There has been an interesting public fight going on at the FCC as Viasat has been telling the FCC that Elon Musk’s Starlink should not be eligible for funding from the Rural Digital Opportunity Fund (RDOF). At stake is the $886 million that Starlink won in December’s RDOF auction that is still under review at the FCC.

Viasat had originally filed comments at the FCC stating that the company did not believe that Starlink could fulfill the RDOF requirements in some of the grant award areas. Viasat’s original filings listed several reasons why Starlink couldn’t meet its obligations, but the primary one was that Starlink technology was incapable of serving everybody in some of the more densely populated RDOF award areas. Viasat calculated the number of potential customers inside 22-kilometer diameter circles—the area that it says can be covered by one satellite. According to Viasat’s math, the most customers that could reasonably be served is 1,371 customers—and the company identified 17 RDOF areas with a greater number of households, with the maximum one having 4,126 locations.

There have been similar claims made by others in the industry who say that Starlink will be good for serving remote customers, but the technology is not capable of being the only ISPs in an area and serving most of the homes simultaneously.

Last month, Viasat made an additional claim that Starlink does not have sufficient backhaul bandwidth to serve a robust constellation. This stems from an ongoing tug-of-war at the FCC over the 12 GHz spectrum. Starlink wants this spectrum to enable it to create more ground stations for transferring data to and from the satellite constellation. This is a spectrum that Dish Networks owns that it wants to purpose for 5G. Dish Network has offered a spectrum-sharing plan that would greatly reduce Starlink’s use of the spectrum. The FCC filings on the topic are interesting reading, as wireless engineers on both sides of the issue essentially argue that everything the other side says is wrong. I’m not sure how the FCC ever decides which side is right.

The latest Viasat criticism of Starlink is based upon public statements made by Elon Musk at the Barcelona MWC conference, where he commented on how hard it is to fund the satellite business. Musk said that the business is likely to need between $20 billion and $30 billion in additional investment to reach the goal of over 11,000 satellites. Musk said his first priority is just to make sure that Starlink doesn’t go bankrupt. Viasat says that this is evidence that Starlink is a ‘risky venture’, something the FCC originally said should not be eligible for the federal RDOF subsidy.

Starlink recently asked the FCC to ignore everything Viasat has filed and said that the Viasat comments are anti-competitive and a ‘sideshow.’ This has to be a huge puzzler for the FCC. We already see Starlink bringing good broadband to remote places that don’t have any broadband today. But the question in front of the FCC is not if Starlink can be a good ISP, but whether the company deserves a 10-year federal subsidy to support the business. Obviously, if Starlink needs at least $20 billion more to be viable, then getting or not getting the $886 million spread over ten years is not going to make a difference in whether Starlink makes it as a company.

The FCC is in a bind because many of these same issues were raised before the RDOF auction in an attempt by others to keep Starlink out of the auction. It wasn’t hard to predict that Starlink would win the subsidy in some of the most remote places in the country since it was willing to bid lower than other ISPs. The FCC voted to allow Starlink into RDOF just before the auction and is now seeing that original decision challenged.

It’s also an interesting dilemma because of the possibility of an infrastructure plan by Congress that would fund fiber in most of the places won by Starlink. Would the FCC had allowed Starlink into the RDOF had it known about the possibility of such federal grants—I would have to guess not. The FCC is now faced with depriving areas from getting a permanent subsidy if they continue with the plan to give the RDOF to Starlink. That would just be bad policy.