[http://www.vsat-systems.com/satellite-internet-explained/lat...]
Edit: Please note that the data packets make a two way trip from the satellite. Many network communications assume a lot of two way communication from client and server, so this decrease in distance should have a big impact.
So it possibly won't be a killer for video conferencing, but keep in mind that the USAF's current system for drone video has 2 seconds of one-way lag. There's three orders of magnitude between what we're currently doing and the physical limit.
SpaceX's system will undoubtedly be better than what is in use today, but even with two orders of magnitude improvement (a HUGE improvement) you're looking at adding 20 ms of lag on top of what you'd already have.
LEO is a range between 300km - 2000km. I suspect the satellites will be on the higher range to reduce atmospheric drag. The IIS has a 400km (250 miles) orbit and it's orbit decays at 2km/month without correction maneuvers.
https://en.wikipedia.org/wiki/Geostationary_orbit https://en.wikipedia.org/wiki/International_Space_Station https://en.wikipedia.org/wiki/Low_Earth_orbit