SpaceX argued that the FCC’s doubts are unfounded and that Starlink will “easily clear the commission’s 100-millisecond threshold for low-latency services, even including its “processing time” during unrealistic worst-case scenarios. In fact, with altitudes at 335 to 354 miles (compared to 21,750 miles for geostationary systems), SpaceX is shooting for a latency below 20 milliseconds — in line with cable internet.

That might prove to be true, but SpaceX is in a catch-22 situation. The FCC wrote that it 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.” In other words, SpaceX may well be right about its latency claims, but without a working network, it won’t be able to prove it in time to qualify for the maximum funding.

That wouldn’t mean SpaceX would be completely shut out. It can still qualify for funding outside the low-latency tier, but that could reduce the sums it would be eligible to receive.

SpaceX currently has 480 satellites but no consumer services as of yet, and it has exactly a month to submit an application for the auction. The company plans to roll out services in the Northern US and Canada this year, but it would likely be too late.