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New York (CNN) — The Commerce Department has changed its rules in a way that could open the door for Starlink, Elon Musk’s satellite internet service, to become part of a federal $42 billion grant program to bring high-speed service to rural and poor areas of the United States.
The rules of the program — known as Broadband Equity, Access, and Deployment or BEAD — previously gave preference to fiber-optic service. That essentially shut out services like Starlink, a unit of Musk’s SpaceX company, which beams high-speed online access from its satellites in low-earth orbit to terminals on the ground.
The Commerce Department, which oversees the program, announced Wednesday that BEAD is now open to all forms of internet connectivity.
“The Department is ripping out the Biden Administration’s pointless requirements,” said a statement from Commerce Secretary Howard Lutnick. “It is revamping the BEAD program to take a tech-neutral approach that is rigorously driven by outcomes, so states can provide internet access for the lowest cost.”
Lutnick did not specifically mention plans to grant funds under the program to Starlink, or any other satellite service. But the “tech-neutral” reference points in that direction.
He complained that BEAD, created by Congress in 2021, has yet to connect any homes to the internet. (The Biden administration announced in September that it had distributed $20 billion so far to states and territories under the program, but it did not claim any homes had yet been connected.)
Whatever the argument for using Starlink satellite service instead of fiber-optics, the move would seem contrary to efforts by the Trump administration — plus those of the Department of Government Efficiency, which Musk heads — to cut government spending and halt federal grant programs already approved by Congress.
If Starlink does go on to receive contracts through BEAD, it could also raise new questions about conflicts of interest involving Musk, his many businesses that have made him the world’s richest person, and his new, prominent role in setting government policy.
Starlink has had trouble getting contracts for various government programs meant to bring high-speed internet service to rural areas. In 2023 the Federal Communications Commission rejected a $885 million contract that Starlink had won in a preliminary bidding process under a similar but separate program, the Rural Digital Opportunity Fund, saying that it did not meet the fiber-optic preference.
Musk and Trump cut spending elsewhere
Both President Donald Trump and Musk have said that money-losing government services, such as the US Postal Service and Amtrak, should be privatized and transformed into for-profit businesses. They argue these moves would save taxpayers money and improve the services.
“I think we should privatize anything that can logically be privatized,” Musk said at an investors’ conference Wednesday.
Yet even as Musk makes this argument, the same government agencies that are facing staffing or budget cuts are also considering new massive new contracts for Musk’s businesses.
For example, the Federal Aviation Administration (FAA) has confirmed it is testing three Starlink terminals to determine whether Starlink can be used to upgrade the communication system for the nation’s air traffic control system.
Last week Musk said in a post on his social media platform X that Verizon — which has a $2 billion, 15-year contract to upgrade the system’s communications infrastructure — was putting airline passengers at risk because of problems with the current system. He suggested Starlink could do a better job.
Despite Musk’s initial claim about Verizon running the current system — which he later retracted — the FAA’s current communications infrastructure is still relying on a decades-old copper wire system overseen by L3Harris and is not yet using Verizon equipment. The FAA said it was “testing multiple communication technologies” and had not decided which system to use, even though it had already awarded Verizon the $2 billion contract.
– CNN’s Hadas Gold contributed to this report.
The-CNN-Wire
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