Sunsetting the High Cost Fund

SpaceX recently filed comments in the Federal Communications Commission’s open docket looking at the Universal Service Fund 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. 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.