Comment by tristanj
6 months ago
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
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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.
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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.
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Delta’s ViaSat based Wireless is fine. The latency is hire. But it really isn’t a competitive disadvantage.
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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.)
It’s already profitable
Profitable-profitable or EBITDA-profitable? https://www.reuters.com/business/finance/spacex-generated-ab...
I don't mean this as a gotcha or anything. I imagine rockets are a capital-intensive business. So are datacenters.
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> 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.
I never said it would replace terrestrial networks... you invented that claim yourself and are responding to a strawman.
Starlink mobile is for rural areas, and the other 90% of the planet that's not well served by traditional terrestrial networks.
And 40% of earth's population live in rural areas, so there is a large market for this kind of service.
If its a big market, SpaceX will have to share this sooner than later as plenty of others are working on this.
Nonetheless even in rural areas there is A LOT of coverage.
And starlink has one sig issue: its bandwidth.
For them to increase bandwdith they need to scale which is expensive and they have to reinvest every 5 years in replacing these satelites.
A fiber layed down can work for a lot longer and can be replaced a lot easier.
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%.
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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.