Elon Musk plans to disrupt broadband internet access


Space-X is launching telecommunication satellites that will become a network called Starlink. Starlink will bring high-speed, low-cost broadband internet to the world, starting in mid-2020.

The requirements to use Starlink are the purchase of a pizza-box-sized receiver and a subscription.

This service will be especially useful for remote areas outside of big cities that suffer from slow or poor internet service but could also be competitive in urban centres.

Will Starlink disrupt cable-based internet providers?

In 2015 Elon Musk stated that there is “significant unmet demand” for affordable high-quality broadband internet in remote parts of the planet.

In 2020, Starlink will soon be available in the northern U.S. and Canada, according to the Starlink website.

Using Space-X Falcon 9 rockets, Starlink has launched thousands of these 260-kg devices, with a target of 12,000 in orbit by mid-2020. The latest launch was February 17, 2020 with 60 satellites. Before Starlink there were only about 2,000 man-made satellites orbiting the earth.

These satellites are easily seen in the night sky soon after their launch, before they take up their permanent orbit at 350 or 550 kilometers above earth. Each satellite costs about $300,000 and is the size of a table.

The company has applied to the International Telecommunications Union (ITU) to launch an additional 30,000 satellites, bringing the total to 42,000, if approved. This would allow Starlink to provide service around the globe including remote areas in Africa.

Starlink internet is faster than most traditional cable-based internet, as the light travels 47 percent faster in in a vacuum. Current satellite internet services use receivers and transmitters that are about 35,000 kilometers above the ground, causing a significant latency delay. By positioning in low orbit at 350 kilometers and having thousands of transmitters and receivers that are close to each other the Starlink service will be faster and cover a much wider area.

Space-X owns Starlink and provides the launch service to get the satellites into position. Starlink, as the main subsidiary of Space-X, carries most of the value in the $33 billion private market (estimated) valuation of Space-X.

This 15-minute video from Real Engineering (June 2019) explains that the economic potential of a high-speed service with almost zero latency could be much higher than initial estimates. The video shows how the information can travel around the globe almost instantly, measured in milliseconds.

The current system of international broadband internet other than satellite relies on subsea cables which cover only the busiest data traffic routes, like London to New York. The new Starlink speed could be up to 50 percent faster than those subsea cables that are available only on the busiest routes. The Starlink speed advantage will be even greater on very long distances like New York to Shanghai or Singapore.

Providing high-quality, fast internet service to remote areas like Africa could transform the world’s economy.

The initial estimates for the Starlink internet business are based on a model of 40 million subscribers generating $30 billion in revenues annually, at an average subscriber payment of $75 per month. The total internet broadband market is estimated at $1 trillion and growing, so Starlink is targeting only 3 percent of the market.

A receiver/terminal will cost about $200. The cost of all the hardware for the network is expected to be $10 billion. Thus, the service could be highly profitable for Starlink once the initial cost is recouped.

Watch for an IPO (initial public offering) of Starlink, once the service is running.

And expect there will be high investor demand for that IPO given the performance of Tesla’s stock price recently.


Hilliard MacBeth


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