The world's richest man has been tapped by Donald Trump to drastically reduce government spending in ways that could benefit his own business interests.
Tech billionaire Elon Musk was named by the president-elect to co-lead the quasi-governmental "Department of Government Efficiency" (DOGE) with entrepreneur and failed Republican presidential candidate Vivek Ramaswamy, and the South Africa-born mogul is poised to cut funding for rural broadband services – which would potentially benefit his own internet service provider, reported The Guardian.
“We have never had a situation where the leading shareholder of a communications company has both a position – both in terms of influencing the president, but also having an assignment to drive efficiency in government – with so many government contracts,” said Blair Levin, a telecommunications industry analyst with New Street Research and the Brookings Institution. “That is an extraordinary situation. That is unprecedented.”
Musk has long been a critic of the Broadband Equity, Access, and Deployment (BEAD) Program, which provides nearly $42.5 billion through the Bipartisan Infrastructure Bill to expand high-speed internet access in rural areas, but his Starlink satellite internet service has been shut out of that funding after government agencies determined it was too slow to qualify.
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“Starlink is the only company actually solving rural broadband at scale!" Musk raged on his X platform last December. "They should arguably dissolve the program and return funds to taxpayers, but definitely not send it those who aren’t getting the job done. What actually happened is that the companies that lobbied for this massive earmark (not us) thought they would win, but instead were outperformed by Starlink, so now they’re changing the rules to prevent SpaceX from competing.”
Musk described the program "as “an outrageous waste of taxpayer money" in June, and he endorsed Trump a month later and became an influential adviser after pouring hundreds of millions into his campaign, and soon the president-elect was echoing his language on rural broadband.
“We’re spending a trillion dollars to get cables all over the country, right, up to upstate areas where you have like two farms," Trump told podcaster Joe Rogan last month. "They haven’t hooked up one person.”
Congress has authorized BEAD funding, but Levin suggested that Trump could right away order that money to be withheld indefinitely, as Musk and Ramaswamy argued he should do in a Wall Street Journal op-ed, although that would violate the 1974 Impoundment Control Act – the law that the former president violated in his first term ultimately resulted in his first impeachment.
“Every day Starlink is signing up customers in low-density America," Levin said. "Today, those in unserved and underserved locations likely believe that if they want a baseline broadband service, they have no choice but to subscribe to the Starlink service. The longer it takes for an alternative provider to come online with a similar or better service, the better it is for Starlink, as its sales process benefits from the current lack of broadband alternatives.”
Trump's newly named FCC chair Brendan Carr has also argued that subsidizing Starlink terminals instead of fiber optic broadband was a better use of public funding, and incoming Senate telecommunications committee chair Ted Cruz (R-TX) sent a letter last week to the National Telecommunications and Information Administration administrator complaining about waste in the BEAD program.
“Fortunately, as president-elect Trump has already signaled, substantial changes are on the horizon for this program,” Cruz wrote. “Congress will review the Bead program early next year, with specific attention to NTIA’s extreme technology bias in defining ‘priority broadband projects’ and ‘reliable broadband service.'"
However, industry experts say moving funding away from fiber to satellite would benefit Starlink, which analysts believe has been losing money, and be a bad deal for taxpayers and consumers.
“While there are other technology options for high-speed connectivity, the most reliable, efficient and future-proof solution is fiber optic technology to the home or business,” said Tom Dailey, head of regulatory and government affairs at Brightspeed, an internet service provider competing for BEAD funds. “Satellite broadband is a costly option that does not provide the same level of reliability or speed that fiber optic technology provides."