Starlink service is so obviously phenomenal to anyone who's used it, this isn't going to change that or effect SpaceX's success one bit. The FCC's actions here are just embarrassing their agency by exposing their petty ineptitude and harming whomever this program was supposed to help.
I don't really see how it's embarrassing that the FCC set out a clear requirement for a low-latency, 100/20M rural service and Starlink (having failed to show a plan to achieve that) is not accepted into the program. Which part is embarrassing to the FCC, exactly?
I could see this making sense if there was any real competition or someone else who was realistically going to provide the service. But the only competition for this money are companies with a poor track records and that are notoriously bad.