Federal Broadband Policy Is Increasingly Being Recast Around Satellite
With few meaningful competitors, Starlink is the primary beneficiary
Another federal broadband subsidy may soon be restructured to account for the growing role of SpaceX’s Starlink.
The low-Earth orbit (LEO) satellite internet provider, having already gained legitimacy within broadband deployment programs administered by the National Telecommunications and Information Administration, has also found a receptive audience at the Federal Communications Commission.
The FCC recently tweaked a proposal to modernize its High-Cost programs to place greater emphasis on considering the emergence of satellite technologies.
The High-Cost program, one of four initiatives within the federal Universal Service Fund overseen by the FCC, subsidizes telecommunications and broadband deployment in rural and other expensive-to-serve areas. At roughly $4.5 billion annually, it is the fund’s largest program.
Is LEO satellite broadband a sufficient substitute?
In a proposed rulemaking adopted unanimously on May 20 the FCC asked whether LEO satellite broadband should be treated as a sufficient substitute for terrestrial infrastructure in the most difficult-to-serve areas, and whether continued support for land-based deployments in those locations constitutes unnecessary “overbuilding.”
In its proposal, the FCC claimed “nearly all” remaining U.S. locations without a fiber, cable or fixed wireless broadband connection are now considered to be served by “a LEO satellite provider.”
Many of those locations are in sparsely populated rural areas, where the high cost of deploying terrestrial broadband infrastructure has historically left residents with few connectivity options.
In its filing, the FCC reinforced its policy that “providing support in areas of the country where another voice and broadband provider is offering high-quality service without government assistance is an inefficient use of limited universal service funds.”
The FCC’s proposed rulemaking landed just days after SpaceX satellite policy principal Joseph Bissonnette met with all FCC commissioners to argue the FCC’s High-Cost programs should be “phased out” with “funding redirected to more productive ends.”
How should regulators evaluate satellite broadband performance?
The FCC’s proposed rulemaking raises a series of unresolved questions about how regulators should evaluate satellite broadband performance, particularly around affordability, latency, reliability, and long-term capacity compared to terrestrial networks.
While FCC officials across the political spectrum stressed that the inquiry is meant to “build a record” on the technical merits of satellite service, the proposal closely follows a restructuring of the $42.5 billion Broadband Equity, Access, and Deployment program that expanded consideration of satellite broadband.
Changes implemented by the Trump administration resulted in SpaceX winning the most locations of any ISP, taking more than 464,000 locations under the BEAD program, alongside $636 million in funding.
The previous administration had not treated satellite systems as meeting the technical requirements envisioned for broadband infrastructure under the BEAD program established in the Infrastructure Investment and Jobs Act.
The bipartisan infrastructure law called for broadband networks built with BEAD funding to be capable of providing broadband service with: (1) at least 100 * 20 Megabit per second (Mbps) speed; (2) a low network latency enabling real-time, interactive applications; and (3) a low network outage rate of less than 48 hours over any 365-day period.
Variability of performance
According to recent speed test data from Ookla, only 44.7 percent of Starlink customers in the U.S. reached the 100 * 20 Mbps mark in the fourth quarter of 2025. That was a dramatic increase from the 17.4 percent who met it in the first quarter of 2025.
Starlink’s own disclosures indicate significant variability in user performance.
The company’s website says users typically experience download speeds between 45 and 280 Mbps, with a majority of users experiencing speeds over 100 Mbps. Upload speeds, however, range between 10 and 30 Mbps.
Latency ranges between 25 and 60 milliseconds (ms) in most land-based conditions, but can exceed 100 ms in remote regions such as oceans, islands, and Alaska.
By contrast, fiber networks commonly deliver symmetrical upload and download speeds exceeding 1 gigabit per second, with latency often below 10 milliseconds.
Higher latency can affect real-time applications such as video calls and interactive services, and users also report occasional service interruptions during satellite handoffs and periods of congestion. The gap becomes more noticeable for bandwidth-intensive or real-time applications such as cloud backups, online gaming, livestreaming and large file transfers.
While SpaceX’s Starlink service has steadily increased user speeds and reduced latency over the past several years, the technology is still outperformed by terrestrial networks in every other broadband performance dimension.
One analysis last year from Penn State University’s X-Lab found that Starlink can support only 6.66 households per square mile before speeds drop below FCC broadband minimums.
Even still, federal policy is increasingly opening additional pathways for satellite broadband within legacy subsidy programs. A bill passed in the House in March would expand consideration of satellite service in another federal broadband funding stream.
Introduced by Representative David Taylor, a Republican from Ohio, the Expanding Appalachia’s Broadband Access Act would require the Government Accountability Office to assess whether the Appalachian Regional Commission can incorporate satellite-based broadband into its infrastructure grant programs.
The Appalachian Regional Commission (ARC), a federal-state partnership covering 13 Appalachian states, has historically prioritized fiber-optic infrastructure with its broadband grants.
ARC requires eligible providers to reliably deliver symmetrical 100/100 Mbps speeds with latency under 100 milliseconds. Providers must also offer affordable service with no data caps or throttling.
That ARC’s emphasis on affordability collides with emerging questions about satellite pricing.
SpaceX’s Starlink currently offers a “Residential Lite” plan at $80 per month and a standard residential plan at $120 per month, with advertised download speeds of up to 250–305 Mbps and upload speeds of 35–40 Mbps. After offering a limited promotion, the company recently raised prices across several plans by $5 to $10 per month.
The FCC has also begun to directly examine whether these pricing dynamics could become a policy concern if satellite broadband becomes the primary option in some rural areas.
The commission has asked whether rates in those regions could rise significantly above those charged for comparable urban services, and how regulators might ensure “reasonably comparable” pricing if terrestrial competition declines.
SpaceX planning on a major capacity expansion
Looking ahead, SpaceX is positioning Starlink for a major capacity expansion.
The company expects to begin launching third-generation satellites later this year, which it says will increase download capacity by a factor of 10 and upload capacity by a factor of 24 compared with its current generation.
The FCC also adopted changes in April to satellite spectrum sharing rules that are expected to increase usable capacity by allowing greater frequency reuse across overlapping satellite beams.
SpaceX has already deployed more than 3,000 satellites in 2025 alone, adding roughly 270 terabits per second of capacity to its constellation, according to company disclosures.
The company’s growing footprint in federal policy comes as it prepares for a highly anticipated initial public offering expected to begin trading on the Nasdaq on June 12. Proceeds are expected to raise between $50 billion and $75 billion, which would make it the largest IPO ever.
SpaceX’s 250-page prospectus filed with the Securities and Exchange Commission May 20 offered a first public look at its earnings and financials, revealing that more than a fifth of its revenue now comes from government contracts, underscoring the extent to which federal demand is already intertwined with the business of Starlink.
This article was produced in collaboration with Broadband Breakfast partner Daily Yonder, and is also published on Daily Yonder on May 29, 2026.
