Why Starlink Is Crucial To SpaceX’s Success

In more remote areas of the US, reliable internet is still difficult to get. Forty-two million Americans still do not have access to broadband. This is a 9.5 acre farm in Idaho. And when we first got here, we didn't have cell service. We tried to put reinforcements on top. We tried to put thrusters on the bottom. We tried to put reinforcements anywhere we could. We didn't have cell service. So we really needed good, reliable Internet. And then Starlink appeared. Mike Lorden and his fiancee, Liz Racer, are one of more than 10,000 customers using Starlink, SpaceX's ambitious project to build an interconnected network of thousands of satellites to provide high-speed broadband Internet around the world. .

They have been using the Starlink service for about six months and are documenting their experience of living on a farm on YouTube. There are times when Starlink goes offline. The dropouts are not really significant. They seem to be little flashes, you know, a couple of seconds here and there. The only time you really notice it is if you like live streaming or if you are using the Wi-Fi calling option. Other than that, if you're just browsing the web or something, it seems to be very fast. So far, as it is, it's a really good connection, you know, considering our circumstances.

Starlink is still in beta and currently serving select customers in the northern US, Canada, the UK, Germany, and New Zealand. Experts estimate that there are around 70 million households around the world that are good candidates for satellite-based consumer broadband and can afford to pay. Amid a global pandemic that has kept employees from offices and children from schools, the need for universal broadband has become undeniable. If the service expands to its intended global customer base, Starlink could be key to SpaceX's

success

and Elon Musk's vision of a Mars colony. I think it's fair to say that most of SpaceX's current valuation is tied to the Starlink business model.

Generally speaking, the global launch industry is around $5 billion a year. SpaceX, in previous discussions, has talked about a $30 billion a year opportunity in the Starlink business, which is expected within three to five years. The basis of Starlink's Internet service consists of three components: a satellite dish, ground stations, and the satellites themselves. The service is intended for customers like Lorden and Racer, who live in a sparsely populated area that is not served by traditional Internet companies. Given the high cost of laying cable or fiber, which can reach $20,000 per kilometer, terrestrial service providers tend to focus on urban and suburban areas where there is high density.

It simply doesn't make economic sense to reach consumers in low-density areas. The only option we really considered was if we had a local Internet company that wanted to participate. They would have had to erect a tower on the top of our mountain. Maybe they could have given us five megabytes per second and it would have been about the same monthly price as the Starlink service. We have other friends who are in similar situations to us and have other satellite internet providers and many of them have data caps. Most of the rates are really high. Starlink customers pay $499 for the hardware needed to connect to the network and an additional $99 per month for service.

Currently, there are no contracts or data usage limits. So far, SpaceX has put more than 1,000 satellites into orbit, but the company plans to deploy 4,425 satellites by 2024. By the time SpaceX has finished building its Starlink global satellite system, known as a constellation, the company will have launched approximately 12,000 satellites. And although it has not yet been approved by the FCC, SpaceX has requested permission to launch 30,000 additional satellites, which would bring the total to 42,000. Unlike traditional Internet satellites, which are the size of a school bus and orbit about 36,000 kilometers above the Earth's surface, Starlink satellites are much smaller and closer, about 550 kilometers above the Earth's surface. the earth.

But the satellites' closer location means they can see less of Earth at any given time, which is why SpaceX needs so many. On the other hand, SpaceX claims that this closer orbit allows the system to have less signal delay, known as latency. Latency is important for things like video streaming and gaming. Lorden says speeds vary depending on factors such as weather. But on average, it has gotten speeds of about 75 megabits per second for downloads and about 12 megabits per second for uploads. In a filing with the FCC, SpaceX said Starlink's service meets and exceeds speeds of 100 megabits per second for downloads and 20 megabits per second for uploads.

Musk has said that he expects the service to double its speed by the end of the year. To do this, the company is developing a technology known as intersatellite links. The basic premise is that you have an optical sensor, which is effectively a laser, that points from one satellite and connects to the optical sensor of another satellite and creates this invisible path from one to the other. That's this stable connection, almost like a cable. And if you have a stable connection, you can dramatically increase the speed because now you're moving the signal from one satellite to another at the speed of light instead of the speed of whatever is on the ground.

Another benefit is the reduction in the amount of infrastructure needed. Given Starlink's current architecture, we estimate they will need over 100 ground stations in the US. However, if they move to laser communications on satellites, they can greatly reduce the number of ground stations needed, as well as the complexity. . of the global system worldwide. From a consumer standpoint, Lorden says working with the technology was easy. Currently, SpaceX does not provide an installation service, so users are, for the most part, on their own. They ship and deliver a big old box to your door and inside that box, there are actually not that many items.

