SpaceX Starlink – Is 3% to 5% a threat or a warning?
by Doug Mohney, July 7, 2021
Last week participating virtually at Mobile World Congress, SpaceX CEO Elon Musk said the company’s Starlink satellite broadband service was complementary to fiber and 5G services, providing access to the three to five percent of the world that didn’t have such broadband options. He said Starlink is best for “low density” areas with some capability to serve “medium density” areas, but being Elon, he didn’t explicitly define what the difference between low and medium density is.
Musk went on to say Starlink had nearly 70,000 simultaneous users online and the company was continuing to lose money on the terminal hardware, selling it to users at $500 while costing “more than a thousand dollars” per dish today. Of course, SpaceX is working hard to build lower-cost dishes and will one day – again, Elon didn’t say when – get the equipment price down to $250 to $300, a price point originally cited back in 2016.
Exactly how many dishes SpaceX is shipping per month is not known, but since the company told the FCC it had 10,000 beta users in February, a little back-of-the-envelope math (70,000 estimated users in late June – 10,000 in February = 60,000 / 4 months-ish) provides a guesstimate of around 15,000 dishes per month. SpaceX is working on ways to increase dish production rate with Musk saying the company will reach 500,000 users within 12 months.
Does Starlink service really threaten existing broadband service provider? If we take Musk at his word, fiber and 5G have nothing to worry about in the near-term, since the fastest rates expected from Starlink in the second half of this year will peak around 300 Mbps downlink speeds and perhaps 20 Mbps to 40 Mbps uplink speeds.
Cable and legacy DSL services likely have the greatest concerns, with frustrated users at the end of old coax or copper cable having no hesitation to jump onto Starlink beta services if all the Reddit users on the r/Starlink section are to be believed. However, these users will have to get in line with existing million plus HughesNet and Viasat geosynchronous earth orbit (GEO) satellite broadband customers who have heard the siren song of lower latency and faster broadband speeds.
SpaceX has stated on several occasions Starlink has a backlog/wait list of over 500,000 customers. It’s easy to believe that number when you tally up existing GEO satellite customers and legacy cable/DSL customers who have been waiting for faster options for years. For most, paying $500 down for equipment and trying to find the place to mount a Starlink dish is nothing compared to the thousands of dollars an incumbent wireline carrier wants to pull upgraded copper or fiber to a residence.
If anything, consumers may find themselves waiting behind government and enterprise customers willing to pay substantially more than $100 per month for Starlink services. SpaceX is working with Google to directly connect its data centers to the Starlink network. Google and SpaceX will team up to sell directly to enterprise customers, enabling single hop access to Google Cloud apps in the second half of this year. Add on demonstrations SpaceX is conducting with the U.S. military, commercial aviation, and the oil and gas industry, and it may be difficult for SpaceX to financially justify selling a dish to a consumer household paying only $100 per month.
SpaceX believes it will ultimately be able to support several million Starlink users in the future, but exactly when and what mix of those users are consumers are unknown because the company just doesn’t talk about those kinds of data at this point in time. If Starlink is ultimately spun out as a public entity years into the future, SpaceX will have to be more forthcoming on its customer mix and growth projections, along with other mundane benchmarks used by financial analysts like customer acquisition cost and average revenue per user (ARPU).
The Starlink warning to broadband companies is the relatively low cost and higher speeds the satellite network is capable of delivering to consumers in comparison to legacy wireline and first generation wireless systems. Companies that haven’t made efforts to upgrade infrastructure and network speeds will find themselves under increasing scrutiny by users who want “service like Starlink.” A few dishes in a service territory may have a significant customer impact beyond a relatively small loss of revenue. Broadband providers are going to have to be more proactive in discussing their pricing policies and network upgrade plans or they will be faced with being more reactive to disgruntled customers who have heard about Starlink as an option.
Satellite Rural Broadband: Billions, No. Small Percentages, Maybe.
by Doug Mohney, June 10, 2021
For over a decade, satellite broadband companies have hyped how they will serve the billions of people who currently don’t have basic internet access, but the reality is that they haven’t delivered. O3b derives its name from the “other 3 billion” people on the planet who didn’t have access to the internet when it was founded in 2007. Fast forward to 2021 with the number increasing to four billion people that “still have no internet,” according to Astranis’ web page.
If we focus on the United States, a country with sufficient wealth to pay for infrastructure investments, the January 2021 Federal Communication Commission (FCC) annual broadband report estimates around 14.5 million people in the U.S. did not have access to the copper standard of 25/3 Mbps fixed broadband service at the end of 2019. And this is before delving into the known hot mess of where the FCC gets its data compared to the reality on the ground and the agency’s reboot of broadband maps with a more crowd-sourced approach.
How many users can be served by new satellite broadband systems, such as SpaceX Starlink? SpaceX founder and CEO Elon Musk tweeted on May 4 that the company’s Starlink satellite broadband service can provide service for up to 500,000 users total in the near-term best case. Supporting “several million” users will be “more of a challenge,” Musk said, with the solution impractical for large scale use in denser urban areas.
Under the FCC RDOF auction, SpaceX will receive $886 million over a decade to deliver broadband speeds of 100 Mbps/20 Mbps to 640,000 locations across 35 states. SpaceX might be providing broadband to about 4.4% of the 14.5 million unserved/underserved within a decade, assuming Starlink gets all its 12,000 satellites in orbit by then to support millions of users. The company expects to be servicing up to 5 million users in the U.S. if it gets approval for its FCC license modification requested back in August 2020, up from its 1 million cap approved in March 2020.
