This coming Wednesday, March 31st 2021, SpaceX, Tesla boss Elon Musk’s rocket company, will launch another of its Falcon 9 rockets into near orbit, where it will release 60 small satellites. The satellites will form new links in the Starlink constellation of satellites in low orbit around the Earth, taking their total number to over 1300.
It will be the 25th launch of Starlink satellites – the satellite broadband unit of SpaceX that aims to offer a global service. Musk’s company is already offering a “better than nothing”, beta satellite broadband internet service across rural regions of the USA and Canada that has attracted 10,000 customers since launching in October last year.
By this summer, SpaceX plans to have completed three more launches of Starlink satellites, taking their total number above 1500 – enough, says SpaceX president Gwynne Shotwel, for the company to be able to offer “continuous coverage throughout the globe”.
Many analysts anticipate an announcement from Starlink unveiling a global service that could come as soon as this summer.
Starlink has made the fastest progress towards being able to offer a global satellite broadband internet service that will potentially bring billions of people online that either currently have no or a poor, unreliable internet connection.
But Musk’s space-age start-up has competition. Amazon, which has built a dominant and extremely lucrative market-leading position in cloud computing services through AWS, plans to launch 3200 near orbit satellites through its $10 billion Project Kuiper. The internet giants are expected to be Starlink’s main global rival for the satellite broadband market. Other players include the U.S. satellite communications company Viasat and OneWeb, Britain’s state-owned provider.
The international connectivity problem
Most of us living in developed European economies take a reasonably fast and stable internet connection for granted and have done for well over a decade now. Longer for those in the towns, cities and regions that benefit from the extensive infrastructure of more densely populated areas.
But even in countries like the UK, 4% of households are still classed as having either no or patchy internet access. These households are almost exclusively found in the country’s most rural regions, where population densities simply don’t justify the kind of massive expense that would be involved in bringing fibre optic cabling to scattered properties.
In far more spacious North America the problem is significantly greater than it is in relatively densely populated Europe. While hundreds of millions live in the cities and suburban sprawls of the USA and southern Canada, there are still tens of millions scattered across small towns and villages in regions with low population density.
The much larger distances involved in connecting sparsely populated regions of rural North America mean that according to the Federal Communications Commission’s (FCC) 2020 Broadband Development Report released last April, approximately 18 million Americans lack access to any broadband network.
The actual numbers may be significantly higher, with the report criticized for relying on inaccurate mapping data that skews the numbers more favourably than reality. An independent review of the FCC’s 2019 report found estimated real numbers may be as high as over 35 million.
And of course, once we leave the most economically developed parts of the world, reliable broadband internet coverage drops off a cliff outside of more densely populated urban areas. There are also still significant internet blackspots within densely populated regions of emerging economies, where the extent and quality of infrastructure is often far from egalitarian.
Research by telecoms consultants STL Partners estimated that in 2017, 47% of the global population still don’t use the internet, with lack of coverage the single biggest reason why. And most of the world’s internet coverage is still via mobile coverage, with the GSM Association estimating that there are around 1 billion broadband connections worldwide.
Economically, lack of access to broadband internet is extremely significant. Various studies have estimated that a broadband penetration rate of 10% in regions lacking coverage can add up to 1.9% to economic growth.
Source: ITU
A reasonable broadband internet connection opens up the digital economy to billions. Of course, it will take time for populations with fresh access to the digital economy to develop the skills that will allow them to make money online. But the beauty of the internet is the cheap access it offers to those who are motivated to develop those skills.
Affordable, reliable broadband access will, over time, undoubtedly prove to be a huge economic boost to previously unconnected regions.
The business case for satellite broadband – why the world’s richest men are jockeying for position
Affordable access to the satellite broadband services Starlink, Amazon, OneWeb and others will soon offer internationally will bring clear benefits for unconnected communities around the world. But Elon Musk and Jeff Bezos, the two richest men in the world, are not throwing billions at the enterprise as philanthropists. It’s a potentially huge business opportunity.
Quoted in The Times newspaper, Eli Dourado, an economist at the Utah State University’s Center for Growth and Opportunity, estimates Starlink’s revenues would ultimately dwarf those of its mother company SpaceX’s core rocket launch business, which earned $2 billion in 2019. Last year analysts at investment bank Morgan Stanley estimate Starlink’s new business, if successful, could drive SpaceX’s value to $175 billion.
Creating constellations of near orbit satellite constellations is an extremely capital intensive process. But once they are up there, that expense drops drastically and the potential economies of scale of a global satellite broadband business are significant.
Duorado writes:
“Starlink is a money printer.”
Concerns around a company like Amazon growing even more economically powerful and deeply embedded into the global economy aside, the fact that commercial interest matches up with a pressing need can be considered a good thing. If it proves to be the foundation that helps hundreds of millions of people in remote areas rise out of poverty and limited opportunities, maybe the Bezos’s and Musk’s of the world growing even wealthier is a price worth paying.
It will of course ultimately mean companies like Amazon have a huge new growth market to sell other products and services into. But sometimes commercial interests align with those of humanity. Hopefully, a future where global internet connectivity is a reality proves to be one of those times.