“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.”
Levin suggested that Trump could order Bead funding to be withheld indefinitely as soon as he takes office, even though Congress has authorized the funding.
Doing so would violate the 1974 Impoundment Control Act, a law Trump fell afoul of in his first term that ultimately resulted in one impeachment. But Musk and Vivek Ramaswamy, who will co-lead the commission to reduce the size of the federal government, argued in a Wall Street Journal editorial last week that Trump should pursue impoundment when he deems it necessary.
“Mr Trump has previously suggested this statute is unconstitutional, and we believe the current supreme court would likely side with him on this question,” they wrote.
Any move like this would tie the program in legal knots as lawsuits abound, Levin said. But the delay is the point. “While states and others could file legal actions to stop such a pause, we think most courts would be reluctant to enjoin or otherwise stop the administration from reconsidering some elements of the program. Even actions of dubious legality can benefit Starlink through delay or through litigation.”
Musk had set his sights on the Federal Communications Commission (FCC) and the National Telecommunications and Information Administration (NTIA) long before Trump’s victory. The NTIA administers federal grant funding for the Bead program.
Without a government subsidy, rolling fiber optic lines down country roads to serve a handful of houses at a time is usually too cost-prohibitive for an internet service provider. But to companies like AT&T or Verizon, a government subsidy to a local internet service provider also looks like the government funding the competition.
Big telecom companies and the FCC argued long and loud about what parts of the country had access to high-speed service, and thus didn’t need government money. But the definition of “high speed” used by industry and the government was often slow by many standards.
After years of negotiation, lawsuits and politicking, the FCC and the NTIA settled on a modern definition for broadband service: 100 megabits per second (Mbps) download speeds, 20Mbps upload speeds, with less than 100 milliseconds of latency.
Right now, Starlink doesn’t meet that standard . It has been getting slightly slower over time even as more people sign up for service, according to internet performance testing service Ookla’s speed tests. In 2022, the FCC rescinded a $900m grant from the Rural Digital Opportunity Fund to Starlink to connect rural communities to the internet, citing its failure to meet the speed and latency standards and declining network performance.
A SpaceX Falcon 9 rocket is launched, carrying 23 Starlink satellites into low-Earth orbit, in Cape Canaveral, Florida, in May 2024. Photograph: Joe Skipper/Reuters
Musk erupted on an X post.
“Starlink is the only company actually solving rural broadband at scale! They should arguably dissolve the program and return funds to taxpayers, but definitely not send it those who aren’t getting the job done,” Musk wrote. ”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.”
In June, Musk described the Bead program, which began rolling out grants to states this year, as “an outrageous waste of taxpayer money and is utterly failing to serve people in need”.
A month later, Musk endorsed Trump and began a $100m spending campaign in support of his candidacy.
After Musk started to gain Trump’s ear – and particularly after Musk’s endorsement and Starlink’s deployment of satellite terminals to areas hit by Hurricane Helene, which Trump praised regularly on the campaign trail – Trump’s language about rural broadband began to shift in Musk’s direction.
Trump described Starlink as “better than the wires”, when talking with Joe Rogan in the much-watched podcast interview. “We’re spending a trillion dollars to get cables all over the country, right, up to upstate areas where you have like two farms … They haven’t hooked up one person.”
Over the last year, the FCC commissioner – and Trump’s newly named FCC chair – Brendan Carr has also echoed Musk’s position, arguing that the public might be better off by subsidizing the cost of Starlink terminals instead of fiber optic broadband.
After Trump’s election, Carr said the FCC is unlikely to revisit its rescission of Starlink’s grant, citing procedural hurdles. But Carr, who authored the FCC chapter of Project 2025 , has suggested that as much as a third of Bead funding could go to satellite internet providers.
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