Elon Musk’s SpaceX won $885.5 million in subsidies from the Federal Communications Commission Monday to provide rural areas with high-speed internet through its Starlink satellite project, a major win for the Musk-led company and its first publicly announced major customer.
SpaceX was one of 180 companies who won a portion of FCC subsidies doled out via an auction to incentivize private companies to build out their networks in underserved areas of the country.
SpaceX was the only satellite operator among the top four bidders by dollar amount, behind LTD Broadband, Charter Communications and Rural Electric Cooperative Consortium.
The FCC says the money will allow SpaceX’s Starlink project to reach 35 states across 642,925 locations, while the only other satellite company to win subsidies in the auction, Maryland-based Hughes Network Systems, won $1.3 million serving 3,678 locations in one state.
The government is Starlink’s first publicly-announced major customer, in addition to its partnership with Microsoft to provide its Azure cloud computing services over the network.
Starlink’s service is still nascent—it only went into public beta over the summer with nearly 900 satellites—but the company has ambitious plans to put 42,000 satellites into orbit for widespread high-speed internet access.
“This is great for SpaceX because now they have an anchor customer,” Quilty Analytics senior analyst Caleb Henry told CNBC. “Up until this point SpaceX has not announced any major customers … and [this auction] provides them an assured source of revenue that they can build on as long as they meet the FCC’s criteria.”
Lack of internet access, especially in rural areas, has become of increasing concern during the pandemic. At a time when work and school activities are being held online, only 77% of the population in rural areas of the U.S. have access to high-speed broadband internet, according to 2018 data from the FCC. A number of private companies are launching their own satellites into low-earth orbit in a bid to dominate the commercial space market, including Amazon with its satellite internet program Project Kuiper.