It's not meant to replace terrestrial networks, it's a space-based alternative that serves areas carriers have no financial incentive to cover. Terrestrial cellular towers cost between $150k to $500k per tower, and are not economically feasible in less populated areas. There are also many dead-zones in mountainous regions, since cell signals are blocked by mountains.
Starlink Mobile supplements this, it's simply cheaper for mobile providers to partner with them than do their own buildout. Currently only 5% of the earth's surface is covered by cellular signals. Starlink will push that up to 85+%, and is backward compatible with existing cellphones.
> it's a space-based alternative that serves areas carriers have no financial incentive to cover
In a nutshell: they're serving a market that has less money to spend using more expensive tech than the current industry leaders. Maybe I'm wrong but it doesn't scream "massive profit".
I think Airplanes are going to be pretty profitable. They are sort of running a market cornering operation there. But, there will be competition eventually. Starlink is way faster than the alternatives so most airlines have switched and Starlink has rapidly increased their prices for aviation. Idk if it's enough though, they are definitely running lots of promos for home customers.
That sounds pretty niche. And airlines have already extremely thin margin (that have been eaten by fuel price increase). I wouldn’t be surprised if they drop that type of luxury
It’s another product for airlines to sell and make money off. It also serves to keep passengers entertained and content. It’s going to be a very strong market for Starlink IMHO.
> I think Airplanes are going to be pretty profitable.
Anything at sea, too. Going on a cruise? The cruise ship can offer you Wifi backed by Starlink for another few bucks. Or even your cell provider could get you hooked right up to Starlink for some phones.
Container ships, military vessels, even fishing expeditions could enjoy an internet connection and cell service.
It's big in the recreational boating community, as those folks generally have the disposable income to support a SpaceX ISP subscription.
Worldwide there's roughly 30 million recreational boats, whereas for commercial aircraft carrying people (not cargo) is more like 30k, so different orders if magnitude. It's highly likely boating would be a more profitable industry to satisfy demand for than airlines in the long term. That is unless they're charging exorbitantly more for airline contracts than personal boat use, which is totally possible.
Amazon Leo just signed delta as a customer so competition is indeed close behind.
I think SpaceX is an incredible company but at this valuation I’d expect it to have something as pervasive as the iPhone or Nvidia chips. It seems to have only small niches.
I have been flying a lot post Covid between it being a hobby of ours and consulting - I’m currently Platinum Medallion on Delta.
Frequent flyers choose their airlines for a lot of reasons - which airline has the most direct flights from their city, who has the best frequent flyer program, etc. The latency of the Internet is seldom a factor or the difference between 10Mbps and 50Mbps.
Non frequent flyers just buy the cheapest flights. The major three airlines make money off of business travelers, business and first class flights and credit cards.
If I’m flying for work and Starlink is that much better, quite possibly. My wife’s experience with other in-flight WiFi providers has been quite poor, often to the point that it barely works. Having said that, neither of us has been on a flight with Starlink yet.
No but the airline might choose starlink. I think a gogo business install is on the hundreds of thousands and annual costs in the tens of thousand for their Eutelesat based system.
There's enough vast terrestrial areas that have had no other options, so those areas may have pent up demand at least in the short term. However, I think they'll need to figure out how to further lower costs to target those poorer underserved communities that tend to come up in these discussions. That is, unless some sort of subsidy is put in place by governments that know that internet connected communities boost economic values, etc. Some such programs likely already exist in some form in the US, but are largely regional so may take some effort to integrate into those systems.
AFAICT, popular tech companies owned by cult of personalities tend to get overinflated evaluations. I agree that the promise of returns tends to be rosier than reality, but at least SpaceX makes a tangible product and isn't the average AI shilling company with no hope of returns. Here at least they have first mover advantage along with lower scaling costs than their competitors thanks to the rocketry side of the biz. I have enormous respect for what SpaceX has accomplished (even if I'm not a fan of the company's owner, etc.)
Some very rough math. $16 billion in EBITDA with 9million customers. This translates to about $1800 average annual subscription. Per month this is $150.
That is I think Starlink's target customers are ISP deprived. I asked Gemini estimate the size of that market. It said about 10 million in the US and over a 1 billion worldwide. I assume the Elon is pushing the 1 billion number. The problem I see is that outside the US, not everyone can pay $165 per month for internet.
> Terrestrial cellular towers cost between $150k to $500k per tower
I'd be interested to find out exactly where this cost exists. I would expect the majority of the cost (especially in rural/mountainous areas) to be more with power and backhaul, rather than the physical radio gear. Because it's rural, you should be able to easily just use coverage bands (ie 850 MHz or 900 MHz) with relatively high transmission power. This would easily be able to cover 300 km2.
Because of the higher transmission power, and the fact that the tower would be in the middle of nowhere, wouldn't the OPEX be higher, with smaller numbers for CAPEX?
