Tag Archives: StarLink

A Peek at the New BEAD

The State of Tennessee released a side-by-side comparison of the new Benefit of the Bargain round of BEAD applications compared to its initial round of BEAD applications conducted before the revised BEAD rules.

The side-by-side comparison (file:///C:/A/Articles/Tennessee-BEAD-Comparison.pdf) is interesting and shows some big differences between the two grant rounds:

  • Tennessee received 541 applications in the new Benefit of the Bargain round compared to 298 applications in the original round of BEAD.
  • The low-orbit satellite companies Starlink and Kuiper bid throughout the state. Starlink didn’t submit any applications in the first round but bid almost everywhere in the new BEAD round. Kuiper bid for most of the state in both BEAD rounds. Satellite is clearly going to win a significant amount of grant funding since there were 68 of 173 serving areas that got proposals from one or both satellite providers and no other technology. The satellite companies surprisingly don’t seem to be fazed by bidding in Appalachia.
  • There were surprisingly few proposals for fixed wireless technology, with proposals only made in 12 of the 173 study areas included in the new round of BEAD. Part of the reason for this might be the mountainous and hilly nature of much of Tennessee, but there are plenty of areas in the central and western parts of the state where wireless will work well.
  • Comcast switched technology from the first to the second round. In the first round, the company proposed to build fiber, and in the new round it mostly changed to traditional hybrid fiber/coaxial networks – apparently to be able to bid at a lower cost. This makes me wonder if it’s really cheaper to build copper coaxial cables than fiber or if Comcast is just willing to take less funding.
  • There has always been a big question of whether big ISPs would show up for BEAD. There are three big companies in the new round of BEAD – AT&T, Comcast, and Windstream. The industry has always wondered if AT&T would join BEAD.
  • There are a number of smaller ISPs asking for funding to build fiber that includes cooperatives and municipalities.
  • There are four service areas that had no proposals. The state will have to talk an ISP into serving these areas before they can close out their BEAD grants.

It’s impossible to make any definitive cost comparisons between applicants because the new BEAD rules allow ISPs to request to serve areas smaller than the serving areas suggested by the state. There are also roughly 7,000 fewer passings on the newest BEAD map than were included in the initial BEAD grants. But in general, the comparison shows:

  • Most companies proposing to build fiber bid less the second time, but some of this could be due to fewer eligible passings and not just to a sharpening of the pencil.
  • Fiber ISPs across the country are wondering how much lower other technologies will bid in BEAD. There is only a single company asking to build wireless in the state, and their proposed grant awards are roughly one-third the cost of those asking for fiber in the same study areas. But without knowing more details, that ratio might not mean anything for other states.
  • However, satellite bids are incredibly low, most at 10% or less than proposals to build fiber. There is a map showing the eligible passings by study area, and I eyeball the satellite bids to be in the range of $400- $600 per passing. Kuiper is generally significantly lower than Starlink. These low bids are going to worry ISPs everywhere.

 

Broadband and Rural Real Estate

Over the last decade, I’ve heard from dozens of real estate agents who work in rural America. They universally tell me that it’s gotten exceedingly hard to sell rural homes that don’t have good broadband.

I’ve also written a few blogs over the years about people who moved to a rural home and were shocked to find they couldn’t buy broadband. They probably moved from a place where broadband is ubiquitously available, and they never imagined that there were places without broadband. The most famous such story in my neck of the woods involves Brian Rathbone, who owns the broadband consulting company Broadband Catalyst. When he found his new home didn’t have fiber, he undertook nearly a decade-long effort to get it, including building the fiber to reach from the road to his remote home.

The Brattle Group released a study late last year that concluded that bringing fiber to a home might add as much as 14% to the value of the home. They undertook the study by comparing the prices for homes in 2023 that didn’t have fiber to prices in the same neighborhoods in 2024 after getting fiber. This was a time period with some significant inflation, so the increase can’t be attributed entirely to fiber, but there is no doubt that getting fiber added significant value to homes. Over the last decade, I recall estimates made by others that estimated the increase in home value for getting fiber of 6% to 8%.

