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Every major corporation gets lots of subsidies from the government and few actually deliver what they promised in exchange. But yeah, yet another hyped up product by Musk today fails to live up to the promises. In this case it's because the sats still need to communicate directly with the grind station instead of being able to bounce signals between them. That was the original promise and it's still far from becoming reality.
Failed to live up to their promise? The whole point of these specific subsidies is to be at X in year 2025. The FCC said, nah, you aren't going to make it there by 2025 (in 2022), so we won't give you the money to make it there by 2025.
It's impossible to ever know now if that promise could or could not be met if they don't meet it as the money was part of that promise.
If they make it there in 2025 in spite of not getting the money, then we'll know the FCC decision was complete BS
Edit: For reference, SpaceX has almost doubled their 2022 starlink launches (33 vs 60+ (still a couple weeks left, might be 62-63?)). Each launch of the new v2 mini satellites is about 40% more bandwidth than their previous launch (less satellites but 4x bandwidth). And this pace is only going to increase. I think they're aiming for 140+ launches (not starlink specific) in 2024.