Should federal funds go to fiber installations or satellite internet services such as Starlink? That question is playing out across the US as states submit plans on how to spend $42.5 billion from the Broadband Equity Access and Deployment (BEAD) program, which is designed to expand high-speed internet access in rural and remote areas.
In June, the Trump administration overhauled the program to encourage “technology neutrality,” meaning satellite and wireless providers could also receive BEAD subsidies. SpaceX has even told several US states to revise their BEAD proposals, calling fiber investments “wasteful” and “unnecessary,” citing the lower costs to deploy Starlink.
Still, some states have prioritized fiber over satellite in their funding proposals. In Vermont’s case, the state’s $120 million plan includes subsidizing fiber in over 85% of underserved locations, while Starlink will only be used for 11% with a $2.5 million subsidy grant. However, SpaceX told Vermont earlier this month that it’s “spending too much on some locations,” and has called on the Commerce Department to intervene.
To learn more, we spoke with Christine Hallquist, the executive director for Vermont’s broadband office, who also pushed back on the notion that fiber is more expensive than satellite internet. “This focus on low-Earth orbit satellites, that’s not infrastructure, that’s renting space,” she said.
Fiber vs. Satellite
A letter SpaceX sent to Vermont, pointing out the cost differences between satellite and fiber. (Credit: SpaceX)
Fiber installations often cost between $8,000 and $10,000 per location, whereas SpaceX says it only needs between $500 and $1,000 per site.
However, Hallquist says fiber is the “best investment” of taxpayer dollars. “If you get down to the cost per gigabit, it blows everything else away,” she argues.
That’s because fiber providers tend to offer gigabit speeds for $70 to $80 per month. Starlink, on the other hand, usually offers download rates between 100Mbps and 300Mbps for $120 per month. (SpaceX has gigabit speeds on Starlink’s roadmap.)
Although it’s not reflected in the BEAD bids, it costs SpaceX a fortune to launch rockets and maintain new Starlink satellites, which are designed to orbit the Earth for five years, Hallquist points out. The BEAD program only requires satellite and fiber providers to guarantee service for 10 years.
“Certainly, if you look at the cost per satellite and maintaining a business plan for satellites, it’s so much more expensive than fiber,” she says. “If you put the government subsidies aside, and look at the pure business case, fiber would win today…. Just looking at the energy costs alone, fiber is so much more efficient.”
Still, SpaceX argues that Starlink is best equipped to deliver high-speed internet in hard-to-reach areas, where laying fiber is extremely expensive. It’s why Vermont’s BEAD proposal still selected Starlink to deliver internet to over 1,600 eligible underserved locations, out of more than 15,000.
(Credit: VCBB)
Hallquist says the Trump administration’s decision to overhaul the BEAD program led the state to pick Starlink in areas where deploying fiber could be viewed as too costly. “We chose it because of [the] expense. We always knew that satellite would have a place,” she says, noting that she previously used Starlink at her own rural home.
A Compromise on Starlink Locations
Christine Hallquist previously served as the CEO of the Vermont Electric Cooperative, and was the 2018 Democratic nominee for Vermont governor. (Photo by Stephanie Keith/Getty Images)
Vermont’s initial BEAD proposal, released in late August, only picked Starlink for about 900 locations. But after negotiations with the Commerce Department’s National Telecommunications and Information Administration (NTIA), which administers the BEAD funding, “we increased the number of satellite locations” to 1,600, Vermont’s broadband office tells PCMag.
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In our interview, Hallquist mentioned making a “compromise” on its BEAD proposal. “We set an upper control limit on the amount of money we could spend per location. It was a lot higher. I’m not going to be specific, but I’ll say, for example, we were talking about setting a $30,000 limit and saying anything over that, and we would put a satellite in place. But we moved that number down significantly because of the pushback we received. That didn’t really cause a huge increase in the number of satellites.”
However, Hallquist expects some of the locations will struggle to receive adequate broadband access, even with Starlink. “Those people who are going to get satellite are going to sweat over it because they wanted fiber,” she said. Previously, the state was considering custom solutions to reach these hard-to-reach areas.