The value of bringing fiber to a rural home has to be greater than for an urban home. How do you quantify the value of adding fiber to a rural home if it suddenly makes the home marketable? In my mind, a house that is put up for sale and gets no offers can be said to have no value. Some rural real estate agents have told me stories of homes without broadband that sat vacant for years after the owners left the home for some reason.

Of course, fiber isn’t the only form of rural broadband. When real estate agents talk about homes without broadband, they include homes served by rural DSL, cellular hotspots, or high orbit satellite broadband. In rural areas, I’ve run across numerous residents who tried and abandoned each of these options as inadequate and not worth the cost.

The rural broadband landscape has gotten more complicated in recent years. For example, most counties now have a few cell towers that provide FWA home cellular broadband. But the coverage areas for decent broadband from towers are small, perhaps two miles, and in the counties I’ve examined, FWA typically covers 20% or less of the area.

WISPs have been stepping up their game in many markets with new radios and better backhaul. It wasn’t unusual three or four years ago to find counties where all WISP customers saw speeds of 10 Mbps or slower. WISPs are often now delivering much faster speeds in these same places.

The big wildcard is Starlink. There are rural customers who rave about it, particularly those for whom Starlink brought the first really workable broadband. But I’ve talked to Starlink customers who complain that the quality of broadband varies throughout the day, making it a challenge to work from home. Many people moving from a cable company or fiber connection are likely to be skeptical of satellite broadband.

Of course, the advantages of bringing better broadband to rural homes go far beyond just the value added to the real estate. The counties I know that have worked hard to get better broadband have several other major goals. They understand the boost to the local economy when rural folks can make good incomes working from home. Counties are universally desperate to keep young residents from leaving the County to find jobs, and they hope that better broadband opens up local opportunities. Good broadband is also key to attracting retirees to move from cities. It’s nearly impossible to put a dollar value on these benefits.

BEAD and the Rural Public

The last two days I wrote about the impact of the changes to the BEAD program on County Governments and on State Broadband Offices. As important as those impacts are, the real impact from changing BEAD is on the public living in the rural areas that are covered by BEAD.

Let me start with BEAD eligibility. The new rules include a provision that wireless ISPs (WISPS) that claim speeds to the FCC of 100/20 Mbps using unlicensed spectrum can certify their capability to State Broadband Offices and have those areas removed from BEAD eligibility. That means people living in the removed areas will not be seeing a new broadband alternative. It doesn’t matter if the WISP actually has speed far slower than 100/20 Mbps. It doesn’t matter homes have a line-of-sight issue and can’t be served by the WISP. It doesn’t matter if the WISP wants to charge $100 a month for 25 Mbps service. NTIA will have declared that these areas are served and deserve no federal funding for broadband upgrades. My guess is that millions of homes will be removed from the BEAD map and will be declared as already being served – which will be a huge surprise to the people living in these areas.

The biggest change in the new BEAD rules is that there will be a lot less fiber built with BEAD funds. Various States have been expecting anywhere from 60% to 95% of BEAD funding to go to build fiber. The revised rules will eliminate most of that fiber. BEAD grants will now be awarded to the ISP that asks for the lowest amount of funding for each location. Satellite and fixed wireless providers can easily underbid fiber ISPs if they want to serve a given market. This is going to save the federal government a lot of money, and a large portion of the $42.5 billion allocated to BEAD will not be spent.

Households in BEAD areas are likely to see BEAD money going to a WISP or Starlink – and on paper, that will be their fast ISP option. To be fair, WISPs who install the latest radios might deliver speeds up to 500 Mbps to many customers. But because of the line-of-sight issues with fixed wireless, some homes won’t be able to get service at all. But BEAD winners will not have to spend the extra money for the newest radios – technology capable of 100/20 Mbps is considered to be okay.

