Even Elon Musk Makes It Clear Starlink Could Have Limited Impact, May Not Be Financially Viable

Broadband

from the subsidize-me-please dept

When even Elon Musk is reining in expectations and speaking carefully about one of his products, you know you probably shouldn’t get too excited.

We’ve noted how Musk’s Starlink satellite broadband venture will certainly help a few people out of the reach of broadband options, but isn’t going to meaningfully disrupt telecom. Limited capacity means Starlink will be able to provide broadband service to somewhere between 400,00 and 800,000 subscribers, in a country where up to 42 million Americans lack access to broadband, 83 million live under a broadband monopoly, and tens of millions more live under a duopoly. In short, Starlink will “fix” US broadband much like a squirt gun will kill an elephant.

Musk clearly knows that Starlink’s reach doesn’t meet the usual hype surrounding the billionaire’s products, so he continues to be more candid and honest when talking about Starlink versus many of his other abundantly hyped projects. Like during his onscreen talk at Mobile World Congress (MWC) in Barcelona, where he once again tempered enthusiasm about Starlink’s real-world impact:

“You can think of Starlink as filling in the gaps between 5G and fiber, and really getting into parts of the world that are hardest to reach,? he told interviewer Justin Springham, publisher of Mobile World Live, in a keynote Tuesday at the wireless industry trade show. As in, the last “3%, maybe 5%.”

Musk also made it clear that the low orbit satellite broadband business is littered by failures, something he’d like to avoid:

“Every other low earth orbit constellation ever done has gone bankrupt,? Musk said early in the half-hour talk, citing such past collapses as Iridium. ?Step number one for Starlink is don?t go bankrupt.”

At the same speech Musk noted he’s currently selling his “Dishy” terminals to users for around $500 despite costing $1000 to make. Other outlets, like Reuters, were even more pointed about the chance of Starlink success given it lacks the capacity to really obtain any real scale:

“Starlink would need a few million subscribers paying about $99 a month each to recoup a $5 billion investment in a year’s time, said analyst Tim Farrar, president of TMF Associates.

A $30 billion investment over a decade would not require a dramatic rise in subscribers, but to achieve Musk’s 2020 projection of roughly $30 billion revenue a year would require tens of millions of subscribers, he said.

But even the most rosily optimistic projections I’ve seen, which assume a full fleet of 42,000 satellites capable of offering 60 Gbit/s each many years from now, tops out at around 6 million max subscribers. So in other words there’s a very real potential that Starlink not only doesn’t really make much of a dent in the US broadband problem, but can’t get anywhere close to financial viability anytime soon.

So the question then becomes, why bother? And the answer is because much like his heavily-ridiculed Las Vegas space tunnel, he’s using potentially doomed side projects to nab government subsidies to finance his space ambitions. The FCC recently came under fire for giving the planet’s second-wealthiest human being $883 million to deliver satellite broadband to a handful of traffic medians and already served airports. Instead of funding future-proof fiber, the FCC has been criticized for throwing money at a man who doesn’t need it, to finance a project that may not even be around a few years from now.

To be clear, Starlink, if it survives, can genuinely help Americans out of the reach of traditional options. But keep in mind with a $600 first month cost ($500 for hardware, $100 a month) it’s not exactly helping those who can’t afford broadband. And with only 300,000 to 800,000 initial slots, those who really need the service will have to battle with Musk fanboys who already have decent options, but just want to be early adopters due to the Musk brand. In short there’s an awful lot that can go very wrong here, and even the most optimistic projections for the venture aren’t particularly productive or disruptive.

Filed Under: broadband, capacity, competition, elon musk, satellite, starlink
Companies: spacex