More than 121,000 homes and businesses in 17 states will receive subsidized satellite internet service from Viasat, after the Federal Communications Commission awarded $87.1 million to connect customers at those locations at a cost of just over $715 per customer.

The money is part of the ongoing Connect America Fund (CAF) program, designed to subsidize the costs of delivering internet access in high-cost, typically rural areas. The current iteration of the program is dispensing funding over 10 years to 45 states. Viasat won the funding through an auction procedure that makes it easy for satellite providers to win funding because of low infrastructure costs to service rural areas that lack a wired internet service provider.

An additional $2.1 million was awarded to some other providers:

• Fixed wireless provider LTD Broadband, which relies on 1,500 wireless internet tower sites covering over 40,000 square miles of Iowa, Minnesota, Nebraska and South Dakota.
• Horry Telephone Cooperative, which serves rural customers in Horry County, S.C.
• Bruce Telephone Company, which won funding for parts of Wisconsin to deliver gigabit internet service.
• JCWIFI, which provides fixed wireless internet within a 3,000 square mile service area covering parts of Illinois, Iowa and Wisconsin.

In addition to the upper Midwest and South Carolina, the biggest states expected to benefit from the latest awards are (northern) California and Wyoming.

At least $2 billion in subsidy funds became available after larger providers — AT&T, CenturyLink and Verizon turned down funding because the companies had no interest in building out their networks in rural service areas.

Despite claims satellite broadband has improved, our readers respectfully disagree:

“Most people don’t know what data caps really are until they’ve had satellite based Internet service where the bandwidth is shared,” Scott S. reminds Stop the Cap! He’s a subscriber of Exede, a satellite broadband provider powered by the ViaSat satellite platform serving about 687,000 residential customers nationwide.

Online life can be a lot worse when you are stuck with satellite-based Internet access:

• “I am only allowed to have 10GB per month total for everything and have a 12/3Mbps service. Anything over that and they either cap your flow or give you substantially lower bandwidth speed.
• “You can’t go online with more than three devices (including your phones).
• “You can forget Netflix or watching any shows online.
• “You can forget playing ANY video games online.
• “You can forget taking any college courses online without service interruptions (which I am).”

“And they still charge you as much as other ISPs do (at least $60/month) that provide no data caps and a MUCH faster speed,” Scott writes.

Exede offers most customers plans with 10, 18, or 30GB of usage per month. About one-third of the country, typically the most rural regions in the western U.S., can now choose faster plans at speeds nearing 25Mbps because those spot beams are underutilized. But most subscribers get considerably poorer service because about two-thirds of ViaSat’s residential satellite access beams are full. Despite that, Viasat still managed to find capacity to power in-flight Wi-Fi on JetBlue, Virgin America and some United Airlines aircraft.

Customers who have never had DSL or cable broadband tolerate the slow speeds and low caps better than those that move from an area served by a wired provider. Many of those customers call satellite broadband speed marketing claims “fraudulent” and complain low usage caps make it difficult to impossible to use the Internet to use multimedia content.

Rural Americans already depend on their satellite dish to receive hundreds of channels of television entertainment, but broadband over satellite has traditionally been slow, limited and very expensive.

There is little evidence things will change quickly for those without access to traditional cable or phone company DSL. But the launch of new, higher capacity satellites, have at least increased satellite broadband speeds and eased back on extremely low usage caps under a provider’s “fair access policy.”

This week, Viasat’s Exede broadband pricing through DirecTV was formally announced. The “up to 12Mbps” service will cost:

• $39.99 for 10GB of monthly usage;
• $69.99 for 15GB;
• $119.99 for 25GB

These discounted prices are good for the first year of a two year contract. Prices increase $10 a month for the second year. Contract customers will have the $49.99 installation fee credited back on a future invoice.

There is one significant improvement: the satellite service removes the data cap between 12 midnight-5am daily – good for automated downloads, software updates and any other high bandwidth applications.

Customers have until Jan. 31 to sign up for the promotion.