Unless they change their pricing philosophy, some WISPs have very high prices. Where fiber providers who won BEAD were likely going to charge $70 per month, some of the WISPs are already charging more than $100 for slower speeds. Starlink is already expensive – the company now has an $80 product in some markets, but its normal price is $120 per month.

Rural residents already feel like they’ve been jerked around for years. The FCC held a reverse auction for RDOF in 2010, and many of the networks promised by that funding are still not built – and might not be for 3 more years. Somebody promised a new solution from a BEAD grant might not see a solution until 2029. Many rural residents who have been told they have faster broadband coming are so cynical that they’ve stopped believing anything they hear about broadband. Certainly, many who have been told for the last few years that BEAD was going to bring them fiber are now going to be disappointed again.

I could write a dozen blogs about what good broadband meets for rural households – and I’ve written about this often over the years. Good broadband means kids can do homework and not have to sit in the parking lot of a library in the evening to do school work. Good broadband means rural residents can find online work that pays better than jobs available in their rural county. Good rural broadband means farmers can participate in the latest technology. Good broadband means houses for sale that somebody is willing to buy.

I’m picturing a resident who is told later this year that the federal government and their State Broadband Office is making a grant to Starlink to bring them faster broadband. They’ve already been able to buy Starlink for several years. They might already have rejected it for being too expensive. They might have already tried it and rejected it because of interference with trees or hills. If they’ve already heard through local politicians that better broadband is coming, can they conclude anything other than the government at all levels has screwed them on broadband while handing money to a company that doesn’t need it?

The consensus has been that BEAD was going to bring fiber to thousands of counties. Unless public pressure reverses some or all of the NTIA Notice, there will be many millions of rural homes after BEAD that still won’t have adequate broadband. I guess this means that States and local governments will have to regroup and get back to tackling the rural broadband gap  a little bit at a time.

Related Blogs

Updating My BEAD Bingo Card

County Governments and BEAD

BEAD and State Broadband Offices

Project Kuiper Finally Here

After several delays due to bad weather, Amazon’s Project Kuiper finally launched its first batch of low-orbit broadband satellites on April 28. The company says it is in communication with all 27 new satellites. Amazon used a United Launch Alliance (ULA) Atlas V rocket launched from Cape Canaveral.

Amazon is under pressure to get the launches going and has a commitment to the FCC to launch 1,618 satellites by July 2026. That’s half of Project Kuiper’s first satellite fleet of 3,232 satellites. The company has seven more scheduled launches using the Atlas V rocket, 38 launches scheduled for ULA’s larger Vulcan Centaur rocket, and 30 launches scheduled on Arianespace, Blue Origin, and SpaceX.

The company’s name refers to the Kuiper Belt, a region of the solar system that exists beyond the eight major planets. The Kuiper Belt is named after the late Dutch astronomer Gerard Kuiper, one of the fathers of modern planetary science.

Project Kuiper’s stated mission is to provide fast, affordable broadband to communities around the world that are unserved or underserved with broadband. The company says it will offer three sizes of customer terminals that will support three tiers of service at 100 Mbps, 400 Mbps, and 1 gigabit. No prices have been announced yet for the receivers. The industry is waiting to find out what Amazon means by affordable broadband. It will be interesting if Project Kuiper significantly undercuts the prices charged by Starlink.

Project Kuiper is currently part of the Devices and Services division of Amazon that is also the home for devices like the Kindle, Echo, Fire TV, eero, Ring, and others. The company is headquartered in Redwood, Washington, and the satellites are manufactured at nearby Kirkland, Washington. Amazon claims the factory will be able to crank out five new satellites per day.

Launching a satellite fleet isn’t just about satellites, and the company is building earth stations around the world to communicate with the satellites as well as sites that can track the telemetry and keep satellites operating in the right orbits.

The satellites will be parked in a narrow band between 590 and 630 kilometers (367 and 392 miles) above Earth.

It’s going to be interesting to see what a second major LEO satellite provider means for the U.S. broadband market. There is a movement currently underway to divert more of the $42.5 billion in BEAD grants to LEO satellites. It will be interesting to see how much of that might go to untested Project Kuiper.

