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The Federal Communications Commission said it has “serious doubts” that SpaceX and other low-Earth orbit (LEO) satellite providers will be able to deliver latencies of less than 100ms.

As we reported yesterday, FCC Chairman Ajit Pai backed off a plan that would have completely prevented SpaceX and other LEO companies from applying for rural-broadband funding as low-latency providers. But the FCC’s full order was released today and suggests that SpaceX will have a tough time convincing the commission that its service will deliver latencies below the FCC standard of 100ms.

The final version of the FCC order acknowledges that LEO satellites have “intrinsic advantages” over geostationary satellites that operate at much higher altitudes. “Satellites in low-Earth orbit are not subject to the same propagation latency limitations as higher orbiting satellites,” the FCC order said. But the order goes on to say the FCC has “serious doubts that any low-Earth orbit networks will be able to meet the short-form application requirements for bidding in the low-latency tier” and that companies like SpaceX thus face a high chance of being rejected when they apply for funding as low-latency providers:

Service providers that intend to use low-Earth orbit satellites claim that the latency of their technology is “dictated by the laws of physics” due to the altitude of the satellite’s orbit. We remain skeptical that the altitude of a satellite’s orbit is the sole determinant of a satellite applicant’s ability to meet the Commission’s low-latency performance requirements. As commenters have explained, the latency experienced by customers of a specific technology is not merely a matter of the physics of one link in the transmission. Propagation delay in a satellite network does not alone account for latency in other parts of the network such as processing, routing, and transporting traffic to its destination. Short-form applicants seeking to bid as a low-latency provider using low-Earth orbit satellite networks will face a substantial challenge demonstrating to Commission staff that their networks can deliver real-world performance to consumers below the Commission’s 100ms low-latency threshold.

$16 billion at stake

If SpaceX and similar companies are rejected from the low-latency category, they will be at a disadvantage in a reverse auction that will distribute $16 billion—$1.6 billion yearly, over ten years—from the Rural Digital Opportunity Fund (RDOF). The auction, scheduled to begin on October 29, will give ISPs funding to deploy broadband in census blocks where no provider offers home-Internet speeds of at least 25Mbps downstream and 3Mbps upstream.

The FCC will prioritize low-latency networks when awarding funding, so SpaceX and other LEO providers could come up short against terrestrial networks. Even DSL providers would have an advantage over LEO networks in funding battles if the satellite companies are placed in the FCC’s high-latency category.

SpaceX has argued that the FCC’s skepticism is unwarranted, telling agency officials that its Starlink broadband system “easily clears the commission’s 100ms threshold for low-latency services, even including its ‘processing time’ during unrealistic worst-case scenarios.” While altitude isn’t the only factor in latency, SpaceX’s altitudes, ranging from 540km to 570km, are a fraction of the 35,000km used with geostationary satellites. SpaceX CEO Elon Musk has said the company is aiming for latency below 20ms, similar to cable Internet and low enough to support competitive online gaming. SpaceX will have a chance to make its case in detail to the FCC during the application stage.

The timing is part of the problem for SpaceX. The company has launched about 480 satellites but isn’t offering commercial service yet, and companies have to submit applications for the auction by July 15. Having a commercial service available would make it easier for SpaceX to convince the FCC that its service is low-latency. Getting placed in the high-latency category wouldn’t completely shut SpaceX and other LEO providers out of funding, but it would likely at least reduce the amount they get.

Starlink’s website says the SpaceX-operated ISP plans to deploy “service in the Northern US and Canada in 2020, rapidly expanding to near global coverage of the populated world by 2021.”

DSL, fixed-wireless get shot at gigabit tier

Separately, LEO satellite providers are forbidden from applying as gigabit providers in the FCC auction, even though DSL and fixed-wireless ISPs will be given a chance to demonstrate that they can provide gigabit speeds. While gigabit speeds “are not commercially available on a widespread basis using these technologies, service providers using these technologies have increasingly reported deploying networks capable” of providing them, the FCC order said. Like SpaceX in the low-latency category, DSL and fixed-wireless providers will face a high bar in attempts to enter the gigabit category:

While an applicant will be permitted to select the Gigabit performance tier in its application if it intends to use fixed wireless or DSL technologies for meeting its Auction 904 public interest obligations, such applicants face a high burden to persuade Commission staff that they are reasonably capable of meeting the public interest obligations in rural areas and thus qualified to bid for the Gigabit performance tier. Particularly for DSL services, we do not anticipate that an applicant using DSL technologies would be able to demonstrate that it is reasonably capable of offering a service that meets the Gigabit performance tier public interest obligations absent a hybrid approach that relies mostly on fiber.

Fixed-wireless providers will have to account for “distance limitations, spectrum bands attributes, channel bandwidths requirements, backhaul and medium haul requirements, tower siting requirements, capacity constraints, required upstream speeds, required minimum monthly usage allowances, and other issues raised in the record,” the FCC said. Ultimately, the FCC said it expects that “relatively few fixed wireless and DSL technologies will be able to meet the short-form requirements for bidding in the Gigabit performance tier.”