In a decision that has sparked outrage from SpaceX, the Federal Communications Commission (FCC) has rejected the company's appeal to reinstate an $886 million grant aimed at bringing high-speed broadband to rural areas using its Starlink satellites. The FCC reaffirmed its previous ruling to reject Starlink's long-form application for public support through the Rural Digital Opportunity Fund (RDOF) program.

The grant was initially awarded to SpaceX in December 2020 under the former FCC chairman Ajit Pai, but was later rejected by the current chairman Jessica Rosenworcel in August 2022. SpaceX immediately appealed this decision, labeling it as "grossly unfair" at the time.

Christopher Cardaci, the Vice President of Legal at SpaceX, expressed deep disappointment and confusion over the recent rejection. He stated that the FCC's decision directly undermines the goal of the RDOF program, which is to connect unserved and underserved Americans, particularly in rural areas.

According to the FCC, as of 2020, 22.3 percent of Americans living in rural areas lack access to fixed, terrestrial broadband with speeds of at least 25 Mbps download. In contrast, only 1.5 percent of Americans in urban areas face the same connectivity challenges.

To bridge this digital divide, SpaceX has been deploying a vast network of Starlink satellites in low-Earth orbit. However, the company has faced challenges with coverage and capacity limitations. In its rejection, the FCC cited Starlink's recognized capacity constraints, claiming that it was unable to provide sufficient low-latency service with speeds of at least 100 Mbps down and 20 Mbps up.

SpaceX's CEO, Elon Musk, had previously acknowledged the difficulty of connecting "several million" new users to the internet, acknowledging that it would be a complex challenge.

The issue of broadband access in rural America has become highly politicized, with the FCC's decision aligning along partisan lines. Republican commissioner Brendan Carr criticized the regulator for taking action against Elon Musk's businesses.

Despite this setback, the lack of incentive for local internet service providers to address the issue remains a key concern. These providers have made little progress in expanding broadband coverage to millions of rural Americans who still lack sufficient access to the internet.

It is evident that addressing the rural broadband gap requires a holistic approach, combining efforts from both satellite-based solutions like Starlink and concrete action from local internet service providers. Without finding a balance and incentivizing these providers to take up the challenge, the digital divide in rural areas is unlikely to be bridged in the near future, regardless of satellite constellations in the sky.