There have been no announcements when Project Kuiper would begin offering service. Starlink began a beta test service in the U.S. in July 2020 when the company had 595 satellites. Starlink has 1,260 satellites when it began retail broadband service in early 2021.

Technology Equality

There was an article published last week by Dr. Christopher Ali in Tech Policy.Press that asks if we should be making widespread broadband grants to Starlink and other low-orbit satellite technologies. Dr. Ali is Professor of Telecommunications in the Bellisario College of Communications at Penn State.

I highly recommend reading his paper. I was particularly taken by his conclusion. He says, “There is an important difference between technological neutrality and technological equality. LEO and fiber are not equal, and any policy that treats them as such will widen the very divide we have spent decades trying to bridge.”

I have been making this same observation about almost every grant program in the last decade, but just not as eloquently as Ali. As Ali points out, his comments are not a criticism of Starlink. Like him, I’ve talked to dozens of rural folks who absolutely rave about Starlink. For rural households, finally getting access to working broadband twenty years after the rest of the country has been a revelation. They can finally work at home, join Teams calls, and take online classes – things that the vast majority of Americans take for granted. Starlink should absolutely be a part of BEAD to reach remote locations, but should it be deployed to other locations?

Ali’s real issue is with the folks who set grant rules. Consider BEAD. The rules were established in 2020, and grants were not expected then to be finally completed until the end of 2028. Consider how much broadband has changed in the country just between 2020 and 2025.

  • In 2020, Ookla said the median broadband speed in the country was 86 Mbps download and 12 Mbps upload. In March of this year, Ookla says that median broadband speeds in the country has increased to 287 Mbps download and 53 Mbps upload.
  • In the second quarter of 2020, OpenVault said the average U.S. household used 359 gigabytes per month of download data and 25 gigabytes of upload data. OpenVault says at the end of 2024 that consumption had grown to 652 gigabytes of download and 46 gigabytes of upload.

The policy folks who set the BEAD rules set the broadband target performance for BEAD just a hair above the national average broadband performance in 2020. We’re only half way to the completion of BEAD grant construction and the country has already more than doubled the 2020 national broadband speeds and consumption. It’s not a stretch to predict that by 2028 the average U.S. home will be consuming more than a terabyte of data each month.

If the authors of the BEAD grant rules had looked just a decade forward, they would have set the BEAD performance standard to something like 400/100 Mbps. It doesn’t seem like a big policy stretch to think that valuable grant money ought to build networks that match the average market performance when they are completed. As Ali mentions, the biggest issue with LEO satellites isn’t even speeds, but capacity. Will the LEO companies be able to provide broadband to the many millions of households who will have no other broadband options?

It’s obvious why the folks in Congress picked wimpy BEAD standards. They are politicians and were under tremendous pressure from ISPs to not be excluded from BEAD dollars – and even under more pressure to not declare cable company networks as underserved. I remember the furor from cable companies in 2020 that lobbied hard against the BEAD upload speed requirement of 20 Mbps. That was because, at that time, most of them had upload speeds closer to 10 Mbps. It’s amazing what only five years of market pressure has done, and cable companies are upgrading urban upload speeds to 100+ Mbps with quick mid-split upgrades and have plans to get to gigabit upload speeds with DOCSIS 4.0.

WISPs didn’t have the same market power as cable companies in 2020, but they fought hard to make sure that the requirement for BEAD didn’t climb above 100 Mbps. But after only five years, they got access to a lot of new spectrum and can buy gear that will deliver 500 Mbps or faster broadband.

As ALI points out, LEO technology barely meets the 2020 definition of broadband that was codified in BEAD, and it is not a forward-looking technology – it is not equal to fiber or even to fixed wireless. And yet, the NTIA is doing mental gymnastics using an argument about technology neutrality to give more money to satellite technology. Perhaps the critics of satellite technology will be proven wrong, and satellite providers will improve technology so that by 2028, they will be delivering forward-looking speeds and coverage. But if not, we’ll be making grant awards in 2025 to implement 2020 broadband.

