Assessing Starlink’s Commercial Viability

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SpaceX is gradually deploying a mega constellation of 12,000 satellites that will serve as internet relay stations. This constellation will form the Starlink network and will provide a high-bandwidth, low-latency internet service. 

On Tuesday, October 6, the aerospace company conducted its thirteenth Starlink mission and deployed a fresh batch of 60 satellites. So far, SpaceX has launched 773 satellites into low-earth orbit, and is ready to take the next big step.

SpaceX CEO Elon Musk announced on Twitter that enough satellites were launched to start a public beta service in northern USA and possibly southern Canada.

Additionally, SpaceX already rolled out a private beta service and recruited testers as early as last June. This article will outline the service’s performance thus far, and how the network is vital to SpaceX’s plans from a commercial standpoint and to their ultimate objectives.

Starlink’s Network Performance So far

According to Starlink’s official website, the objective of SpaceX is to provide “near global coverage” by 2021.  In regards to their broadband internet service, SpaceX have lofty ambitions.  Their 2016 application to the FCC states that “the system will be able to provide high bandwidth (up to 1Gbps per user)” once the constellation is deployed.

Additionally, during the 2020 Satellite conference’s Q&A session, Musk said that the company is “targeting latency below 20 milliseconds. Latency of less than 20 ms would make Starlink comparable to wired broadband service. 

So far, Starlink’s performance is looking very promising. Last August, beta users conducted tests using Ookla’s tool and anonymously published them on reddit. Speed tests showed upload speeds ranging from 5Mbps to 18 Mbps, and up to 60Mbps download speeds.

One reddit user compiled the test results and created the following Image:

Starlink Download Speeds Compiled Together / Image Source: u/Snnackss – Reddit

Throughout the month of August, the American West Coast has been devastated by wildfires. Washington state emergency responders started using Starlink user terminals to bring internet service to areas affected by the wildfires. 

Emergency telecommunications leader of the Washington State Military Department’s IT division, praised the internet service’s speed and reliability. Hall stated that he has “never set up any tactical satellite equipment that has been anywhere near as reliable”.

The Native American Hoh tribe also sang Starlink’s praises. The tribe tweeted that the network has been supplying fast broadband to local residents in the area. They also added that their “children can participate in remote learning” and their “residents can access healthcare.”

It’s fair to say that so far, the Starlink network is seen as a viable and reliable service by customers.  

Starlink Network’s Commercial Viability

From a commercial and economic standpoint, the Starlink project could be worth tens of billions of dollars. Forbes estimates that the network could be valued at $30 billion by 2025. To understand Starlink’s value, we must delve deeper into SpaceX’s business model and the aerospace industry in general.

SpaceX has significantly disrupted the industry. It is the first commercial enterprise to effectively reuse rockets for mission launches and implement that policy on a wide scale. 

However, the company operates in a price inelastic market. That is the opposite of Tesla and the EV market where lower prices lead to huge increases in sales. The space launch market, on the other hand, is not a consumer market. Normal people don’t buy rocket launches. Governments or giant corporations do. With the exception of Starlink, SpaceX thus deals with a very targeted and specific clientele.

A Starlink User Terminal / Image Source: @flcnhvy – Twitter

Additionally, SpaceX’s raison-d’être is to get to Mars and enable the human race to become a multiplanetary civilization. The company needs to generate considerable capital to do so. This is why it has decided to get involved in the broadband internet business.

Let us assume that SpaceX will bring in 50 million users worldwide out of a possible 7 billion by 2025. Provided that monthly subscription costs amount to $80, the company will be able to generate $48 billion a year just from this service. 

To top it all off, SpaceX builds, launches and operates the Starlink satellites. They do not rely on aggregators or third-parties. As a result, costs will undoubtedly be lower than the competition. 

Thus, from a commercial standpoint, the project possesses a unique value proposition and may even be undervalued by Forbes! Starlink will very likely be an extremely successful enterprise and will enable SpaceX to democratize space access in the upcoming years!


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