Starlink Requires $30B Investment
reuters.com
reuters.com
1) The title implies outside funding is needed, but this isn't true. SpaceX estimates it will require $5-10B of internal funding to reach its targets. This should surprise no one considering the scope of what they are building.
2) "Starlink would need a few million subscribers paying about $99 a month each to recoup a $5 billion investment in a year’s time, said analyst Tim Farrar, president of TMF Associates." Except that there's no explanation of why they need to recoup investment costs in a single year. You don't build a factory and then expect the capital expenditure to be recouped in the first year of ops, so why would a satellite network be different...
3) “It is not implausible to get this number (a few million) to make the system not to go bankrupt. But this is not enough to justify the valuation of SpaceX,” except that SpaceX isn't a satellite internet company, it's a space launch company that is also building a satellite internet network. Its valuation is based on being far and away the launch leader on every metric that matters.
Demand is not going to be the problem for Starlink. If they can roll-out a service just a bit more reliable than their current beta, and they can increase their network capacity fast enough, they will have tens of millions of subscribers in a few years.
edit: Okay, so folks don't like my fairly honest take on Starlink? It's a great service that's going to make a ton of money. But it doesn't replace all classes of Internet use. That's unrealistic.
There is that whole thing about highly dense regions not having as much Starlink bandwidth per capita, tho.
That doesn't seem like a lot, considering it is a global ISP.
Also, good that Elon's net worth is still pretty high (looks like 165B now) so he can possibly fund it himself for the most part
So to support 100Mbit customers, you need to launch a Satellite once for every 40 customers. Each customer needs a $1000 to $3000 dish to connect to the Satellite (currently $500, so you need almost a year of $99 subscription before you make back the money from the dish alone, and then another few years to recoup the costs of the Satellite launches).
This at a time when 5G is beginning to be deployed in mass quantities... and Gbps fiber is available in cities. So cityfolk won't really use Starlink, and 5G will cover many rural areas.
Finally: ~~directional WiFi~~ (Woops: got my terms mixedup. Apparently its "Fixed Wireless") works surprisingly well out in rural areas for 50-mile ranges. So if you can get a line-of-sight radio out there, a small town ISP can still deploy over a relatively rural area.
EDIT: Directional Wifi is like 1 mile. I got my technologies confused.
Only the most rural of areas (over 50-miles away from the nearest potential directional WiFi spots, with no access to 5G or Fiber Optics) would use Starlink, which is... not where people live by definition. Can Musk find millions of rural folk and build an internet service with them?
I mean yes? Rural and underserved areas always been the target market of Starlink in the first place. Starlink isn't attempting to target the urban market.
Are there millions of people in rural areas who will trust a US-based space ISP over local ISPs?
The thing about targeting rural areas, is that you're by definition targeting a small subset of people. People generally live in cities, on the average.
Even if you put in the TOS that the NSA is going to jerk off to all their stuff, most would probably be super happy to sign up if it meant sub-300ms pings and > 5mbps speeds.
Of the 300-million people in the USA, 250-million live in "Urban" areas.
https://www2.census.gov/geo/pdfs/reference/GARM/Ch12GARM.pdf
By definition: this is all towns of 50,000 and above. The next big group of people are in 5,000+ person towns, which are a good target for 5G and fixed wireless internet. I've got an uncle who lives in one of these areas ("rural" for sure, but with line-of-sight to the town center so wireless / line of sight still works and so do cell phones / internet)
I think you're grossly overestimating the number of people where Starlink's $500 upfront costs + $99 / month is competitive.
Furthermore: line-of-sight is not a problem for a lot of people. Huge swaths of the USA's rural areas are extremely flat (ex: Kansas, Iowa, etc. etc.). So Fixed Wireless is reliable for many miles.
Fixed wireless has been an option for a decade plus. When it works, it’s great. Almost everyone I know in rural areas has thought of it or tried it once. Trees, distance, sometimes a hill usually get in the way.
Hughes and others don’t have the subscriber numbers they do because they’re good services that people like using over alternatives.
Don’t forget there are a lot of people that would love to live in a rural area that haven’t because of lack of a decent connection. If starlink keeps on this trajectory, a lot of folks will be moving who never could before.
Which means that Starlink immediately disqualifies itself from 80% of the US population. The remaining 20% seem to be largely covered by direct line-of-sight wireless technology.
Yes 5g, more bandwidth etc so plans may become more liberal but still.
WISP for rural areas are hard to manage, not just the engineering but the marketing and customer retention, now I feel (really believe/know) is not the time to even begin to be a rural WISP where starlink and telecoms are on technological breakthroughs to literally deicentivize using you.
If we're talking about feasibility and/or if something is a good idea, then once all the math is added up, then we need to see that the final costs are "really really good".
EDIT: As long as we're clear on each other's math / assumptions, we can make "napkin level" estimates to guess at the feasibility of this project.
No, you don't. Oversubscription is a thing, a rather obvious thing when you go looking for it (evening Netflix time is horrible bandwidth on any ISP lately, including my Starlink connection), and you could comfortably handle hundreds (or low thousands) of customers at once on a single 40Gbit bird.