Deprioritized Broadband

There is an interesting trend of ISPs selling broadband products that are not always guaranteed to be at the same speed and quality as other customers.

Throttling customer speeds is not new to the industry. Some of the companies that with long-time data caps throttle data to slow speeds after a customer reaches the monthly allowance of usage. Most such ISPs offer an alternative for customers to buy extra broadband to maintain their normal speeds. Some of the companies that have had this practice include the high-orbit satellite providers, cell carriers providing hotspot plans, and a handful of others. Many companies with data plans don’t throttle speeds and just automatically bill more for going over the data cap.

I’ve noted this practice again in recent years from the big FWA cellular providers that sell home broadband using cellular spectrum. AT&T, T-Mobile, and Verizon have all reserved the right to throttle customers any time that the network gets too busy. For example, from the terms from T-Mobile, “During network congestion, some T-Mobile internet customers might notice slower speeds, including Home Internet customers” Home Internet is the FWA home broadband product.

I’ve been able to observe examples of them doing this. I’ve seen speed tests from customers using FWA that have speeds over 200 Mbps during the year who occasionally get throttled down to just a few Mbps. I think these customers are surprised every time this happens and probably don’t understand or remember that the throttling is a part of the terms they agreed to.

It’s easy to understand why cellular companies would throttle home broadband customer first – they are protecting their cellular customers. I’m sure all of the FWA providers are happy with the new revenues coming from FWA, but T-Mobile is not going to let the home broadband for 6.4 million FWA customers threaten the experience of 130 cellular customers.

Starlink also throttles certain customers. One of the features of Starlink’s Away plan for campers and hikers is that Starlink reserves the right to throttle data usage if the network gets too busy. It’s also easy to understand this. As the RV products becomes more successful, it’s not hard to imagine a lot of campers coming together at the same location wanting to connect to Starlink. That traffic alone could overload a particular satellite, but Starlink is also shielding its customers who live in the same region and who are paying full price.

Starlink also reserves the right to throttle customers who buy its new ‘Residential Lite’ product for $80 per month. Rather than mention throttling, Starlink calls it deprioritization, “This service plan will be deprioritized compared to Residential service during peak hours. This means speeds may be slower for Residential Lite service relative to Residential service when our network has the most users online”. This term is at the top of the company’s advertising for the product, and they want customers who want the lower rate to recognize what comes with the plan. The company is making it clear that there are trade-offs for getting the lower price.

I’ve been thinking about all of these plans and net neutrality. One of the key features of the national net neutrality plan was that ISPs couldn’t engage in paid prioritization, meaning that a customer could not be charged more to be guaranteed a better connection.

It’s not clear to me that this practice violates that principle. In the case of the FWA products, every customer buying the FWA product runs the risk of having data throttled – there is no other class of customers with higher priority unless it’s cellphone customers. Starlink is a little different in that customers can save money by agreeing to possibly be throttled. Is having customers agree save money by being deprioritized the same as charging somebody else more to get a better priority?

It certainly doesn’t matter at the federal level since the Courts recently killed the appeal to the FCC’s net neutrality case – and the FCC would have killed net neutrality anyway if the Courts didn’t do it. It is a more germane question in California which adopted a state net neutrality plan that largely mimics the federal rules.

RDOF Defaults

The Benton Institute for Broadband & Society pieced together the statistics for defaults to date on the FCC’s RDOF and CAF II reverse auctions.

The RDOF (Rural Digital Opportunity Fund) was the biggest attempt at the time to solve the rural broadband gap. The FCC had originally slated $20.4 billion to award to ISPs in a reverse auction, meaning the ISP willing to take the smallest subsidy for a given area won the funding. Winners were to collect the funding over 10 years and had up to seven years to build the promised networks.

