Despite War of Words, Trump May Funnel Billions to Musk's Starlink With BEAD Changes

CNET

a day ago

Less than 24 hours after President Trump threatened to terminate Elon Musk's government contracts, his Commerce Department published a notice that could shift tens of billions of dollars in federal funding to Musk's Starlink internet service.
Starlink is projected to receive as much as $20 billion in BEAD money under the new rules -- up from the $4.1 billion it was slated to get previously, according to a Wall Street Journal report published in March.
"This is a huge gift to Starlink,"said Drew Garner, director of policy at the Benton Institute for Broadband and Society. "To me, this looks like another instance of TACO Trump chickening out and handing over the money. He's letting his Secretary give Musk billions of dollars on the day Musk is calling for his impeachment."
The BEAD program was signed into law as part of the Infrastructure Investment and Jobs Act (IIJA) of 2021. It's the largest investment the government has ever made in expanding internet access -- a once-in-a-lifetime pool of money that was supposed to provide every American with an option for high-speed internet at their home.
Critics like to point out that it's been over three years since the program was created and still no homes have been connected by BEAD, but it's largely on track with the timeline laid out in the original law. Commerce Secretary Howard Lutnick has repeatedly cited the need for faster and cheaper BEAD deployment, but industry observers were already telling me before the election that a Trump victory would shift billions of dollars in BEAD money toward Starlink.
Locating local internet providers
A "technology neutral" approach
BEAD was written to prioritize expanding fiber internet to rural areas, but the new rules mandate a "technology neutral" approach. While the previous rules gave states leeway to factor the connection type into how they awarded money, the new rules essentially mandate that the money needs to go to the cheapest bidder.
"The whole idea of technology neutrality doesn't really make a lot of sense in this context," said Evan Feinman, the former director of BEAD who departed in March with an email warning of impending changes. He added that different types of internet connections "have different performance capabilities, they have different costs to operate, and they have different reliability characteristics. And they have wildly different speeds."
Fiber is widely considered the gold standard for internet connections, and states had overwhelmingly been awarding BEAD money to fiber internet providers. The exception was in especially remote areas, where it can be prohibitively expensive to install fiber on a per-household basis.
"Fiber is great, but our cost estimates show somewhere around $120 [thousand] to $130,000 per location just to connect it with fiber," Greg Conte, director of the Texas Broadband Development Office, told me in a previous interview about rural areas in West Texas.
Starlink will still have to compete with other internet providers in all of these states, and there's no guarantee they'll have the cheapest bids. Feinman also predicted unlicensed fixed wireless providers will benefit immensely from the new rules.
New rules also eliminate labor, environmental and affordability requirements
"Starlink will be a significant beneficiary of these changes," "That's just not the only thing they're doing."
There are a number of other tweaks in the new rules that are meant to speed up the deployment process by removing "regulatory burdens." Requirements for labor used on BEAD projects, climate resilience plans and net neutrality protections are all being eliminated.
But the one that jumped out to me the most was what was called "backdoor rate regulation." Previously, providers taking BEAD money were required to offer a discounted plan for low-income residents. It's well-understood that the reason most people don't have an internet connection isn't because it's not available -- they just can't afford it. It's been a year since the Affordable Connectivity Program ended. The federal subsidy provided $30 a month to help low-income households pay for internet.
Internet is already more expensive in rural areas -- Starlink's plans start at $80 monthly, with a $349 upfront cost for equipment -- and many households could struggle to afford whatever connection is available to them once BEAD's construction is complete.
"Today, Secretary Lutnick ripped the heart out of the affordability provisions in BEAD," Garner said. "He basically is just allowing providers to self-certify that they offer something affordable."
Will BEAD changes get internet to rural areas faster?
State broadband offices have expressed dread and outright alarm when discussing potential changes to BEAD this late in the game. In April, a group of 115 state legislators sent an open letter to Secretary Lutnick urging him not to mess with the program.
"The Feds broke it and the states fixed it, and the Feds are preparing to break it again," Missouri State Representative Louis Riggs, a Republican, told me at the time. "Why don't you just leave it up the states to decide what they want to do in terms of technology, instead of putting your thumb on the scale?"
States will have 90 days to comply with the new obligations. Many states were already nearing the finish line on their spending plans, and Louisiana, Delaware and Nevada had even received final approvals. Ironically, the effort to streamline BEAD might end up slowing it down even more.
"They are extremely concerned, because as far as we can tell, that 90-day clock starts today," said Garner. "All of them are mid-stride, and they just had the rug yanked out from under them. It's hard to see how all that work doesn't just collapse right now."