No, not everyone will be able to pull their max speed at the same time, but that's just not a use case you design an ISP for. Assume 20Mbit or so in the evenings for Netflix or Prime or whatever on most of your customers, then let the rest of the bandwidth shuffle around as needed.
And the bandwidth required by any given household will only really go up in the future.
It should also be able to handle at least 4000 customers (10x) through oversubscrpition.
> cityfolk won't really use Starlink
I don't think starlink was ever meant to replace current high speed internet.
> 5G will cover many rural areas
5G means many different things. The high speed bands don't have enough range to make them economical to build in rural areas from what I've read.
> directional WiFi (Fixed Wireless) works surprisingly well out in rural areas for 50-mile ranges
Yes, if it's directional, and the directionality is pretty narrow if you want to get any reasonable performance. I don't think it's feasible for each town to have a dedicated antenna for each house within a 50 mile radius.
You're asking the wrong questions.
So lets say Starlink is 4000-customers per satellite (10x oversubscription of a 40Gbps underlying, 100Mbit per customer, seem fair to you?). It costs $1000 to $3000 for the Starlink Satellite dish right now.
The total costs of Starlink, per customer, is therefore 1/400th of a satellite launch + $1500 or so (depending on how cheaply the dish can get).
Can you run an antenna from a town center to a house 50-miles away for less than $1500 + SatelliteLaunch/4000 ??
EDIT: 4000, not 400.
I admit that I don't know how much a Satellite Launch costs, but Elon Musk is asking $30 Billion for a reason. I assume the satellite launches are a good chunk of those costs.
They need 10 million customers paying that to generate $1B in revenues - that doesn't include all of the other costs involved.
Assuming even good margins, they'd need 10's of millions of customers to get to $1B in earnings in a year.
And that's with rosy numbers around margins.
I don't think it adds up very well and this will only work as long as the 'hyperbubble valuation' period of lofty expecations and very low interest rates continue.
If there is a market correction, esp. due to higher interest rates ... then it won't look good. But until then, it could work.
For 99 a month i dont think I would get it unless there was no other option.
https://www.cringely.com/2021/04/20/starlink-is-a-global-isp...
It's better than rural WISPs by far... most of the time... but even compared to DSL it loses out on things like consistent latency and packet loss.
Yes, you do see the 300+Mbit spikes, but it's realistically closer to 50Mbit average - which, again, for rural areas, is really quite good.
I have it, I mostly like it, but it's still my backup/bulk transfer connection, and I keep a rural WISP for my primary work connection because it's less prone to the random glitches and hiccups that Starlink suffers, and because I have a public IP instead of CGNAT, my VPN devices and SSH connections all seem to recover a lot more reasonably from packet loss on that link than on Starlink.
For mobile use (RVs and such), absolutely, it makes a lot of sense (if you can handle the power use). But I didn't think cell roaming was enabled yet - maybe I missed something.
One problem is that wired service relies on commercial power. When you have 100+ miles of unmanaged tree growth between you and your power company you lose power a lot. 'Lot' is several times a year for anything from a few minutes to a few days.
Everyone that lives as I do has some degree of backup power. Internet service that can run on such backup power is rather appealing.
We had a one week Internet outage earlier this year and there was not a single peep from Comcast. They couldn't say whether they were even working on it, or give any ETA on having it up again. I understand outages, especially related to weather, but the utter lack of any kind of communication infuriates me.
I rely on Internet to get my work done, so I wanted an alternative. Ideally I'd keep both. But that would be a moderately expensive luxury to avoid an occasional outage.
I'm definitely more interested in the mobile possibilities, the farther I get from the outage earlier this year and my anger recedes :)
Elon Musk has legitimate reasons for criticism; sarcastically dismissing him as a charlatan isn't a productive way of doing so.
It's the same strategy with internet trolls; you either ignore them completely, or call them out on trolling and engage no further. Musk is, in some sense, the internet's largest troll. And droves of people have taken the bait.
By that metric, <Walmart ; McDonalds ; Nestle ; Activision ; Eli Lilly ; choose your favorite corporation> are a great boon to humanity and we would be so lost without them!
Putting aside your unstated reasons why you believe Musk is a charlatan or the "Internet's largest troll", simply calling someone a charlatan will not convince people who think otherwise.
If I simply said "Biden is a charlatan", his supporters, or even those who had no opinion of him, would not simply begin to think of him as one. The same applies to if I said "Trump is a charlatan", so I am not sure what you're trying to achieve here.
Elon is actually a good example of why dialogue is important. You see him as a charlatan. I (with the context that I interned for SpaceX 7 years ago), see him as a flawed but impactful innovator who has pushed the state of tech forward considerably and employs 90,000 people though his two biggest companies.
Little is gained by sarcastically dismissing each others' perspectives. But by refusing to pretend that he is all bad or all good, and discussing his successes alongside his failures, we can lean into the purpose and value of HN.
This does not seem too bad, considering that majority of that cash will be raised once most technical risks are addressed.