Musk’s SpaceX pans Virginia broadband plan as ‘massive waste’

Elon Musk’s SpaceX wrote a letter this week slamming Virginia’s federal broadband grant proposal, calling it a “massive waste of federal taxpayer money” and accusing the state of unfairly rejecting a proposal from SpaceX’s Starlink satellite-based internet service.

The state has submitted a grant proposal to the federal government seeking $613 million to finish expanding high-speed internet access to more than 133,000 locations in the state that lack reliable internet. Most of the funding, if awarded, would go toward fiber-based broadband expansion instead of cheaper satellite-based internet services, such as those SpaceX offers through its Starlink subsidiary.

The Aug. 13 letter to Virginia’s state government, which SpaceX released publicly, argues that the federal government, which is funding part of the state’s broadband expansion, should deny the state’s proposal.

According to SpaceX’s letter, the state could spend $60 million with SpaceX and provide internet access to everyone in the state, instead of $613 million in federal funding.

Last week, the Virginia Department of Housing and Community Development, which oversees the state’s broadband expansion program, released its final proposal to the federal government’s Broadband, Equity, Access and Deployment (BEAD) program. The plan proposes to spend $613 million in federal funding, in addition to $434 million in private investment from internet providers.

Fiber-based internet providers Comcast, All Points Broadband, RiverStreet Networks and ZiTel were awarded more than 70,000 of the state’s 133,500 locations for internet expansion, while SpaceX received only 2,759 and satellite competitor Amazon Kuiper Commercial Services won nearly 7,000 locations.

This works out to a windfall for the fiber internet companies. All Points Broadband would receive the most, $171 million, and Comcast would receive the second highest amount, $146 million, if the state’s plan is approved. Meanwhile, SpaceX would receive only $3.2 million and Amazon Kuiper would get $4.4 million.

The U.S. Department of Commerce’s National Telecommunications and Information Agency must approve the plan for the state to receive funding, but the change in White House administrations has created political strife over fiber vs. satellite internet.

Run by Elon Musk, SpaceX began launching Starlink satellites in 2019 that provide internet service to remote communities via low-orbit satellites.

In Southwest Virginia, the Health Wagon has begun connecting patients to telehealth diagnosticians via Starlink internet, and the service has gained a foothold in coal country and other far-flung places where it is expensive to lay fiber to each household and business.

Jeff Bezos, Amazon’s founder, started Starlink competitor satellite orbit company Project Kuiper in 2019, although it has only launched 54 production satellites out of 3,236 it plans to operate.

Both Bezos and Musk have made financial contributions to President Donald Trump’s campaign or inauguration fund, and Musk briefly went to work for the White House, running the Department of Government Efficiency, or DOGE.

Critics of the Trump administration have said it’s no coincidence that the federal government seems to be biased toward satellite internet because of Trump’s ties to the tech billionaires. Even without the political overtones, some in the telecommunications industry nonetheless feel that satellite tech is not reliable enough and view fiber broadband as the gold standard.

Starlink’s satellites are estimated to have an average lifespan of five years before they must be replaced, and under current federal law, there’s a finite number of satellites that can be launched. Also, satellites require unblocked signals, unlike fibers, which direct electrical signals to buildings.

SpaceX calls for the NTIA to reject Virginia’s plan for multiple reasons, arguing that the company “submitted a highly competitive and cost-effective proposal” to serve more than 80,000 locations in Virginia but was provisionally awarded only 2,900 locations in the state’s plan.

What’s more, SpaceX says that the state “used unpublished and inaccurate evaluation criteria to dismiss SpaceX’s application” and “began with a preordained result and then overlaid a paper-thin veneer of ‘analysis’ to unlawfully achieve its preferred outcome — maximum taxpayer spending benefiting specific companies and a misapplication of competitive rules.” It also says that the state wishes to award $91 million to other companies to lay fiber within 100 meters of households receiving internet access via Starlink.

“Today’s grant proposal reflects Virginia’s commitment to ensuring every community has access to the modern connectivity it needs to thrive,” DHCD Director Maggie Beal said in an Aug. 6 statement with the release of the state’s proposal. “By utilizing a smart mix of technologies — from fiber to fixed wireless to satellite — we’re maximizing the impact of every taxpayer dollar and building a stronger, more connected Virginia.”

The DHCD did not respond immediately to a request for comment Thursday on SpaceX’s letter.