600 / mo for internet via mobile hotspot (LTE). HughesNet is terrible. Nothing else is available. I can't wait for Starlink beta!

Very doubtful starlink will work close to major metro areas.

They may ration service to a few people in big cities but i'm doubtful they will offer it at all to be honest.

Re: SpaceX gets $886M from FCC to subsidize Starlink in 35 states

#44

Post by grecy » Mon, Dec 07, 2020, 8:58 PM UTC

For fun, highest to lowest:

  Etheric:          $3,857/home
  CentryLink:       $3,396/home
  Frontier:         $2,916/home
  Windstream:       $2,715/home
  LTD Broadband:    $2,500/home
  Connect Everyone: $2,484/home
  Resound:          $2,443/home
  AMG:              $2,082/home
  GeoLinks:         $1,831/home
  Rural Electric:   $1,779/home
  SpaceX:           $1,377/home
  Comcast:          $1,151/home

Even just 5 years ago who would have guessed satellite internet would be the cheapest...

EDIT: Sorry for the ordering mistake - Comcast are "cheapest", SpaceX 2nd.

Re: SpaceX gets $886M from FCC to subsidize Starlink in 35 states

#45

Post by runj__ » Mon, Dec 07, 2020, 9:00 PM UTC

Mountain_Skies wrote: post #28

liquidise wrote: post #7

This headline is only part of the story, looks like ~10 ISP's were awarded sizable subsidies. While i am not a fan of subsidies in general, the ISP space is particularly tricky for free-market forces to ensure competition. The capital requirements are overwhelming in many cases for a traditional startups, leaving the only other option as local/municipal votes, which have been successful in some areas. Long-term, i co…

My recent employer was one of the ISP providing rural telecom service. These subsidies accounted for a hefty percentage of our income and the company was still perpetually on the edge of failure. Most of our competitors were in similar situations, loaded down with breathtakingly large amounts of debt and expensive to maintain decaying infrastructure, much of it purchased from the Baby Bells when they got out of the m…

Isn't Starlink supposed to have the lowest ping of any solution out there (light not travelling in fiber but air/space) and be a breakthrough for financial customers? Bandwidth doesn't really matter _too_ much in those applications does it?

Re: SpaceX gets $886M from FCC to subsidize Starlink in 35 states

#46

Post by mrkstu » Mon, Dec 07, 2020, 9:00 PM UTC

martinald wrote: post #43

tzm wrote: post #14

I live in the Mission hills of SF Bay and pay $600 / mo for internet via mobile hotspot (LTE). HughesNet is terrible. Nothing else is available. I can't wait for Starlink beta!

Very doubtful starlink will work close to major metro areas. They may ration service to a few people in big cities but i'm doubtful they will offer it at all to be honest.

Why in the world wouldn't they offer it everywhere at whatever their max terminal per square mile is?

Re: SpaceX gets $886M from FCC to subsidize Starlink in 35 states

#47

Post by ccorda » Mon, Dec 07, 2020, 9:00 PM UTC

This was a reverse auction, where the goal was to minimze cost to government to get high speed internet in rural areas.

Starlink bid in the Above Baseline tier, meaning ≥ 100/20 Mbps (with data cap of ≥ 2 TB).

According to the FCC [1], 99.7% of locations are at that tier or higher, and 85%+ in the highest Gigabit (1000/500) tier.

So it looks like the auction funded gigabit where there was a provider bidding at that tier, and the rest went heavily to SpaceX.

One question I have is whether these gigabit deployments actually happen, or if Starlink will pick off legacy business so quickly (full launch nationwide next year) such that rural providers aren't able to take the subsidies and actually implement the new offerings.

[1] https://mobile.twitter.com/matthewberryfcc/status/1335978529...

Re: SpaceX gets $886M from FCC to subsidize Starlink in 35 states

#48

Post by pbreit » Mon, Dec 07, 2020, 9:00 PM UTC

Mountain_Skies wrote: post #28

liquidise wrote: post #7

This headline is only part of the story, looks like ~10 ISP's were awarded sizable subsidies. While i am not a fan of subsidies in general, the ISP space is particularly tricky for free-market forces to ensure competition. The capital requirements are overwhelming in many cases for a traditional startups, leaving the only other option as local/municipal votes, which have been successful in some areas. Long-term, i co…

My recent employer was one of the ISP providing rural telecom service. These subsidies accounted for a hefty percentage of our income and the company was still perpetually on the edge of failure. Most of our competitors were in similar situations, loaded down with breathtakingly large amounts of debt and expensive to maintain decaying infrastructure, much of it purchased from the Baby Bells when they got out of the m…

According to Morgan Stanley (not the final arbiter) Starlink is the bulk of SpaceX's commercial value: https://www.cnbc.com/2020/10/22/morgan-stanley-spacex-to-be-...

SpaceX currently has a massive cost advantage in replenishing the satellite fleet which ever advancing equipment.

It already offers the lowest transcontinental latencies which for high frequency trading alone would be a bonanza.

Re: SpaceX gets $886M from FCC to subsidize Starlink in 35 states

#49

Post by giantg2 » Mon, Dec 07, 2020, 9:01 PM UTC

aaronblohowiak wrote: post #33

rictic wrote: post #26

Earlier quoted context omitted.

Two more questions: 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 li…

Why should rural lifestyle be subsidized ?

Why should any lifestyle be subsidized? Subsidies happen for rural and urban individuals.

Re: SpaceX gets $886M from FCC to subsidize Starlink in 35 states

#50

Post by xoa » Mon, Dec 07, 2020, 9:02 PM UTC

jjeaff wrote: post #24

xoa wrote: post #10

Earlier quoted context omitted.

The beta terminal cost is $500, and beta service is $100/month (at up to ~150 Mbps or so right now?). So the money would cover the terminal cost to those customers and then full freight 8 months of service at current pricing. Alternatively/in addition, and more similarly to traditional in-ground service, it may also simply help fun actual infrastructure in the form of more/faster deployment of ground stations and sat…

I don't believe the subsidies are meant to subsidize the customer. Rather they are subsidizing the upfront capital cost to build out infra. In other words, they get all the money, even if no one subscribes.

From the article:

>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.