It would be the Starlink satellite dish itself, the router, the power supply and the small tripod to place the antenna. And it's super simple. Starlink actually has an app that you can download on your phone and it walks you through everything. You literally just plug this into the wall and place the dish where the app tells you to place it. The Starlink dish comes equipped with a built-in heating element, which keeps it free of snow and ice. It is also motorized, allowing the satellite dish to automatically orient itself to stay aligned with satellites overhead. But making its equipment easy to use hasn't come cheap for SpaceX.

The biggest challenge SpaceX faces with Starlink is also one of the big unknowns about the real cost of the equipment. People aren't sure exactly how much SpaceX is paying or how much it is paying to build its antennas. There has been a lot of speculation about a thousand dollars per unit, two thousand dollars per unit. If, you know, they sell these kits for $499 each and it costs them $2,000 to make them, they're taking huge losses to begin with. And they have to hire a lot of people to compensate for that in the long term by charging for the service.

Spacex has been extremely

success

ful in its launch business, dominating the industry in just 10 years. However, the launch industry, the global launch industry, is not a big enough market to subsidize Elon Musk's dream of building a colony on Mars. Key to Musk's vision for colonizing Mars is Starship. The huge rocket is supposed to be fully reusable and capable of launching up to 110 tons of cargo at a time. Although SpaceX has not revealed how much it spent on the Starship program, in the past, Musk estimated that completing it would cost the company around $5 billion. That's where Starlink comes in.

The decision to move to Starlink gives the company a market adjacency that is significantly larger in size and has the potential to generate the types of revenue and profits that would be necessary for such a Mars colony. Earlier this year, a SpaceX job posting revealed that the company plans to build a factory in Austin, Texas, to manufacture its Starlink kits. But although Starlink is initially targeting the consumer market, experts say there is plenty of room for the service to expand. Starlink's anticipated markets measure tens of billions of dollars and range from consumers to enterprises to mobility applications, including ships at sea and planes in flight.

Starlink's initial focus on consumers is a byproduct of the way satellites are launched and the coverage they provide. Starlink currently can't provide enterprise-grade service, so the company is leading with consumers who are a little more tolerant. In the past, Starlink has been used by emergency services in Washington, where the satellites are manufactured, to establish an internet connection in areas devastated by wildfires. The US Air Force and Army are also testing Starlink. There is a huge hunger for investment in satellite Internet. The sector could be worth $412 billion by 2040. And it's not just venture capitalists who are investing.

Satellite Internet is ready to receive government subsidies. In Canada, the Quebec government has invested millions in Telsat. In China, satellite maker Commsat received a huge government investment as part of the country's new infrastructure initiative. The United States is also betting big. Last year, the FCC awarded Starlink nearly $1 billion in subsidies to bring Internet to rural areas. And in late March, President Biden said his administration would spend $100 billion to expand broadband access to Americans as part of his $2 trillion infrastructure plan. SpaceX is also in talks with the United Kingdom, where Starlink could get funding as part of the country's $6.9 billion internet infrastructure program.

But one place where Starlink may not be welcome is Russia, where the government is reportedly considering imposing fines on people who sign up for the service. Russia is working on its own satellite internet constellation, which it hopes to begin launching in 2024. Starlink's potential is huge, provided the project can overcome some major hurdles. Satellite broadband as a whole is an industry and a sector that is littered with warning signs and corpses of former companies that have tried to go out and do what Starlink is already doing. It's a little-discussed secret that all of today's successful satellite operators received subsidies from the government or the bankruptcy court.

In the case of companies like Iridium and Orbcomm that went bankrupt in the 1990s, only to recover and return for a second act. One of the challenges of building a new satellite network is that all capital expenditures must be made upfront before the first customer can sign up. And that creates a really difficult financial model in terms of generating revenue to pay for both the existing constellation and the tracking satellites that will be needed to continue service. SpaceX leaders, about two or three years ago, estimated that it would cost more than $10 billion to get Starlink up and running in an operational capacity.

That's probably a pretty fair estimate even today. Starlink is still in an early phase of development, so it's not perfect. SpaceX makes this clear on its website, saying there may be periods when customers do not experience connectivity, but service will improve as the company launches more satellites. However, having thousands of new satellites orbiting the Earth comes with its own problems. The initial launch of SpaceX's Starlink satellites in May 2019 took astronomers by surprise. They didn't realize how bright the satellites would be, especially as they were rising into final orbit, and how many there would be. Then, if you looked up, you would see this long line of what looked like slowly moving shooting stars, all in a perfect line across the sky.

That's why people called them Starlink trains. Now, that posed a pretty big problem, which is that because they were so bright, they were so clustered together, and there were more and more of them covering different parts of the sky, astronomers started seeing them appear and really ruining different images and causing all kinds of distortion and effects and things like that. This image taken from a telescope in Chile in November 2019 illustrates the problem. The telescope, intended to view images of distant stars and galaxies, instead captured light trails from 19 Starlink satellites. While some image processing tools can be used to remove traces, Walker says it is not 100 percent effective.