“Even half of those [locations] probably won’t get service because if you look at those locations, there’s heavy, heavy forest cover,” Hallquist added. “And some of them are located, geographically, in these depressions where they don’t have access to the signal. So, in no way is it an end-all solution for everybody.”
SpaceX might disagree. In July, the company published a post about how Starlink’s “beam-switching” tech can help the satellite internet system remain connected despite some tree cover. Even so, Hallquist says a larger issue is why BEAD funds are going to Starlink when the satellite internet service is already available to US consumers across the country. Last week, SpaceX even began offering a new round of discounts.
“One of our staff members makes that point all the time: ‘Why are we providing this service, if it’s already there?’” she adds.
Recommended by Our Editors
Will the Commerce Department Demand More Satellite Locations?
(Photo by Jakub Porzycki/NurPhoto via Getty Images)
Vermont joined 35 other states and US territories in submitting their BEAD proposals earlier this month. The numbers reveal SpaceX is on track to receive at least $300 million to serve over 205,000 underserved locations. Amazon’s rival, Project Kuiper, is also receiving a share. But most states are using the majority of their funds on fiber.
“With the state broadband leaders, we don’t even know who’s Republican or Democrat. But we know what rural America wants, and it’s universal,” Hallquist says. “When we broadband leaders get together, we have the same goals: We know fiber is the most important investment.”
Still, there have been rumblings that the Commerce Department’s NTIA might try to force some states to redo their proposals. The agency must sign off on each state’s funding plan, and such revisions risk creating more delays while potentially shifting more funding away from fiber.
“Yes, it’s a big concern. We feel like we’ve done a great job,” Hallquist says. “I think we’ve kind of met [NTIA] in the middle, and we haven’t received any pushback yet. It’s a fear. And I know some other states have had to struggle with it.
“Our fear is that we might get forced to do even more satellite,” she later added. “We’re definitely going to do some serious outreach in the next couple of weeks… We’re going to let people know this is what our plan was. And then in 90 days, this is the plan we ended up with.”
The Commerce Department hasn’t responded to a request for comment about SpaceX’s protests or whether NTIA will require some states to revise their proposals. In the meantime, it has touted $13 billion in “savings” from the BEAD proposals received so far, with the states using only about 44% of the allocated funds. But it’s unclear whether the agency will release the remaining BEAD money back to the states for other internet projects.
Under BEAD, SpaceX and Project Kuiper are only obligated to provide a free satellite dish to underserved areas and reserve network capacity. We don’t know if they’ll offer new, discounted plans. For now, the revised BEAD program has stripped states of the ability to set the pricing for internet plans meant for low-income users.
About Our Expert
Michael Kan
Senior Reporter
Experience
I’ve been a journalist for over 15 years. I got my start as a schools and cities reporter in Kansas City and joined PCMag in 2017, where I cover satellite internet services, cybersecurity, PC hardware, and more. I’m currently based in San Francisco, but previously spent over five years in China, covering the country’s technology sector.
Since 2020, I’ve covered the launch and explosive growth of SpaceX’s Starlink satellite internet service, writing 600+ stories on availability and feature launches, but also the regulatory battles over the expansion of satellite constellations, fights with rival providers like AST SpaceMobile and Amazon, and the effort to expand into satellite-based mobile service. I’ve combed through FCC filings for the latest news and driven to remote corners of California to test Starlink’s cellular service.
I also cover cyber threats, from ransomware gangs to the emergence of AI-based malware. Earlier this year, the FTC forced Avast to pay consumers $16.5 million for secretly harvesting and selling their personal information to third-party clients, as revealed in my joint investigation with Motherboard.
I also cover the PC graphics card market. Pandemic-era shortages led me to camp out in front of a Best Buy to get an RTX 3000. I’m now following how President Trump’s tariffs will affect the industry. I’m always eager to learn more, so please jump in the comments with feedback and send me tips.