The program ran into problems in several dramatic ways. First, the FCC chose the areas eligible for RDOF using its badly flawed broadband maps. RDOF was supposed to be awarded to Census blocks where nobody could buy broadband of 25/3 Mbps or faster. Unfortunately, the FCC maps had huge numbers of blocks where ISPs claimed exactly 25/3 Mbps ability, and those areas were not eligible. The non-eligible eventually became most of what is being addressed now with BEAD, which indicates how poor the maps were at the time. In a problem that is still plaguing the BEAD process, the FCC made the funding available in what is best described as a checkerboard of eligible and non-eligible areas.

At the close of the BEAD auction, ISPs had claimed over $9.2 million in RDOF subsidies to serve over 5.2 million locations. Benton has assembled a spreadsheet that shows that 1.9 million of those locations and $3.3 billion were defaulted. The two biggest defaults came from FCC action. The FCC decided that Starlink broadband did not meet the speed goal of the plan, and the FCC canceled $852 million that was to cover 630,000 locations. The FCC canceled awards of $1.3 billion to cover 528,000 locations for LTD Broadband after the FCC decided the company didn’t have the financial and technical ability to fulfill its commitments.

The Benton spreadsheet shows 135 entities that defaulted on BEAD or the CAF II reverse auction. The reason for some of the defaults is obvious. Thirty ISPs won subsidies to build to less than 50 locations. It’s likely that most of them were trying to win larger areas and defaulted because the paperwork burden of complying with RDOF wasn’t worth the tiny amount of subsidy.

The other major reason for defaults is the amount of subsidy. The average award for the defaulted areas is $1,732 in RDOF subsidy per location, paid out over ten years. Starlink had asked for $1,353 per location. LTD Broadband won awards of $2,501 per location. The other awards average out to $1,503 per RDOF location. It’s not hard to imagine ISPS looking at the size of these awards and deciding they couldn’t make the math work – particularly after inflation ballooned due to the pandemic.

As Benton warns, the defaults may not be over. Most of the RDOF winners should have built 40% of their locations by the end of 2024. I’ve been working with a lot of Counties that haven’t seen any progress on RDOF and are wondering if the networks will ever be built. I hope Benton follows up by getting a tally, by State, of where RDOF has already been built. I would assume any ISP that isn’t meeting the 40% obligation is probably a good candidate for additional default.

This all sounds negative, but there have been networks built all over the country from the RDOF funding. Numerous electric cooperatives built networks more quickly than the FCC’s required timeline. Charter was a huge winner and says it is far ahead of schedule on RDOF. Yet risk of further defaults is alarming. I know there are a lot of rural folks who are counting on the remaining RDOF networks being built, because further defaults mean areas with no broadband solution.

Constraints on Satellite Broadband

In a 2024 end-of-year memo, Gary Bolton of the Fiber Broadband Association said that FBA had partnered with the consulting firm Cartesian to look at the pros and cons of Starlink in the U.S. FBA says that report shows that Starlink currently has 1.4 million customers in the U.S., and with the current satellite constellation has the capacity to serve 1.7 million customers.

FBA is a pro-fiber trade association, and as such, it probably takes the most pessimistic look at satellite capacity. The short summary I’ve seen of the Cartesian report says that satellite broadband has some natural limitations on capacity. The implied conclusion of the report is that Starlink can’t serve everybody in rural America.

Starlink has never claimed that ability or goal. However, since there are those advocating that most of the $42 billion BEAD grant award should go to satellite broadband, it’s fair to assess Starlink’s capacity.

Starlink currently has 6,957 working broadband satellites with the stated goal is to grow to 30,000 satellites. That would be a 430% increase, and if the FBA claimed limit of 1.7 million U.S. customers is right, that implies a future capacity of more than 7 million U.S. customers when the constellation is completed – which could be even higher if new satellites have more capacity than older ones.

One of the more important FBA claim is that Starlink has a limitation on the number of people that can be served in any geographic area. That seems to be true today as evidenced by reports that Starlink has quietly implemented waiting lists for service in some parts of the country, presumably due to local capacity.

