Chris Scharrer: Why Would SpaceX Need $20B from BEAD? (2025)

While watching the confirmation hearing for Arielle Roth to become the next head of the NTIA, the most fascinating thing I heard was a remark by Senator Ted Cruz. He said, “If Elon Musk had decided to be a ginormous Democratic donor, I have no doubt that the Biden administration would have pulled out a piñata and celebrated Starlink providing broadband.”

Is this rhetorical, or would he have agreed with Biden? But since Elon Musk was, instead, a “ginormous” donor to the current administration, it sounds like Mr. Cruz is saying that his party is pulling out the piñata instead.

Regardless of whoever might be thinking a piñata would be appropriate here, Starlink is an incomparable short-term technology that is being suggested for an issue that has as much, if not more importance, than the Rural Electrification Act had in 1936! This is not an issue that should be made based on “ginormous” donations. This is America's Future!

By now, most everyone is aware of the statement issued by U.S. Secretary of Commerce Howard Lutnick. Mr. Lutnick plans to “revamp” BEAD and take a “tech-neutral” approach. What does “revamping” really mean?

BEAD is already tech-neutral, just with a priority on Fiber-to-the-Home. The States know this. One example: Nevada obviously understands this. The state that claims to have the most “Next Gas Station in 100 Miles” signs has plans to use up to 9% of their BEAD funding on Starlink or other wireless options.

By using practical planning, Nevada is still getting 80% of the state done with FTTH, and 11% with Hybrid Fiber Coax. The states know what they need and are planning accordingly.

Starlink could be a practical short-term stopgap to get more locations online now, but it cannot replace the long-term economic, performance and reliability benefits fiber provides. And there is probably room in BEAD to get the benefits of both.

Fiber will never have the maintenance or upgrade costs of a satellite network

I know firsthand BEAD can be better, probably much better. But first, the talk about deprioritizing a potentially 100-year fiber infrastructure plan with technology that will need replacing every five years would end up costing exponentially more than today’s entire BEAD fund.

Fiber provides a microscopic glass superhighway that cannot possibly be outgrown within the century it is likely to last. And fiber will never have the maintenance or upgrade costs of a satellite network. There is no way to compare any wireless technology today with the long-term capacity, reliability and lifecycle economic benefits of fiber. These are categories beyond apples and oranges.

I understand why the new administration wants to speed up Broadband Deployment across the country. And it makes sense to leverage what we have available today. Starlink can get immediate acceptable connectivity to a lot of locations. It’s the one advantage Starlink has. Their network is up and running, and available now, everywhere in the world. But still, even in optimum conditions, it performs at a fraction of what fiber provides today, and it is still not going to work inside our nation’s forests or deep valleys. It is a five-year proposal for some of the millions of unserved homes remaining in our country.

How could we leverage Starlink today, and still keep fiber as the priority?

The most recent tallies for BEAD were estimated in 2024 to be around 6.4M unserved homes. Hypothetically, let’s consider that we use Starlink for 6.4M installations. What should that cost? The Wall Street Journal reported that “Musk’s SpaceX, could receive $10 billion to $20 billion” with “Lutnick’s overhaul.” Based on what?

The current cost for a residential ground mount installation kit for Starlink is $349. Add $199 for a roof mount. At $548, 6.4 million kits would cost the BEAD program $3.5B. That’s $3.5B out of $43.5B to get every single “un- or underserved” home waiting on BEAD, a Starlink system. A good temporary solution while they build fiber.

That’s not a terrible idea. The State of Maine has introduced a plan to buy 9,000 Starlink systems, out of their own pocket. People can get online now, while the state continues plans with BEAD, to build fiber to the more than 28,800 unserved homes in Maine, including those that get Starlink under this program. Brilliant!

To be clear, BEADs debatable $6,500 per home passed is for building a potentially 100-year infrastructure once; and then the government is out, the ISPs take it from there. Starlink is projected to be completely re-built at least 20 times within that same timeframe and will never have the same reliability or performance levels.

Also, for an ISP to get BEAD funding, they have to cough up 30% to 50% in matching funds based on their total construction costs of building new fiber infrastructure. The only new component to the Starlink idea is the home “pizza box” installs. The Starlink network is existing.

There is no provision in BEAD for ISPs to get reimbursed for existing infrastructure, which should apply to Starlink as well.

Also, this hypothetical Starlink model, $3.5B for 6.4M installs, is retail pricing, no Starlink contribution in this formula. So, again, what is in the three-to-six-fold estimates ($10B to $20B) over the retail cost of 6.4M Starlink installs? The State of Maine plan validates the retail pricing plan with their $5.4M budget for 9000 installs, and they are not using BEAD money to do it.

Where would the additional funding go if the Wall Street Journal BEAD estimates prove correct? We need to start by looking at another example of LEO technology being supported by the United States.

The U.S. government is Iridium’s largest consumer

Motorola started launching the first “Iridium” LEO satellites in 1997 with the promise of a new era of global “tele-communication” services anywhere on the planet. Two years, and 20 rocket launches later, Iridium filed for bankruptcy (while they were a private company). Sixteen months after the Chapter 11 filing, in December of 2000, Iridium is reorganized and lands a $75M contract with the U.S. Department of Defense that saved the Iridium project (emphasis on U.S. DOD saved the Iridium project).