SpaceX is serious about its RDOF commitment, having recently hired a regulatory compliance analyst to work out of the company’s DC office. Over the months and years to come, there will be plenty of data churned out to illustrate how SpaceX is connecting the unserved and underserved with the company tapping into other FCC subsidy programs through certification as an Eligible Telecommunication Carrier (ETC). Getting carrier status will enable it to offer voice services and tap into Lifeline and Emergency Broadband Benefit (EBB) programs.
But we still come back to the fact that SpaceX will only impact around 4.4% of the 14.5 million underserved/unserved in the U.S. after a decade through its current market approach of one dish per user. Other new entrants are leveraging different, more efficient approaches to provide bandwidth to underserved areas. OneWeb and Telesat are positioning themselves as backhaul carriers delivering hundreds of megabits (OneWeb) to gigabit or more (Telesat) into rural communities, providing local connectivity via terrestrial wireless solutions ranging from “simple” WiFi to cellular. Telesat has teamed up with the Rural Broadband Consortium to develop and refine satellite rural/remote community service models for deployments in Canada to meet the government’s 50/10 Mbps household service goals, an approach that will no doubt migrate southward to the U.S. over time.
Satellite community models should be more cost effective than the “Everyone gets a dish” approach by enabling more users within a geographic area to access bandwidth rather than a few handfuls of users overloading an overhead satellite, but they also should provide a longer-term roadmap for viable long-haul network builds as well. Everyone in the history of internet access always wants more bandwidth, be it residential users or businesses. In a community model, gigabit-level satellite backhaul could ultimately be replaced by fiber to provide higher levels of service with satellite transitioning to a backup/redundant link.
Regardless of the model, satellite broadband connectivity is not going to scale to serve “billions.” There’s just not enough new companies, not enough satellites in the sky and on the drawing board and not enough radio frequency spectrum capacity to get to a fraction of a billion users over the next decade. Everyone should stop pretending otherwise.
Half a Million SpaceX Starlink Pre-Orders Aren’t Important – What Is?
by Doug Mohney, May 20, 2021
SpaceX says it has received more than 500,000 orders for its Starlink broadband service as of early May. Is this good news for the satellite broadband effort? Or deflection from more meaningful numbers SpaceX should be disclosing?
“To date, over half a million people have placed an order or put down a deposit for Starlink” was a statement made by a SpaceX spokesperson made during the March 4, 2021 pre-launch countdown to put yet another 60 satellites to orbit, making a total of over 1,400 operational satellites as of this writing.
Over half a million orders or pre-orders sounds quite impressive, doesn’t it? But we don’t know if these orders are worldwide or simply in the U.S. We don’t know how many orders have been fulfilled compared to pre-orders. Or how many of these orders are individual versus business users. It’s just a big number and there’s no way to audit or confirm it, since SpaceX is a private company and doesn’t conduct regular analyst briefings or press conferences.
Let’s place some context based on previous SpaceX statements made to the Federal Communications Commission (FCC). SpaceX received a license to operate up to 1 million user terminals (dishes) in the U.S. in March 2020. The Starlink limited beta started in July 2020, with the company opening a web page to take email addresses so interested parties could receive updates and service availability information.
By the end of July SpaceX had filed a modification to its U.S. license to expand to 5 million dishes, “due to the extraordinary demand for access to the Starlink non-geostationary orbit satellite system. Despite the fact that SpaceX has yet to formally advertise this system’s services, nearly 700,000 individuals represented in all 50 states signed up over a matter of just days to register their interest in said services at www.starlink.com.”
The SpaceX Starlink public beta started in October 2020, expanding from the United States into Canada and the UK in January 2021, followed by the company starting to accept $99 pre-orders worldwide in February, and dishes starting to appear in Austria, Germany, France, Australia, and New Zealand so far this year.
It would be interesting to know how many interested customers converted to orders and paying beta customers from pre-orders and those who simply registered interest, but since SpaceX expanded its pool from U.S. users to worldwide in January, there’s no way to know. We just have the 700,000 U.S. individuals who expressed interest which clearly are less than the 500,000 worldwide signups for orders and pre-orders that have occurred to date.
SpaceX is already starting to limit fulfillment according to Reddit users waiting for Starlink service. Some potential U.S. customers are seeing “Max capacity” messages for their particular address locations, with service not available until the end of 2022. Elon Musk tweeted on March 4, “Only limitation is high density of users in urban areas. Most likely, all of the initial 500k will receive service. More of a challenge when we get into the several million user range” but there’s no way to square what Elon says with the Reddit information.
The more interesting question is how fast the first 500,000 SpaceX Starlink users will be turned up. At the beginning of the year, SpaceX had turned up over 10,000 beta customers per a February 2021 FCC filing, but the company has not provided an estimate as to how many more users have been added since then.
User turn-up is keyed to production of the $1,500 SpaceX Starlink antenna, a marvel of modern electronics. The company has said little on current or expected future production rates, but it would have to produce anywhere between 5,000 to 7,500 antennas per month in order to start making a significant dent in a 500,000 pre-order backlog.
Why isn’t SpaceX talking about antenna production rates and expected ramp-up to sign-on customers? While it is not a public company, SpaceX is in the process of being a registered commercial carrier so it can collect FCC RDOF broadband monies and other subsidies. Understanding how rapidly SpaceX plans to connect more customers, especially whose who need federal support to access broadband and landline services, would be in the public interest.