In the United States, the Federal Communications Commission (FCC) distributes subsidies to broadband providers to offer high-speed Internet in unserved areas.
Millions in rural and low-income regions lack reliable broadband access because providers often avoid these markets, anticipating low returns. This absence contributes to economic stagnation and deepens wage inequality—known as the “digital divide.” To address this, the FCC launched the Rural Digital Opportunity Fund (RDOF), allocating up to $16.4 billion in 2020 to expand broadband infrastructure in unprofitable areas.
CRA’s Ignacio Núñez explores this broader policy effort in a Telecommunications Policy article titled “Estimating private costs in a descending clock auction: The FCC’s rural digital opportunity fund,” providing context on how the RDOF was designed to close the digital divide through competitive auctions.
Building on that foundation, a second article published in Telecommunications Policy by Núñez, titled “Procurement auctions for broadband access: Starlink and the Rural Digital Opportunity Fund,” focuses specifically on Starlink’s participation in the RDOF auction. In 2020, Starlink secured $886 million in federal subsidies to deliver broadband via satellite to underserved US communities. Two years later, the FCC rescinded the award.
This second paper analyzes how Starlink’s unique low Earth orbit (LEO) satellite technology gave it a significant cost advantage—and how that translates into substantial potential profits. With estimated rents exceeding 58% of its subsidies, the analysis raises critical questions about auction design, bidder incentives, and the future of broadband infrastructure.