ButSpaceX has not ignored the problem. The American Astronomical Society, AAS, NOIRLab, and others contacted SpaceX and have since been very generous with their time. And what was just a passing interest in our concerns turned into about a half-dozen people on staff dedicated to finding mitigation solutions. SpaceX originally tried to paint them as this dark material. The problem was that they were still generally too bright and also got quite hot. Instead, they came up with what are known as sunshades, which help prevent the reflectivity of solar panels from generating too much light and glare. The other thing they did was change the orientation of the satellites themselves so that they were more on a knife edge.

So instead of the entire panel catching sunlight and reflecting it off the ground, it was just a part. The huge concentration of satellites also worries radio astronomers, who say radio frequency interference from Internet satellites could hamper their instruments' ability to search for organic and water molecules in space. Then there is the problem of congestion. Since Russia first launched Sputnik in 1957, more than 10,600 objects have been sent into outer space. If SpaceX launched all the satellites requested, the company alone would be responsible for almost quadrupling the number of spacecraft launched by all of humanity. And since the lifespan of Starlink satellites is only five years, experts are also worried about space debris.

An idea known as "Kessler syndrome" sums up how damaging it can be to have debris floating freely in space. Kessler syndrome can be described as two satellites colliding and creating more debris that will collide with other satellites. And this creates orbits that are simply unusable. For its part, SpaceX has said it plans to deorbit satellites that are nearing the end of their life by pushing them back into Earth's atmosphere, where they will burn up during reentry. All SpaceX satellites have propulsion systems on board that, in theory, are more than enough to deorbit a satellite in a very reasonable period of time.

However, if satellite communication is lost, which has happened in certain cases, the ability to tell the satellite to remove itself from its orbit is lost. In other cases, the propulsion system itself may have failed. And when more than 4,000 satellites are launched, all it takes is a very small failure rate to create a large amount of space debris. Jonathan McDowell, an astronomer at Harvard's Smithsonian Center for Astrophysics, has been tracking Starlink failure rates and says they have improved. For now, space debris management remains largely in the hands of individual companies. There is no applicable law that could force a company to deorbit a failed satellite.

Generally speaking, the FCC, along with other government agencies, have rules and guidelines for deorbiting satellites within 25 years. But there is no enforcement mechanism that can make a company spend money to actively deorbit a satellite. At least today. But experts like Walker are pushing for greater national and international oversight of satellite manufacturers. The United Nations Office for Outer Space Affairs is already looking for ways to mitigate the effects of light and radio pollution from satellites. In the United States, the Biden administration recently announced that it would maintain the National Space Council, which will help the president set national space policies.

Plans to spin off Starlink into a separate company have been floating around since last year. And earlier this year, Musk confirmed the idea. Elon Musk was in the news again this morning. This time with SpaceX, saying its broadband satellite business will eventually go public. Musk tweeted, quote, "once we can predict cash flow reasonably well, Starlink will go public," but warned that the company will need to navigate a, quote, "deep chasm of negative cash flow" over the next year to truly make it financially viable. Splitting off the part of SpaceX that has the most profit potential may seem counterintuitive, but experts say there could be some benefits.

Right now, Starlink is a big cash burn for the SpaceX business. And if it were to be spun off independently and charge SpaceX for those launches, it would obviously increase revenue from SpaceX's remaining business. If SpaceX remains the majority owner of Starlink after its spinoff, then the company can still see the revenue stream and benefits of that service. But then you're de-risking the entire SpaceX company, so to speak, by having it operate as a separate business so that if Starlink fails or goes bankrupt or something bad happens to Starlink, then you're not hurting the core space business like as much as it would be if it were still in the entire private sector of the company.

SpaceX is currently the leader in low-Earth orbit satellite internet, but competition is heating up. Amazon has said it will invest more than $10 billion in its satellite Internet network known as Project Kuiper. UK satellite maker OneWeb recently launched another 36 satellites into orbit, bringing its total number to 146. The company says it hopes to begin limited service by the end of the year, although unlike SpaceX, its service is aimed at business clients. Finally, Canadian satellite company Telesat has said it will begin offering commercial services for its satellite Internet in the second half of 2023. If Starlink is successful, it could ultimately do more than just fund Musk's vision of a Mars colony. .

SpaceX included in the Starlink terms and agreements that there are statutes regarding how their service will be treated for people on Mars. And so SpaceX is already looking at that path and seeing, okay, well, we can have Starlink satellites around the Earth in orbit, but then we can also put them in orbit around Mars and then just connect the two and have this expansion, not only a global satellite system, but a multiplanetary satellite system. But for now, Earthlings are happy that Starlink exists, even if it's not perfect yet. When they first contacted us, they labeled their beta test as the “better than nothing beta test.” And for people like me, it's one hundred percent better than nothing.