Today, the U.S. Government is still Iridium’s single largest customer, representing a little over 17% of their total service revenue, mostly still the U.S. Department of Defense. Starlink is positioned to upgrade much of what Iridium provides today. Is that where BEAD might be going?

SpaceX spends $89.6M to put 27 satellites into orbit at a time

About the time Iridium completed launching their second-generation network, Space Explorations Technologies Corp, aka SpaceX, aka Starlink (also a private company), began a much more aggressive LEO launch program. SpaceX has launched more than 8,000 Starlink satellites since 2019, with about 7,000 successfully put into orbit. However, the plan is to build a Starlink network of 42,000 satellites, which, at this rate, is over 30 years away.

As recently reported by Space.Com, the life expectancy of Starlink satellites is 5 years. With a goal of 42,000 satellites, they would need to continuously replace 8,400 satellites annually, to keep the network maintained.

Today, each SpaceX launch carries ~ 30 new Starlink satellites into orbit, at a reported cost of $67M per launch. Add the cost of the payload, approximately 27-30 Starlink Satellites (the Starlink gen 2A satellite is about $800k each, but a third-generation satellite being tested may increase those costs by 50%). A ($67M) Falcon 9 rocket launch, with 27 gen2A satellites ($21.6M), is $89.6M to put 27 satellites into orbit.

In 2024, SpaceX launched 89 Falcon 9 missions for the Starlink network. That would add up to about $8B. Is this where BEAD might be heading?

The United States is <2% of Starlink’s coverage area

I’m sure some are thinking, yea, but all these numbers are for a “global” network, not just the United States. The cost would be spread across all countries, right?

Great point, and the most perplexing part of this whole puzzle. On average, each satellite in Starlink's network will spend less than 2% percent of its time flying over the United States. LEO Satellites do not orbit the earth in one spot, focused full time on individual countries like GEO satellites.

They take about 90 minutes to travel about 34,000 miles to circumnavigate the entire globe, all following their own paths, each providing internet connectivity over the United States for less than 2 minutes an hour. A one-hour Zoom call on Starlink would bounce off hundreds of satellites during a single call. That is why you need thousands of satellites with nanosecond responsiveness to keep coverage available at all times.

But many countries don’t allow Starlink. The satellites (or ground terminals) are programmed to only work in countries where they are allowed, or licensed. However, they are there, flying about 342 miles above every country on the planet, waiting for approval, and a few keystrokes from the Starlink Command Center in Redmond, Washington. But do these agreements with these other countries include billions of dollars beyond just the $600 cost of a Starlink installation? It doesn’t look that way.

On the contrary, some countries are actually getting revenue through licensing fees, others through revenue sharing from Starlink. In Bangladesh, Starlink has applied to the Bangladesh Telecommunication Regulatory Commission (BTRC) for a license to operate in the country. But Starlink will have to pay a license fee, plus it may be required to share 3 percent of gross revenue from the third to the fifth year, and 5.5 percent from the sixth year onward. Is the U.S. financing a global network for others to earn revenue on? Why doesn’t the U.S. get revenue rather than pay retail for 6.4M installs and possibly throw in an extra $16.5B while they are at it?

According to Statista, Starlink now operates in over 125 countries, and except for the case of the Ukraine, and some government contracts, you will be hard pressed to find any country offering up billions of dollars for anything other than what the consumers spend on installs and services.

European countries do not restrict Starlink, but the EU is building their own LEO/MEO network called IRIS², which will provide broadband connectivity for governmental authorities, private companies and European citizens. It’s expected to be operational by 2030.

So, is Starlink becoming the U.S. network that will be available to anyone that wants it, and even make revenue from it? Is that what $20B is going to seed? If that is the case, then it is just seed money for now, that will likely lead to opening a cash spigot.

Starlink should play a bigger role in BEAD, but as an alternative to fiber

The idea of Starlink playing a bigger role in BEAD is fine. But it should remain an alternative to fiber, where fiber is simply not feasible. And the states know where that applies.

We do know BEAD can be better, and I believe there is room to restructure the funding, and requirements to be more efficient, making room for more “tech-neutral” participation. Consider this:

Texas has offered to give back $1B in BEAD, that could buy more than 1.6 million Starlink installs, a good head start. We should also look at the original BEAD allocation that was based on nearly 8.2B unserved locations. The latest estimate, after challenges and other reconciliations, is now about 6.4M unserved locations (an exact account today doesn’t appear to be available). 1.8M locations seem to have been picked up possibly through other programs? But other than Texas, I haven’t heard any other concessions being offered.

Let the states decide what makes sense in their respective states. But do not take the priority away from getting the fiber every place we can reasonably reach, so that we are prepared now for generations to come. It’s what we did with Rural Electrification Administration for electricity, then again for telephone. Reaching both short and long-term goals is manageable. Both sides just need to be whacking at the same piñata!

In 2008, Chris Scharrer founded DCS Technology Design to bring excellence in Telecommunication Infrastructure Design for all types of intelligent building and smart community applications. With Covid, and in response to the lack of reliable and trusted ISP service area maps, DCS refocused its mission to develop methodologies that produce highly accurate Rural Broadband accessibility data, and helping Michigan municipalities locate thousands of homes and businesses that do not have access to Broadband and qualifying them for needed grant funding. This customized version of this Expert Opinion is exclusive to Broadband Breakfast.

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