SpaceX asks for exemptions to BEAD performance and reporting requirements

In a letter submitted to several state broadband offices, SpaceX has asked for special exemptions from certain Broadband Equity, Access, and Deployment program requirements, arguing that they make participation in the program difficult for low Earth orbit satellite providers, like its Starlink.

The letter, which was first reported in a blog post Tuesday by the Benton Institute for Broadband and Society, claims that the program’s rules “could render LEO participation in the program untenable,” because they were originally written for terrestrial broadband projects.

The request comes after Commerce Secretary Howard Lutnick “revamped” the $42.45 billion program last year following critiques of the program’s regulations. Last June, Lutnick shared new BEAD program guidance that directed states to shift away from the program’s original preference for fiber projects, in favor of a technology-neutral strategy intended to open more pathways for states to spend BEAD funds on technologies like low-Earth orbit satellite and fixed wireless.

SpaceX claimed in its letter that those new rules weren’t enough to equal the playing field among providers, though that was a chief goal of the National Telecommunications and Information Administration in issuing the new rules. SpaceX’s proposal includes exemptions, which are specified in a “contract rider” attached to the letter, from the BEAD program’s performance obligations, payment schedules, non-compliance penalties, reporting expectations and labor and insurance standards. The NTIA declined to comment for this story.

BEAD’s original rules, the letter claimed, don’t fit with how LEO satellite internet works, and that applying the same rules to both fiber and satellites that orbit the Earth doesn’t make sense operationally or technically. For one, the letter said, LEO providers should be judged only on their network performance and speeds, not on “reserved capacity” or installation quality. The former is not a requirement placed on fiber providers.

Under BEAD’s main funding rules, all subgrantees, including fiber providers, must deliver broadband service of at least 100 megabits per second (and at least 20 Mbps upload speed) and also meet certain reliability and latency standards. But LEO providers must also reserve sufficient bandwidth capacity to demonstrate that they can meet BEAD performance requirements for each covered location. The letter argued that because LEO satellite networks dynamically allocate bandwidth, providing documentation of reserved capacity is difficult, and to do so “would be wasteful, inefficient, and does not reflect a LEO providers ability to dynamically allocate capacity where needed.”

“Instead, SpaceX will include the capacity needs of BEAD users into its network planning efforts,” the letter continued. “These activities are multifaceted and include real time capacity allocation at the network level, launch activities, and sales efforts. As a result, there is no single ‘document’ evidencing the reservation of capacity.”

The rider also proposed changing how BEAD funds are paid to LEO providers. Instead of tying payments to subscriber sign-ups, providers would receive 50% of their awards once service is certified as available in funded areas, with the remaining 50% paid out in quarterly installments over a 10-year performance period. The company currently claimed that Starlink service is available to most, if not all, BEAD locations, and that if approved, the adoption of the proposed rider would mean the company could request half of its BEAD funding from states immediately — nearly $365 million.

Other proposed exemptions included limiting penalties for LEO providers that default or fail to comply with requirements and eliminating requirements around financial reporting, expense documentation requirements, labor and insurance documentation.

The rider also proposed that only those eligible for the Federal Communications Commission’s Lifeline broadband subsidy program, would be eligible for Starlink’s low-cost service. This option, which all BEAD providers are required to offer, will reportedly cost $80 or less, higher than the average low-cost BEAD fiber plan, which runs closer to $50 per month.

Drew Garner, the Benton Institute’s director of policy engagement, noted in a blog post about the letter that although its author is a senior counsel representing SpaceX, the proposal is written in a way that would also benefit other other LEO providers, like Amazon, though it is not yet offering commercial service.

States, for their part, are still evaluating all their options. Cristalle Dickerson, a spokesperson for North Carolina’s broadband division, wrote in an email that her agency is “aware that Low Earth Orbit providers may require slightly different contract arrangements, but we have not yet entered into contract negotiations with any BEAD contingent awardees.”