Elon Musk’s Starlink will have very high long-term costs for rural Americans

A federal broadband program worth $42 billion is being revised, and Elon Musk’s Starlink may stand to gain the most. State and federal officials say satellites could be cheaper at first but more expensive over time. Some worry that this shift will leave rural Americans paying extra while a billionaire’s company profits.

The Trump administration is altering a $42 billion initiative called the Broadband Equity and Access Deployment Program, known as BEAD. This program was originally laid out to bring fast, consistent internet to every home in the United States. Under the previous approach, which took shape during the Biden administration, fiber-optic lines were favored. Those lines can be expensive to install—at least $1,500 per location, according to one state official—but they last for decades if maintained. 

Now, thanks to lobbying by Elon Musk and his allies, satellite internet services like Starlink could end up with a bigger piece of the funding.

Several state and former federal officials, who spoke to Bloomberg on condition of anonymity, see problems with this new direction. They believe fiber is still more cost-effective in the long run, even though it carries a higher installation cost upfront. 

One state official shared data showing that satellite service would cost consumers 53% more over 30 years compared to fiber. That official also noted that satellite service could be more than twice as expensive to maintain in that same period. Critics of the shift worry that Americans, particularly in rural regions, might be left with a service that is cheaper to install but much pricier over time.

Evan Feinman, who served as the director of the broadband program under the Biden administration until his recent departure, criticized Commerce Secretary Howard Lutnick’s new approach. In his view, the benefits of satellite internet providers do not necessarily mean better outcomes for consumers. 

Feinman said, “There does not seem to be a clear understanding of the difference in these technologies nor in the long-term impacts of making one choice versus another.” Feinman also warned colleagues in an email that the Commerce Department could be on a path to “stranding all or part of rural America with worse internet so that we can make the world’s richest man even richer.”

Lutnick explained that the revisions are aimed at addressing what he termed “favoritism towards certain technologies” in the program, which Congress approved in 2021. He also pointed to a lack of progress in rolling out service under the original framework. He claims that a more “tech neutral approach” will give taxpayers the best deal. 

A statement from his office says the BEAD program needs to deliver internet “at the lowest cost,” and that the prior administration’s focus on fiber may have slowed deployments.

The National Telecommunications and Information Administration (NTIA), the Commerce branch leading the effort, echoed this view. A spokesperson stated, “The BEAD program is being revamped to take a technology-neutral approach – a needed fix from the prior administration’s one-size-fits-all approach. Instead of putting a thumb on the scale for a particular technology, the BEAD program will be rigorously driven by outcomes, so states can provide internet access for the lowest cost.”

State analysis shows fiber in a quarter million homes would be $4 billion cheaper than Starlink

Some state broadband leaders disagree with that reasoning, especially when it comes to defining what “lowest cost” means over several decades. Under the original plan, satellite providers generally could only compete to provide access if the cost of installing fiber in a given area crossed a limit per location. 

States were allowed to decide that threshold themselves. Louisiana, for example, was ready to spend as much as $100,000 on a single fiber connection if necessary. Now, Lutnick is reportedly considering whether to set a single national benchmark rather than letting each state do the math for local projects.

Any formula that leans on a smaller initial investment could steer more funding toward satellite solutions. Musk’s Starlink, which operates under Space Exploration Technologies Inc., is one of only two active low-earth orbit satellite internet providers in the country. Starlink offers a standard residential kit for around $600, although those costs sometimes vary. However, the satellites involved require replacement about every five years, which, according to the state analysis, raises overall costs in the long run.

The same analysis shows that rolling out fiber to a quarter-million homes would end up $4 billion cheaper than providing satellite service to that many locations over 30 years. Households would also save an average of $15,600 each under a fiber setup across that same time period. Critics of the new plan stress that the immediate savings associated with satellite hardware might look appealing but could leave customers and communities paying more over the decades.

Satellite advocates say these worries do not account for a constantly changing industry. They note that satellite broadband capacity is increasing as more satellites launch into low-earth orbit. They also point out that government assistance sometimes helps fiber-based providers keep consumer prices down, while satellite services like Starlink have yet to benefit from similar subsidies. Tom Stroup, president of the Satellite Industry Association, said, “There are multiple satellite companies that are capable of providing broadband today. We’re hopeful that the examinations that are underway will make multiple satellite companies eligible for funding.”

Starlink could receive between $10 billion – $20 billion

According to The Wall Street Journal, Starlink is already set to receive around $4.1 billion under the current Biden-era rules. If the move toward a heavier satellite preference goes forward, that figure could rise to somewhere between $10 billion and $20 billion. Observers say this shift could boost the finances of Musk’s space-based enterprise, which already has a constellation of 7,000 satellites orbiting the planet. Yet the question remains whether such a system can reliably handle the demand for fast, affordable internet across the nation.

Backers of fiber also highlight the local benefits of installing lines in a community. Building fiber requires local crews and technical staff, which can create jobs within an area. By contrast, satellite manufacturing and launch operations tend to occur in specialized facilities, which do not usually hire local workers in the rural towns that need service the most. Some state officials view fiber as more of an investment in their own economies, while satellites may shift the focus of growth elsewhere.

Lutnick and his team are still reviewing how exactly to modify the BEAD program. That review includes whether to remove states’ discretion to set cost thresholds for fiber projects. If a national benchmark is instituted, states with wide rural areas worry they could lose the chance to invest in fiber since it appears more expensive at first glance. Skeptics of the proposed changes say the Commerce Department should focus on what households will pay over 30 years, not just on the cheapest initial bids.

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