What do Starlink’s latest Ookla results mean for its $886M RDOF winnings?

Ookla released a new batch of Speedtest results this week which showed median download speeds for SpaceX’s Starlink satellite broadband service jumped 38% year on year in the U.S. in Q1 2022. Even with that boost, the service still only delivered downstream rates of 90.55 Mbps, leaving it well short of the 144.2 Mbps median posted by the industry as a whole. And Starlink’s upload speeds actually dropped 33% year on year to 9.33 Mbps in the recent quarter. All of this data begs the question: What happens if Starlink can’t meet the 100/20 Mbps speed obligations attached to its Rural Digital Opportunity Fund (RDOF) projects?

In December 2020, SpaceX emerged as a top winner in the Federal Communications Commission’s (FCC) RDOF auction, which was designed to provide billions of dollars to support broadband deployments in unserved parts of the U.S. Of the $9.2 billion awarded in the Phase I auction, SpaceX won $885.5 million and committed to use the money to deliver its Starlink service to 642,925 locations across 35 states.

RDOF rules set speeds of 25/3 Mbps as the minimum allowed for broadband service delivered by winners. However, participants were permitted to bid at four different performance tiers: 25/3 Mbps, 50/5 Mbps, 100/20 Mbps and 1 Gbps/500 Mbps. When the auction closed, the FCC noted 99.7% of locations were bid at 100/20 or higher, with 85% bid at the gigabit tier. That means Starlink will need to provide speeds of at least 100/20 in order to meet its obligations.

History and criticism

Former FCC Commissioner Michael O’Rielly told Fierce that back when the agency was formulating its rules for RDOF he “pushed to prevent any technology from being excluded on the front end” of the application process. He explained this move was intended to both maintain technology neutrality and ensure that all options were exercised to reach the unserved. O’Rielly argued that allowing satellite players like Starlink to bid “did not guarantee their participation or actual winning of any RDOF funds.”

He added those who were interested had to file an initial short-form application “which involved convincing the Commission staff that it was capable of meeting the tier(s) requirements and thus getting the weighting structure treatment as set out for RDOF.” These capabilities were set to be further vetted through the review of long-form applications submitted by auction winners before they received their money.

Officials are still in the process of reviewing long-form applications. Among other things, these documents require an auction winner to demonstrate it is "technically capable of providing the required coverage and performance levels within the specified timeframe in the geographic areas in which it won support." Winners must also have a professional engineer certify that there is "sufficient capacity to meet customer demand at or above the prescribed levels during peak usage periods."

While many of the top ten winners of the auction have received at least a portion of their money, Starlink is still waiting.

The decision to allow satellite and fixed wireless players to participate in the RDOF auction was met with plenty of pushback, which continued well after the auction’s close. Specifically, critics questioned whether Starlink would be able to meet its RDOF service obligations.

In February 2021, for instance, Fiber Broadband Association and NTCA-The Rural Broadband Association warned the FCC that an analysis conducted by Cartesian predicted Starlink would face a capacity shortfall by 2028. And in December 2021, fellow satellite player Viasat told the FCC in a filing that technical analysis showed that even if “SpaceX has absolutely zero non-RDOF-based demands for Starlink capacity, there is not enough Starlink capacity (bandwidth) available in the specific geographic locations that SpaceX bid for and provisionally ‘won’ to meet its RDOF service commitments.”

Can it be fixed?

Ookla’s Speetest results show that Starlink is – in theory – capable of (very nearly) meeting the 100/20 Mbps speed mark. In Mexico, for instance, Ookla indicated Starlink delivered median speeds of 105.9/19.1 Mbps. And Recon Analytics’ Roger Entner told Fierce that he expects “Starlink speeds at least in the medium run to accelerate” as SpaceX brings more satellites online. But he noted the speeds being delivered today are on a “largely unloaded network.”

Starlink has approximately 400,000 subscribers globally, with Entner estimating the figure in the U.S. to be in the “tens of thousands.”

SpaceX CEO Elon Musk “has to stay with his constellations ahead of demand. Right now, he doesn’t have that many customers,” Entner said. “It means that it doesn’t look good for RDOF unless he adds more satellites quickly.”

Viasat argued in the aforementioned filing that “even if SpaceX were to deploy a full, 4,408-satellite Starlink system, that system would fall short in satisfying SpaceX’s RDOF commitments.” For its part, SpaceX dismissed Viasat’s claims in its own filing as “baseless complaints” and “desperate attacks against a competitor.” It asserted it would demonstrate to commission staff its ability to meet its RDOF obligations.

SpaceX did not respond to a request for comment for this story. The FCC likewise could not be reached for comment.

If the Commission’s long-form review concludes SpaceX won’t be able to meet its commitments, the company will be considered in default on its winning bids. The FCC previously told Fierce support will not be authorized for bids in default, with the money instead remaining in the Universal Service Fund.