Just as with any ISP, Starlink also has potential limitations due to backhaul. Starlink currently shows 64 working ground stations, with plans underway to complete 99. A ground station is where broadband traffic passes back and forth between satellites and the terrestrial Internet. Starlink can obviously build more ground stations in the future as needed.

Perhaps the biggest constraint on Starlink is getting the needed spectrum to communicate between satellites and ground stations. Roger Entner of Recon Analytics was quoted recently as saying that Starlink doesn’t have enough spectrum today and new spectrum doesn’t seem to be likely over the next several years. Anybody who follows filings at the FCC has seen numerous filings made by Starlink and cellular companies over the last five years arguing about the allocation of spectrum. A lot of the spectrum that Starlink needs is also currently being used by the military and other parts of the government. It seems likely that Starlink will eventually get the spectrum it needs, but spectrum fights have never been resolved quickly, and this will be a slow struggle.

I have to agree with FBA that Starlink isn’t prepared to handle everybody in rural America today – something I’m sure Starlink would acknowledge. The question that FBA is raising is if satellite capacity can grow quickly enough to meet increasing demands from BEAD plus normal growth. The BEAD program gives ISPs four years to implement BEAD awards. Starlink’s first satellite launch was in May 2019. Who knows what the company can do in four more years?

ISPs React to $15 Rates in New York

AT&T announced that it will withdraw its 5G home Internet product in New York rather than comply with the law that requires it to offer broadband rates as low as $15.

The law went into effect recently when the U.S. Supreme Court refused to hear the appeal for the New York law approved by the New York legislature in 2018. The Affordable Broadband Act requires ISPs to offer broadband rates to low-income households of no more than $15 for 15 Mbps (rumored to soon to be 100 Mbps) or $20 for 200 Mbps. Earlier this year, the 2nd U.S. Circuit Court of Appeals in Manhattan ruled that federal telecommunications law does not stop states from regulating broadband rates, and when the Supreme Court refused to review the case, the law went into effect.

It’s pretty extraordinary when a huge company like AT&T walks away from a state over reduced profits. The company has $122 billion in revenues for the year ending September 2024, and it’s impossible to believe that the company can’t afford to give a discount to a few of its customers.

What is most extraordinary about AT&T’s decision is that the company has been touting its FWA wireless technology as the replacement for customers who lose copper lines. The company announced recently that it intends to retire all copper nationwide by the end of 2029. This new announcement means AT&T is willing to tear down rural copper in New York and provide customers with no alternative. To some degree, they were going to do that anyway since many rural areas don’t have adequate cellular coverage to support the AT&T wireless product.

It’s hard to think that New York regulators won’t quickly react to AT&T walking away from existing FWA customers. This decision might ultimately cost the company more in fines than what it would lose from customer discounts.

It’s hard to see AT&T’s decision as anything other than a political decision and not a monetary one. The FWA products likely has high margins since there are no wires involved. AT&T could have reacted differently. For example, they could have required FWA customers to buy the wireless receiver, which would have eliminated the biggest cost of offering the service. This feels more like a warning to other states about implementing similar laws.

In a related story, Starlink wants an exemption from the new law. The company says it has less than 20,000 customers in the state – which would qualify for an exemption. Other ISPs, like Windstream, are asking for the same exemption. It’s a little hard to accept Starlink’s story of having less than 20,000 customers in the state since the company claims 1.4 million customers in the U.S., but if the company is under that threshold, it should be exempt.

What does that mean for Starlink’s future in the state? Will it permanently cap customers at 20,000 to stay out of the discount program? This seems like it would preclude Starlink from taking any New York BEAD funding to add more customers in rural areas.

One interesting feature of both FWA wireless and Starlink to consider is that these products don’t offer different speed tiers. The networks of both ISPs are not equipped to selectively choke customers to slower speeds, so a $15 customer would get the same bandwidth as everybody else. Both products deliver all-you-can-eat broadband, with no caps on speeds or the amount of broadband used during a month.

