The short answer is no. At least, that’s not the alleged plan, and it seems unlikely in the near future.
The intent behind Starlink is to meet a demand that the internet service providers (ISPs) are struggling to meet: rural populations. Low population density means that there are fewer customers to service. Fewer monthly subscribers means less income to make up the costs of installation. Naturally, the providers are going to go where the money is first. And if there’s not enough money in rural areas, broadband may never come there at all.
Starlink’s mission is to bring broadband internet to the most inaccessible 3-4% of the population. This appears to refer to the global population, eventually, but the service will come to North America in the early stages.
Starlink will offer completely wireless connectivity to consumers through laser communication and advanced millimeter wave transmissions. This is made both possible and (theoretically) profitable by the use of Space X’s satellite tech. A network of 1,584 satellites will cover just about all of the planet, beaming data packets back and forth to rooftop receivers, and to other satellites across the planet.
At first blush, one might assume that such a system might even outperform fiber optics. They are, after all, both using light to transmit data. But Starlink will be beaming lasers through space, rather than glass fibers. That should reduce attenuation by a whole lot. On top of that, the lasers and waves that satellites and receivers use to talk among themselves will travel in straight lines, rather than through cables and hardware. So why bother with cables at all, anymore?
But the intent with Starlink is simply to supplement the existing infrastructure. No doubt the ambitious CEO of Space X, Elon Musk, would love to service the entire world’s population. But for a man with ridiculously large dreams, he’s actually kind of a realist. He certainly wouldn’t have gotten this far without being pragmatic. With Starlink, he’s trying to raise money to fund other SpaceX ventures. And he realizes that the best sales opportunities lie in the rural 3-4%.
The beauty of the Starlink business model is that a satellite internet provider can pick and choose their clientele, and their target customers really don’t have any other option. So at least until other satellite internet providers catch up, there will be no competition to undercut subscription rates and steal sales. That appears to be the focus, at least for now.
The other reason it doesn’t make sense to assume Starlink is a threat to cabling is that the amount of bandwidth that the Starlink network provides will be limited by the number of satellites in service. Consumers of Starlink will essentially be sharing that collective bandwidth, so there’s only so many people that can be serviced.
It still promises speeds faster than 500 mbps, which is faster than 4G could ever provide. But to bring that to 7.8 billion people, they’d need a lot more satellites. Musk’s target, again, is the most inaccessible 3-4% of consumers. 4% of the world’s population (7.8 billion) is 312 million people. So for the sake of this exercise, we can say the initial plan was to launch 1,584 satellites to service 312 million people. That comes with an estimated cost of 10 billion. To service the entire population to the same standards at that rate would total about 250 billion.
Of course, production costs would (theoretically) go down with increased productions. And at some point in the near future, subscription revenue will start offsetting production costs. They hope to earn as much as 30 billion each year once Starlink reaches full capacity. But keep in mind those numbers are projected in a market without competition. That would change as Starlink sought to win over some of the world’s more “accessible” customers.
And it would be a huge project. With 1,584 satellites needed to service 312 million people, you’d need 39,600 to bring the same amount of bandwidth to 7.8 billion consumers. Strangely enough, its theoretically possible. SpaceX has already requested permission for up to 42,000 satellites from the ITU, but that doesn’t necessarily mean that they intend to launch that many. Starlink is, after all, just a stepping stone in Musk’s life ambition to get to Mars. That filing for authorization could simply be a publicity stunt. Or it could be a “just in case” exercise for a potential project, one they aren’t even seriously considering at this point.
Like any good enterprise, Starlink will bring in a lot of reveneue for SpaceX because it meets a demand. Musk and co plan to use it for their Mars project. But the initial business model is already in place, and authorization for expansion has been filed for. That means that Starlink could essentially scale up as needed to increase revenue. But the obvious drawback to doing that is that they’ll run into competition as they pursue more consumers.
The most inaccessible consumers will use Starlink because there is no other option for broadband internet. But once those people have been serviced, the remaining consumers will reside in more population dense areas. With every new subscriber signed, Starlink will face more competition for the next subscriber. 5G networks are expanding (allegedly) and fiber optics and other cabling are being installed every day. With 5G and fiber both potentially offering higher data speeds (1gbps and greater), Starlink will have its work cut out in trying to win over subscribers who have other choices.
Somewhere in between the rural 3-4% and the inner cities, Starlink’s value proposition begins to weaken. When that happens, profits tend to decrease. Satellite broadband is a brand new industry, so its impossible to tell where the point of diminishing returns will be.
As long as it’s his best strategy for inching toward Mars, Musk and co will probably do what they can to expand Starlink. But we haven’t even seen it reach its initial goal of servicing the 3-4% yet, so we don’t know yet what unforeseen problems and costs might emerge. In the meantime, 5G and fiber are slowly chipping away at the parts of the world that are currently out of reach of broadband.
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