FAA Weighs Canceling Verizon Contract Amid Starlink Tests (1)

The US Federal Aviation Administration is nearing a decision on whether to cancel a $2 billion Verizon Communications Inc. contract, according to people familiar with the matter.

That would be a crucial step that could clear the way for billionaire Elon Musk’s SpaceX to take on more work upgrading information technology networks for the national airspace system.

An outright cancellation is one option under consideration, along with alternatives that would let Verizon continue while also handing some work to SpaceX, said the people, who weren’t authorized to speak publicly. A decision could come as soon as Friday, though the situation remains fluid, the people said.

A spokesperson for the FAA said Wednesday that the agency hadn’t made any decisions about the contract, which was awarded in 2023. Verizon and SpaceX didn’t respond to requests for comment.

The crossroads comes as the FAA begins testing the use of SpaceX’s Starlink satellite internet terminals for some of the planned upgrades. The move, first reported by Bloomberg, has raised concerns about conflicts of interest since SpaceX is regulated by the FAA and it could be seen as Musk using his influential position within the Trump administration to funnel business to his companies. At the same time, the need to modernize the FAA’s systems has been a longstanding problem.

Read More: Musk Begins Testing His Starlink Terminals in US Airspace System

Bloomberg previously reported that Musk authorized a shipment of 4,000 Starlink terminals to the FAA.

In a Thursday post on X, Musk said the system Verizon was tapped to upgrade is “breaking down very rapidly” and that Starlink terminals are being sent to the FAA at no cost to US taxpayers “on an emergency basis to restore air traffic control connectivity.”

FAA representatives didn’t immediately respond to a message seeking comment on Musk’s claims.

The agency previously confirmed that it is testing one Starlink terminal in Atlantic City and two terminals at non-safety critical sites in Alaska. The FAA has been considering the use of Starlink to fix telecommunication connections and provide more reliable weather information at remote sites, a spokesperson said.

The Washington Post reported earlier that the FAA may cancel the Verizon contract.

(Updates with Musk statement in sixth paragraph.)

--With assistance from Ryan Beene.

To contact the reporters on this story:
Allyson Versprille in Washington at aversprille1@bloomberg.net;
Jason Leopold in Los Angeles at jleopold15@bloomberg.net

To contact the editors responsible for this story:
Benedikt Kammel at bkammel@bloomberg.net

Richard Clough, Ryan Beene

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