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Application for Designation As an Eligible STATE OF ILLINOIS ILLINOIS COMMERCE COMMISSION Starlink Services, LLC : : Application for Designation as an Eligible : Telecommunications Carrier for the : 21-0005 Purpose of Receiving Federal Universal : Service Support pursuant to Section : 214(e)(2) of the Telecommunications Act : of 1996. : PROPOSED ORDER I. PROCEDURAL HISTORY On January 4, 2021, Starlink Services, LLC (“Applicant” or “Starlink”) filed with the Illinois Commerce Commission (“Commission”) a verified Application pursuant to Section 214(e)(2) of the Telecommunications Act of 1996 (“1996 Act”), 47 U.S.C. §151 et seq., and Section 54.201 of the Federal Communications Commission (“FCC”) rules requesting designation as an eligible telecommunications carrier (“ETC”) in the census blocks in which it was awarded Rural Digital Opportunities Fund (“RDOF”) support (the “Service Area”) under the provisions of Section 54.201(d) of the FCC rules. Applicant seeks an ETC designation in the Service Area in order to receive Universal Service Fund (“USF”) support from the federal RDOF. Pursuant to notice as required by law and the rules and regulations of the Commission, hearings were held in this matter before a duly authorized Administrative Law Judge (“ALJ”) of the Commission on January 27, 2021, March 18, 2021, April 7, 2021, April 12, 2021, April 15, 2021, and April 26, 2021. Applicant and Commission Staff (“Staff”) were each represented by counsel. There were no petitions to intervene. The evidentiary hearing took place on April 26, 2021. Applicant presented the testimony of Matthew Johnson, a Senior Business Operations Analyst employed by Space Exploration Technologies Corp. (“SpaceX”), the parent company of Applicant. Staff presented the testimony of David Sackett, an Economic Analyst in the Policy Division of the Public Utilities Bureau. The ALJ marked the record “Heard and Taken” at the conclusion of the April 26, 2021 hearing. Applicant and Staff each filed an Initial Brief and Reply Brief. II. BACKGROUND A. Universal Service and the Rural Digital Opportunity Fund The FCC provides several types of support through its USF programs. The two types of support available are Lifeline support and the RDOF support: Lifeline funds support the provision of voice and broadband services to low-income consumers by providing a discount, while the RDOF supports the development and provision of voice 21-0005 and broadband networks in high costs areas. The RDOF provides $20.4 billion in support nationwide to those areas of the country that are unserved by internet service providers, or where service is unavailable at 25/3 Mbps. The FCC has opted to transition from support of voice telephony services to the provision of broadband internet access services (“BIAS”) through both the Lifeline and RDOF programs. The FCC apportioned RDOF funding to high cost areas through a two- phase process. In RDOF Phase I, which targeted census blocks wholly unserved with broadband at speeds of 25/3 Mbps, the FCC implemented an Auction (“Auction 904”) which allowed any pre-qualified provider to bid on projects in designated census blocks. Bidders were required to bid for specific service levels related to both speed and latency. The bids were capped based on that model. Auction 904 was successful in awarding more than nine billion dollars of RDOF funding over a 10-year timeline. The FCC released information about the amounts bid and the support awarded to each winner on December 7, 2021. Phase II will include all locations that were not awarded in Phase I as well as those areas that are partially served currently. The budget for phase II will be $4.4 Billion plus all funds not awarded in Phase I. The FCC requires each provider awarded RDOF Phase I (“RDOF I”) support to offer voice and BIAS and to provide Lifeline service in the area within Illinois for which the winner was awarded that support. See 47 C.F.R. §54.805. Prior to receiving support, winners be must designated as ETCs in each state for which they were awarded support. There were 19 winners awarded RDOF I support in Illinois through Auction 904 for a total of $369 million over 10 years. The FCC requires that all winners submit proof of designation as ETCs by the appropriate regulatory body within 180 days from that notice; this deadline is June 7, 2021. There is no provision in Auction 904 to reassign any funds that do not get paid out to a winning bidder that fails to get ETC designation within the specified timeframe. Thus, failure of a winning bidder to receive ETC designation from the Commission will result in the winning bidder losing the entire amount of support awarded, with funds going back to the RDOF, as such funds will not be re-awarded to any other bidder at this time. B. Applicant, Service, and