Satellite-Broadband Service Is the Best Way to Get Internet Access to Rural America

Commentary

Satellite-Broadband Service Is the Best Way to Get Internet Access to Rural America

Throwing billions of taxpayers' dollars at rural broadband projects is not the answer to the digital divide.

Rural broadband seems to be a category of infrastructure that members of Congress want to include in any future stimulus or infrastructure bill. Rural members from both political parties have also sponsored stand-alone bills to put billions of federal taxpayer dollars into projects intended to bring high-speed internet to their constituents. 

One of the more-modest bills in Congress—the Serving Rural America Act—would offer $500 million in subsidies over five years. The Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act), which was passed by House Democrats in May, included $5.5 billion for rural broadband. And there is bipartisan support for a Rural Broadband Acceleration Act, which would speed up spending from the Federal Communications Commission’s existing $20.4 billion Rural Digital Opportunity Fund (RDOF)

It is sad but true that a digital divide does exist between urban America and parts of rural America. It’s expensive to install fiber optic cable in places where homes and businesses are far apart. Telecom companies are businesses and will look at the costs and benefits of potential internet projects. They can’t be expected to choose projects that would cause large financial losses and where revenues would be few and far between. But throwing billions of taxpayers’ dollars at this issue is not the only way to bring broadband to rural Americans.

Untold millions of people in India, the Middle East, and Africa have received some access to the internet in recent years—in places where laying fiber would also be too costly. The service is provided to people’s inexpensive cell phones by an array of companies that have changed the lives of people who previously didn’t have access to the internet.

Which brings me to SpaceX, the innovative space launch company whose reusable Falcon rockets have slashed the cost of lofting satellites, cargo, and people into space. Twice this month, SpaceX launched large batches of its Starlink satellites into orbit. These were the 10th and 11th Starlink launches since last year, bringing the constellation to 658, thus far. The company’s near-term goal is to have nearly 1,600 in operation by 2021-22, offering broadband internet service to rural customers worldwide. It has received licensing permission from the FCC for up to 12,000 such satellites, eventually.

Space-based broadband is another transformative technology moving beyond the limited internet access now available in Africa and India. And it is not just SpaceX’s idea. An early competitor is OneWeb, whose initial goal is a 648-satellite constellation, with 74 already in orbit. (OneWeb is currently in reorganization but looks likely to survive.) Even more formidable is Amazon’s recently announced plan to compete in this market. The Wall Street Journal puts its planned investment at $10 billion for a 3,200-satellite network called Project Kuiper.

Can these companies actually deliver affordable broadband internet access to the world’s rural customers?

That remains to be seen, but the business model is analogous to that of the cell phone companies now blanketing Africa and India with affordable internet access. The initial costs are large but mostly fixed. The variable operating costs are low, so revenue depends primarily on very large numbers of customers worldwide, which should permit affordable prices. And that is more likely if there are competing providers, including Elon Musk’s Starlink and Jeff Bezos’ Project Kuiper.

And satellite broadband will be at least as good as what the FCC is currently subsidizing on the ground. ArsTechnica reported on leaked test data from Starlink that exceeds the performance required under FCC’s RDOF rural subsidy program:

Beta users of SpaceX’s Starlink satellite-broadband service are getting download speeds ranging from 11Mbps to 60Mbps, according to tests conducted using Ookla’s speedtest.net tool. Speed tests showed upload speeds ranging from 5Mbps to 18Mbps.

The idea that federal taxpayers should massively subsidize ground-based rural internet when entrepreneurs are spending billions on space-based systems that will likely be operational years or decades before government-subsidized systems would get built is misguided. It reminds me of what’s going on in space launch itself. Despite the fact that SpaceX’s innovative approach has cut the cost per pound of getting things into orbit by about two-thirds, powerful members of Congress continue to fund NASA’s massively overbudget Space Launch System. Its design is deliberately old-tech; it uses left-over engines from the Space Shuttle Program and is not reusable.

Cooler heads in Congress should resist the temptation to make the same mistake again with rural broadband.

Robert Poole is director of transportation policy and Searle Freedom Trust Transportation Fellow at Reason Foundation.