It will be interesting to see if other states consider putting the burden for customer discounts on ISPs. There is no guarantee that if this issue spreads to other states that the Supreme Court won’t decide to hear the issue.

Perhaps the biggest problem with the law is that it could bankrupt small ISPs that build expensive networks. 20,000 might seem like a lot of customers, but it’s not. The New York legislators seemingly picked the $15 rate of out the air with no consideration of what that might mean for ISPs. This feels like regulating with a sledge hammer rather than doing the research to develop a long-term solution that can work for both ISPs and customers.

Starlink vs. Kuiper

Strand Consult published an article on its website that makes numerous prediction for broadband and related industries in 2025 and compared to the company’s 2024 predictions. It’s fascinating and well worth reading. There is one prediction in particular that got me to thinking.

In its 2024 predictions, Strand Consult compared Elon Musk’s Starlink to Jeff Bezos’ Kuiper and said that Bezos had opened a burger bar while Musk runs an interstellar McDonald’s. The 2025 observation agrees with that assessment.

My first reaction was a chuckle because it’s an amusing analogy. But then I started to think about the companies to see how accurate it is.

Starlink has a huge head start on Kuiper, with 6,000 satellites already in orbit. It’s a no-brainer to say that Starlink is far superior as the two companies sit today. In fact, if Starlink is an interstellar McDonald’s, Kuiper is not even a menu at a burger bar yet.

But Strand is not talking about the current companies, but their long term potential, and that gets more interesting. Kuiper has a huge hurdle ahead to launch enough satellites to have a viable service. All indications are that the company is on the verge of doing so, but until those birds are in the sky, Kuiper is not much more than a blueprint of a company.

But what about after Kuiper has enough satellites to offer decent residential broadband? Starlink will still be ahead as it keep launching new satellites. Starlink plans will always have more a lot more satellites than Kuiper. But Starlink is now beginning the cycle where a lot of it’s launches will be replacing satellites that have hit the short short end of functional life.

The interesting thing about Starlink is that it seems ready to chase a wide range of new opportunities. It offers home broadband, but it’s expanded to also service mobile folks in campers and hikers. Starlink recently hinted that it’s going to chase other revenue opportunities, like encryption services for governments and communications infrastructure for militaries. This will greatly increase earnings per satellite but will divert a lot of broadband capacity to those big bandwidth users.

I think Strand’s observation is based on the belief that Kuiper is likely to concentrate on just selling broadband to people. It’s a boring product compared to many business lines that Starlink will be chasing. And that’s where I think the burger bar analogy gets interesting.

Jeff Bezos is a master of bundling. He makes money by getting people to buy multiple services, and it’s hard to think he won’t do this with satellite broadband. He might bundle this creatively with Amazon Prime! and other products, where the add-ons bring more profit than his satellite broadband alone.

I think the best way to think about Kuiper’s future is to compare it to the FWA cellular broadband being sold by Verizon and T-Mobile. The big ISPs all rail against FWA and say that it’s not adequate broadband. But the public is saying otherwise, and the two companies have taken the market by storm by adding over 10 million new customers while the rest of the ISPs in the country flounder.

My bet is that Kuiper broadband is going to be priced far below Starlink, and just like with FWA cellular broadband, a whole lot of ISP customers, including those who use Starlink today are going to be lured by the price.

The Strand prediction feels right to me. Starlink will be doing big, exciting things around the world for governments and huge corporations. It will be selling connections with a wow factor. Meanwhile, Bezos might be selling nothing more than plain household broadband bundled with other everyday products – but selling a lot of it.

This makes me wonder if ten years from now, the pedestrian Kuiper might have more customers while Starlink might make more money. It’s a big possibility unless Bezos is lured into competing head-to-head with Starlink on the big stuff. I think both companies will claim they are being highly successful, and it will likely be true – with each following a different business model. That might be the inherent advantage of satellite broadband – unlike a normal ISP network that can only pursue opportunities in the immediate geographic vicinity – a satellite company can choose from a wide range of business plans.