GOP Wants Musk’s Starlink to Get a Cut of $42 Billion Biden Internet Plan

(Bloomberg) — When President Joe Biden put $42 billion behind making high-speed internet accessible across the US, he committed to doing it the old-fashioned way – with miles upon miles of fiber-optic lines.

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That frustrated Elon Musk, who said his Starlink satellite-internet business could get rural areas online faster, at lower cost. Biden’s decision helped drive a wedge between the Democratic president and the world’s richest person, who later used his wealth to help return Donald Trump to the White House.

Now, some Republicans want to open the floodgates for Starlink to compete with fiber, potentially shifting billions to Musk.

Starlink, owned by Musk’s SpaceX, has become a sought-after tool for linking disaster-wracked corners of the world to the web. Thousands of its terminals, each about the size of a pizza box, have been put to work in the flood-soaked hills of western North Carolina, the battlefields of Ukraine and in wildfire-scorched Los Angeles.

While fiber can offer faster connections and is highly durable, it can take years to install at scale. Critics say satellite and 5G wireless networks can expand web service to remote areas with fewer delays and less ground-based infrastructure.

The Broadband Equity and Access Deployment Program, passed in 2021 as part of a bipartisan infrastructure package, has drawn fire from Republicans who say it hasn’t connected consumers quickly enough. Lawmakers like Senate Commerce Committee Chairman Ted Cruz have decried the plan’s labor and climate regulations and what they see as an “extreme bias” against newer technology.

“It blocked innovative and simpler wireless and satellite options, burdened taxpayers with billions in waste, and prioritized bureaucratic mandates over results,” said Cruz. SpaceX opened a factory in 2023 in Bastrop, Texas, that company officials say can make millions of Starlink terminals each year.

“During recent Hurricanes Helene and Milton, Starlink showed how satellite internet could swiftly reconnect stranded communities — proving the need for alternate technologies,” Cruz said.

SpaceX officials did not respond to a request for comment.

Newly minted Majority Leader John Thune of South Dakota has also demanded an overhaul of the BEAD program, complaining that no providers in his state could meet its requirements. Thune has said the program is one example of the Biden administration’s failure to spend money appropriated by Congress efficiently.

Trump Commerce Secretary Howard Lutnick vowed in his confirmation hearing last month to make the initiative more efficient, and hinted at a greater role for Starlink.

“Let’s do it swiftly,” Lutnick said. “Let’s use satellites, let’s use wireless, and let’s use fiber, and let’s do it the cheapest, most efficiently we can.”

Wary Republicans

Trump has nominated Arielle Roth, a top Cruz aide, to run the National Telecommunications and Information Administration, the Commerce Department branch that is running the broadband buildout. Roth decried Biden’s pro-fiber bias at a Federalist Society event last year.

“We shouldn’t be straying from the guiding principle of technology neutrality that’s increased competition and choices and reduced prices for American consumers,” she said.

Some GOP lawmakers fear that shifting away from fiber will only slow things down. Three states have had plans for spending BEAD money approved, including House Speaker Mike Johnson’s home state of Louisiana, as well as Delaware and Nevada.

Alaska Republican Senator Dan Sullivan urged Lutnick not to force his state, which is slated to receive more than $1 billion, to go with Starlink everywhere, warning that its coverage isn’t yet as reliable. Shelley Moore Capito of West Virginia, a member of the Senate GOP leadership, told Lutnick she doesn’t want to see her state’s $1.2 billion plan slowed down to meet yet another set of new regulations.

“I DO NOT want West Virginia’s three years of hard work to be wasted,” she wrote.

Starlink and other satellite providers, like Amazon’s Project Kuiper, are generally only allowed to compete to provide access if the cost of installing fiber exceeds a certain cost per location set by states. Louisiana set its threshold at $100,000.

Some observers say that bar should be much lower. The Information Technology and Innovation Foundation, a think tank, said in a paper last month that states could provide cheaper service in many locations with Starlink. The authors suggested setting the cost threshold at no more than $1,200 per location.

As calls for Starlink grow, fiber-broadband providers who pushed Biden to adopt a “fiber first” approach are sure to lobby to protect their piece of the $42 billion pie.

“Fiber is the only infrastructure that makes economic sense, both in terms of cost and potential,” said Gary Bolton, the president and CEO of the Fiber Broadband Association.

It’s relatively inexpensive to connect users to satellite Internet, but the monthly bills can add up. The average household’s broadband bill is $89 a month, according to a US News & World Report survey last year, while standard Starlink service starts at $120 a month (rural residents might be eligible for discounts).

Biden Rift

Musk has tried for years to convince the US government that Starlink, founded in 2015, could quickly and economically connect less-developed areas that have been harder to reach with wired broadband. But his campaign has met with resistance from regulators.

In 2022, the Federal Communications Commission reversed an $885 million subsidy grant to Starlink to provide rural web service, saying the company failed to show it could deliver on its promises. The move angered Musk, who became increasingly vocal in his criticism of the Biden administration.

Last year, as the election loomed, Musk, who had long voted for Democrats, was still fuming. After Hurricane Helene swept through the southeastern US, laying waste to communications networks and other infrastructure, he slammed the FCC’s reversal.

“Had the FCC not illegally revoked the SpaceX Starlink award, it would probably have saved lives in North Carolina,” he posted on X. Starlink terminals were sent to the region by FEMA and SpaceX, with Trump claiming credit.

Trump told podcaster Joe Rogan before the election that Musk could have provided broadband “for almost nothing,” while Biden planned to install fiber “right up to upstate areas where you have, like, two farms.”

Musk has meanwhile continued to press his case. On Jan. 29, he posted on X that Starlink could provide service to the Pine Ridge Indian Reservation in South Dakota for about 90% less than the nearly $55 million in grants awarded to the local tribe’s broadband utility.

As the head of the DOGE cost-cutting drive, Musk has set a goal of slashing federal spending by $1 trillion in the year starting Oct. 1. But some Democratic lawmakers have said it is likely Musk’s business goals will come into conflict with the public interest.

Broadband subsidies are one of many government programs that benefit Musk’s companies. Tesla Inc. has gained from billions in electric vehicle incentives, and SpaceX holds billions in contracts with the Pentagon and NASA.

“It’s a huge conflict of interest,” said Senator Elizabeth Warren, the Massachusetts Democrat, in an interview. “Elon Musk is in the middle of decision-making for the White House, when he stands to profit personally from one decision after another that is being made.”

–With assistance from Loren Grush.