A lot of the cost is regulatory. I used to work at a mobile provider, and it took months to get permission from all the various government agencies before we could actually start building. Even if the tower is in BFE, you still have to get all your plots to the FCC, you need EPA signoff for batteries and fuel tanks and such. Plus there's always state and local permits of various kinds. We had a custom workflow application just to track all of that and there were dozens of steps.
Cell towers aren't very expensive on an ongoing basis, but every few years you're rolling out the next big technology (we went from analog to 1x to 3g to LTE while I was there) and it's a headache.
Well if you make the argument that it will replace terrestrial networks and that's why its worth X trillion $ then yes, you do actually need to cover the 1% of earth surface where the waste majority of people actually spend most of their time.
The question is not if its a good business, the question if its a 2 trillion $ business, and if you only cover the 95% of earth without coverage. That more like a couple 100 billion $ business at best.
In regions like Nigeria or the Philippines, Starlink costs over 100% of the average monthly income. The individual addressable rural market really is closer to 1% than 40%.
Starlink Mobile actually reinforces my point. Most don't have phones capable of using it. And even at that, it’s a low-bandwidth designed for SMS and emergency data, not a primary ISP replacement. Of course, you can believe what it could be... Much like all of Elons products, they are always coming
Every city has phone lines. A phone line allows you to replace it with fiber. A fiber and a tower has long loves.
A star link server has 5 years.
Setting up a terrestrial network is already done and it was relativly easy because you build it up from most profitable to lowest profitable.
Star link only serves 9/10 Million people right now with already 10k satelites whith only a lifetime of 5 years and if this market is profitable, the margins will go down sign due to other competitors. Which are already working on it.
5G Non-Terrestrial Networks (NTN) is already part of the 5G standard. It's not a replacement for terrestrial carriers, it's an expansion that enables devices to be always connected and select the appropriate terrestrial vs satellite connection transparently. ~75% of the land mass on Earth has no cell coverage, ~90% if you include the oceans. It's the same transition in theory that we had from landlines to cell towers.
Great, but the overwhelming majority of money is made from the place people actually live. Those places are called cities. Only about a few % of earth are built on, and even among those the top 1% is where most people live.
Don't get me wrong, that fucking great business, but its not 'replacing terrestrial ISP' level great.
They said the same thing about cell phones vs landlines back in the day. Based on Starlink's revenue doubling year on year, and a six fold increase since 2022, I don't think anyone really knows what the upper bounds for global access is yet. And traditional telcos are usually limited to a region whereas Starlink is global. Just the top 20 global telcos alone are almost $2 trillion in market cap and $1.35 trillion in revenue. Starlink has captured less than 1% of that revenue to date.
McKinsey estimated the global market for cellphones would be 900,000 units in 2000.
They were off by 100 million.
Even until the 90s some telcos believed that cell usage would never eclipse landlines which would remain the base of their business. It sounds ridiculous today because cell numbers outnumber landlines almost ten to one and have been dominant for over two decades.
They did. I worked in telecommunications from the late 90s until 2016. The death of the landline and dominance of mobile was a genuine surprise to the industry. The iPhone was the knockout blow.
my most altruistic view : they said it through actions.
Rural areas were the last areas to join the mobile networks.
This is just a practical thing though; why would you build a tower for a community of 900 people when there are still gaps in the major metropolitan areas? It can't all happen simultaneously regardless of how badly we wish it could.
There were a lot of people back in the early '90s who thought cell service would never be widely adopted because of the cost. It was clear you didn't need a mobile phone -- we'd all gotten long just fine without one.
I worked at Radio Shack in 1995 shortly after carriers started subsidizing phones aggressively and you could “buy one for penny”. They were selling like crazy.
Just some quick Googling says that cellphone penetration went from 1% in 1990 to 50% by 1999.
The Motorola Startec was introduced in 1996 and clones came quickly thereafter and were all the rage
Although it’s also the case that people like me owned cell phones for quite a while but didn’t use them to any material degree especially for personal uses for a while.
Per minute costs were expensive, roaming from your local city took a lot of work, they were bulky bag phones and you still had to pay separate long distance charges, I’m not surprised.
Sprint changed that in the late 90s where all calls were 10 cents a minute anywhere you were calling from and too and you stayed on their network.
Exactly. I eventually bought one and then an other and chose a calling area that was most likely to correspond with people I might communicate with on trips and the like but it was backup/emergency use. Not something you used personally day to day or even maybe week to week.
It doesn't not seem like anything approaching a lucrative business.
TAM: How big is the market for high speed internet that can pay $1200+/year and isn't already well-served by comcast/at&t/etc? And of course, this is all with finite spectrum too. So you can't serve the major cities.
No doubt there exist buyers. But rural Montana doesn't have that many households. Add that 5 year replacement cycle and Musk's Trump alignment that has Europe building their own for security reasons.
These are US telecoms, the satellites blanket the entire Earth at all times. Lower ARPU, but still. Also, it seems like they're swallowing a large percentage of flight/cruise/military internet. And direct-to-cell data coverage of the entire Earth.