the Requested Service Area Applicant is a limited liability company formed in 2020 under the laws of Delaware authorized to conduct business in Illinois. Applicant is a wholly-owned subsidiary of SpaceX, which is also a Delaware corporation with its principal office located in Hawthorne, California. SpaceX is a private American company founded in 2002 by Elon Musk. SpaceX participated in the RDOF Phase I auction. The FCC awarded SpaceX $885 million in support to provide broadband and standalone voice services in 35 states. This includes $8,325,104 awarded to provide broadband and standalone voice services to the census blocks in Cook, DuPage, and Lake Counties, Illinois listed in Exhibit 2 to the Application. On December 22, 2020, pursuant to the processes established by the FCC, SpaceX assigned its winning bids to Applicant. SpaceX designs, manufactures, and launches advanced rockets, spacecraft, and satellites, and offers broadband service over the world’s largest satellite constellation. SpaceX has over 8,000 employees in the United States at its Hawthorne, California 2 21-0005 headquarters and at facilities across the country. Applicant will rely on the significant managerial and technical expertise of SpaceX in delivering service to consumers. SpaceX is leveraging its track record of rapid innovation and experience building rockets and spacecraft to deploy a space-based broadband internet system capable of providing truly low-latency, high-throughput service in even the most remote areas of the country. The constellation of satellites providing this service is called Starlink. This service is ideal for bringing broadband and voice over internet protocol (“VoIP”) to underserved rural areas in the United States. Since the grant of its FCC satellite authorization in 2018, SpaceX has successfully deployed the largest satellite constellation in history and demonstrated its ability to deliver high-quality internet to thousands of users. The FCC authorized SpaceX in 2018 to deploy and operate Starlink, which consists of more than 4,400 Non-Geostationary Orbit (“NGSO”) satellites in low Earth orbit. The FCC based its decision on the ability of SpaceX “to bring high-speed, reliable, and affordable broadband service to consumers in the United States and around the world, including areas underserved or currently unserved by existing networks.”1 Applicant asserts that it and SpaceX bring to bear SpaceX’s successful history of design innovation, manufacturing capability, and ability to operationalize complex space and ground systems in order to create a U.S.-based manufacturing capability for Starlink satellites, consumer premises equipment, and ground station antennas. The result is the creation of a comprehensive ground network that currently communicates with over 900 Starlink satellites deployed, enabling SpaceX to commence beta service with thousands of users across multiple states and in some international locations. Applicant states that Starlink’s technical maturity and inherent capacity to support high-throughput, low-latency broadband service to underserved communities in even the most remote and rural areas of the United States promises to materially contribute to closing the digital divide. With more than 900 satellites deployed, Applicant relays that SpaceX has launched sufficient satellites in volume to provide continuous coverage to large parts of the United States and is expanding the size of its constellation rapidly to provide coverage over the entire country. SpaceX has already deployed ground equipment to support initial broadband operations in desired locations. SpaceX is currently offering select users beta consumer-grade broadband service in Idaho, Maine, Michigan, Minnesota, Montana, North Dakota, Oregon, Washington, and Wisconsin. Currently, Starlink beta users are selected to validate technical, operational, and business system readiness ahead of a broader public beta service roll-out. Applicant is seeking an ETC designation in each of the states in which SpaceX received support to provide broadband and standalone voice services through the RDOF. In addition to receiving an ETC designation from each relevant state authority (or from the FCC if the state disclaims jurisdiction) by June 7, 2021,2 all RDOF winning bidders 1 In re Space Exploration Holdings, LLC Application for Approval of Orbital Deployment and Operating Authority for the SpaceX NGSO Satellite System, Memorandum Opinion, Order and Authorization, 33 FCC Rcd, 3391, ¶ 1 (2018). 2 Rural Digital Opportunity Fund Phase I Auction Scheduled for October 29, 2020; Notice and Filing Requirements and Other Procedures for Auction 904, Public Notice, AU Docket No. 20-34, WC Docket 3 21-0005 are required to commercially offer voice and broadband service consistent
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