SpaceX recently filed comments in the FCC’s open docket looking at the Universal Service Fund (USF) with a recommendation that the FCC should sunset the High-Cost Fund and eventually eliminate it. This is one of the four major components of USF, with an annual budget of $4.5 billion.

SpaceX argues that Starlink has now solved rural broadband connectivity issues with ubiquitous broadband available throughout the country. SpaceX argues that ongoing subsidy payments to support rural voice and broadband networks are no longer needed.

To put the SpaceX comments into perspective, let me start by reviewing the stated goals of the High Cost Fund:

• Preserve and advance universal availability of voice service.
• Drive universal availability of modern networks capable of providing voice and broadband service to homes, businesses, and community anchor institutions.
• Drive universal availability of modern networks capable of providing advanced mobile voice and broadband service.
• Ensure that rates for broadband and voice services are reasonably comparable in all regions of the nation.
• Contain administrative costs and minimize the universal service contribution for consumers and businesses through efficient, effective program management.

The High-Cost Fund is the home to a multitude of different subsidy programs:

• It’s the home of six different Connect America (ACAM) funding mechanisms.
• This fund is still making the annual subsidy payments for RDOF, which were spread over ten years.
• The fund has separate funds to support Alaska, Puerto Rico, and the US Virgin Islands.
• The fund includes the Mobility Fund that pays subsidies to cellular carriers that operate in very rural markets.
• There are also legacy funds that provide subsidies to regulated telcos operating in high-cost markets.

SpaceX’s recommendation to sunset the various programs refers to the fact that many of the subsidy programs will expire if not renewed. For example, RDOF payments end after the tenth year of payments.

This is not a surprising recommendation. SpaceX and Starlink have been claiming in other forums that satellite broadband technology has solved the universal service problem and that everybody in the U.S. now has access to broadband. That’s been a problematic argument to some extent, since Ookla has been reporting a lot of Starlink speed tests below the FCC’s definition of broadband of 100/20 Mbps. Ookla reported earlier this year that average Starlink speeds had exceeded the 100 Mbps download test and recently reported that Starlink is close to meeting the uplink speed threshold.

However, there is still one troubling aspect of declaring Starlink to be a universal solution everywhere, which is the affordability issue. It’s hard to argue that a product priced at $120 per month, and which requires the purchase of the receiver, is affordable for low-income households. However, there has been no federal effort to define an affordable broadband rate. In the early days of BEAD, before the Benefit of the Bargain changes, various State Broadband Offices around the country were considering a definition of affordable rates between $30 and $50.

There has been a lot of criticism of some of the High-Cost Fund programs over the years. I wrote many times about the ludicrous billions of dollars paid to the largest telcos in the CAF II program that required that rural broadband speeds be increased to 10/1 Mbps – with payments that started months before the FCC raised the definition of broadband to 25/3 Mbps. But there has also been a lot of demonstrable benefits from some of the programs. You don’t have to look much further than the fiber networks built by numerous rural electric cooperatives that were jump-started with the RDOF subsidy.