Musk could use the ‘Department of Government Efficiency’ for self-enrichment | Elon Musk

Elon Musk, named by Donald Trump to co-lead a commission aimed at reducing the size of the federal government, is poised to undermine funding for rural broadband services to benefit his satellite internet services company, Starlink.

Musk has long been a critic of the Biden administration’s Broadband Equity, Access, and Deployment (Bead) Program, which provides $42.45bn through the Bipartisan Infrastructure Bill to expand high-speed internet access in rural communities. Starlink, the satellite internet services subsidiary of SpaceX, has largely been shut out of this funding after government agencies deemed it too slow to qualify.

But with Trump’s election, and the deference Trump appears poised to give to Musk’s desired reforms, the world’s richest man could re-prioritize how the federal government provides high-speed internet to rural America, creating an immense conflict of interest. If Musk recommends cuts to government spending on rural fiber optic broadband – as he has repeatedly suggested – it directly increases the value of Starlink’s satellite internet services.

“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.

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.

Republican senators have also been agitating for changes to the Bead program. Senator Ted Cruz, poised to take over the Senate committee overseeing telecommunications, sent a letter last week lambasting the NTIA administrator, Alan Davidson, for alleged waste and administrative bloat 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’.”

Senator Joni Ernst of Iowa sent Musk and Ramaswamy a letter on Tuesday with a roadmap for cost-cutting. The Bead program was on her target list.

Davidson responded to earlier inquiries by Cruz, noting that the NTIA “has obligated over $28bn to states and territories, all of whom also received planning grants through the program”.

The program “also creates room for all strategies, and the NTIA expects states and territories will use a mix of technologies to connect their unserved and underserved locations”, Davidson wrote.

The NTIA announced earlier this year that Starlink could qualify for some Bead funding for services in extremely remote locations. In areas without broadband service from a landline operator, Starlink is often the only option. Project Kuiper by Amazon is also a low-Earth-orbit satellite internet service, which Amazon says will begin consumer offerings next year.

SpaceX and its Starlink subsidiary are private companies that do not regularly disclose their finances. But analysts have argued that, until recently, Starlink had been losing money despite the success of SpaceX.

That has changed over the last year as Starlink’s 6,000-plus low-Earth satellite network has come online and courted business in developing countries. Analysts from Quilty, a space industry intelligence firm, suggest that Starlink’s revenue has exploded, from $1.4bn in 2022 to $6.6bn in 2024.

SpaceX and Tesla have about $15.4bn in government contracts, according to a recent New York Times analysis. Starlink is also competing with 15 other companies for US space force contracts worth nearly $1bn.

Starlink did not respond to a request for comment for this story.

Despite the obvious interest in government contracts, Musk and biotech entrepreneur and former presidential candidate Ramaswamy’s “Department of Government Efficiency” will be tasked with reducing the federal government headcount and cutting costs, which could include the Bead program.

“Starlink and Bead are seeking to provide broadband to the same population: those living in low-density America,” Levin said. “While Starlink already has a network that covers the entire country, spectrum constraints and its relative functionalities compared to wired broadband service providers mean that the primary market for Starlink is in low-density America.”

Starlink benefits from any delay in Bead funding, Levin said. “Every day Starlink is signing up customers in low-density America. 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.”

Reallocating funding from fiber to satellite would put money in Starlink’s pocket at the direct expense of terrestrial competitors.

“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 … We don’t anticipate that the Bead program will be eliminated. In fact, we believe it will continue and there is strong bias for fiber technology as the main means of connectivity given its superior speed and bandwidth capabilities.”