Who is Starlink really for?
But it’s not entirely clear if rural America is a viable customer base for Starlink. The biggest problem is the cost. A Starlink subscription is $99. Speeds can vary greatly, but the average user should expect 50 to 150 megabits per second. You would have to pay traditional satellite internet companies like Viasat (which operate geostationary satellites) twice that amount to get the same speeds. Not bad.
However, it is the initial expense that will affect you the most with Starlink. Things like a satellite dish and router cost $499—and that equipment sells to customers at a loss. SpaceX founder Elon Musk has previously said he hopes those costs will drop to roughly $250, but it’s unclear when or if that will happen. For most of the rural world, in America and elsewhere, the price is too high.
So who will be the first Starlink users? Derek Turner, technical policy analyst at Free Press, says the physical and financial requirements of building and launching satellites into orbit (although cheaper than ever, still very expensive) mean Starlink will be operating at a loss for some time. A nonprofit organization that advocates open communication. Reducing costs will mean looking at customers other than the unconnected in the countryside.
Instead, early customers will likely include the US military, which when operating in remote areas often relies on geostationary satellites that suffer from congested service and high latency. Both the Air Force and the Army are interested in the Starlink test. Some intelligence experts pointed to the turbulent withdrawal from Afghanistan as an example Where the service would have helped.
Airlines that want to provide faster and more stable Wi-Fi for passengers on board are also looking at Starlink. Other rural businesses may find value in it, too. And, of course, there are techies and curious clients in suburbia and cities who have the money to try it.
In Turner’s view, adding these clients can help lower prices for everyone, but it also means less bandwidth. Starlink can offset this problem by launching more satellites – which it eventually plans to do, but that’s assuming it has enough subscribers.
Musk said it will take tens of billions of dollars in capital before Starlink has enough capacity to generate positive cash flow. It has launched 1,600 satellites so far without any problem, but the end goal of 42,000 is something completely different. “It doesn’t scale positively the way wired broadband does,” Turner says. It is not at all clear how many satellites Starlink will need in order to provide reliable, high-speed Internet to hundreds of thousands or even millions of subscribers logged in at the same time.
And for many customers, especially trading companies, there are cheaper alternatives to Starlink that can meet their needs. A farmer who uses smart sensors to track things like local weather and soil conditions does not need broadband internet to connect these devices. This is where smaller companies like US-based Swarm come in: they use a fleet of more than 120 small satellites to help connect IoT devices for these use cases. Swarm (recently acquired by SpaceX) offers a data plan starting at just $5 per month. And of course, if you’re in a densely populated area, spending $99 a month with another ISP will probably increase your speeds to close to 1,000 Mbps.
Ostensibly, the FCC’s RDOF award to Starlink might indicate that rural America is an essential part of how Starlink grows. But Turner says that’s a misconception, and that SpaceX shouldn’t be allowed to drop RDOF offerings in the first place, because it would build the Starlink network anyway. “I think the FCC would have been better off directing its resources toward bringing broadband in the future to areas where it doesn’t make sense to deploy it economically,” he says.
Acting Federal Communications Commission Chair Jessica Rosenworsel led a review late last year of how RDOF subsidies were given under her predecessor, Ajit Pai, and found that billions were earmarked for businesses to make them bring broadband internet to places where it was unnecessary or inappropriate, such as “insurances.” Well-serviced cars and urban areas.” A report by Free Press estimated that about $111 million in SpaceX’s special prize will go to urban areas or places where there is no real infrastructure or need Internet connections, such as highway intermediaries. The FCC is asking those companies, including Starlink, to return some of the money, essentially. (SpaceX did not respond to questions or requests for comment.)
Turner acknowledges that LEO satellites “will be a very important communications innovation.” But he still believes that services like Starlink will be a niche product in the US, even in the long run – and sees the general trend toward fiber continuing. Even emerging technology like 5G relies on extremely dense networks of antennas that can connect back to fiber as quickly as possible. Cable broadband has continually improved over time as companies push fiber networks deeper and closer to customers.
Underdeveloped parts of the world may find Starlink a blessing, since many of these places don’t have physical networks like the cable system that the United States put in place in the 1970s, 1980s, and 1990s. But beta testing so far is limited to the United States, Canada, parts of Europe, Australia, New Zealand and Chile. It’s too early to tell what kind of impact it could have in the developing world, especially if subscription and equipment costs remain high.
The Woodward experience is the kind the company would like to repeat for all of its customers. But Woodward knows he’s lucky to be able to afford Starlink, and to be able to make ends meet. For now at least. “It will be interesting to see how Starlink holds up when you get 200,000 users,” he says. Prices should come down, but speeds and service should stay the same. That’s all that has to be determined.”