“Starlink” is Elon Musk’s new ambitious project with the goal of providing “high speed internet access across the globe”, unobstructed by ground infrastructure limitations. The plan involves launching 12,000 to possibly even 30,000 low orbit satellites into space. The sheer scale of this project is highlighted by the fact that only 9000 satellites have ever been launched into space in human history, with only 2000 still active. The implications of accessible, affordable internet for the whole world are incalculable and could reignite interest in commercial space exploration, providing a valuable source of income for SpaceX.
Figure 1 (Starlink Satellite Constellation)
Satellite internet operators are nothing new, often acting as the only source of internet to consumers living in rural areas with no fixed broadband connection. In the United States, the FCC states that over 19 million Americans do not have access to fixed broadband internet. Even in Australia, an ABS survey found 22.3% of Australians in remote areas do not have access to the internet. Due to the high fixed costs of broadband internet, it is highly unlikely that these groups will be able to receive high-speed internet through conventional means. This is the niche that satellite internet providers service, with the two leaders in the US being EchoStar and ViaSat. The current satellite internet market has just 2 million users in the US, mainly due to the fact that both ViaSat and EchoStar are up to full capacity on their satellite infrastructure. This indicates the extremely high potential for growth in the industry and can be exploited by SpaceX with its industry-leading efficiency on rockets and space transportation. In addition, the low orbit nature of Starlink satellites is believed to reduce latency and increase the quality of the internet, providing speeds of up to 1 gigabit per second (1000Mbps) per user. If true, this may be the defining quality of Starlink as even the best-fixed internet plans in Australia struggle to provide one-tenth of that speed.
Figure 2 (Average Internet Speeds by Country)
Elon Musk has confirmed a public beta of the service in late 2020, hoping to deliver global coverage by the end of 2021. SpaceX is on track to serve the US market soon with 422 satellites currently in orbit. If successful, this project could have a significant impact on worldwide internet access inequality. In the 21st century, while access to the internet has continued to be more essential, access to the internet remains impeded by socioeconomic status. A survey conducted by Roy Morgan on the digital divide highlights how only 57% of residents in remote indigenous communities have access to the internet, likely due to a lack of infrastructure and high cost of available options. In Africa, less than 1% of the total population has access to fixed broadband connections. This puts affected groups at a significant disadvantage clearly visible in the COVID-19 crisis where employment and education rely on stable, fast internet access. While no exact prices have been confirmed for the Starlink service, it can significantly help in eliminating the divide of internet access.
Figure 3 (Percentage of Population with Internet Access)
In addition to increasing internet access, Starlink is a significant milestone for SpaceX towards realising its goal of commercial human space travel. SpaceX was founded in 2002 with the main purpose of taking humans to Mars and the commercialisation of space. The two decades that followed have seen it push technological boundaries, reducing costs significantly, and making space more accessible. The cost of transporting 1 kilogram into space by NASA in 2000 cost $18,500 while SpaceX boasts just $2,720 per kilogram on its Falcon 9 rocket for a trip to the ISS. In addition, the cost to NASA per astronaut on its current spacecraft, the Boeing Starliner, is $90 million compared to just $55 million per astronaut on the SpaceX Crew Dragon. This is achieved by engineering rockets that can carry an extremely high load and be reused multiple times. Ultimately, however, SpaceX makes much of its current revenue through launch contracts for NASA and other groups, adding up to around $3 billion annually. This isn’t nearly enough for a human mission to Mars, which NASA estimates would cost up to $220 billion. This is where Starlink’s purpose becomes increasingly clear, with projected earnings of over $30 billion annually by 2025. With the astronomic growth of Tesla, Musk has repeatedly proven his talent in creating hype in the consumer market. SpaceX has seen its fair share of his signature publicity stunts, including the launch of Musk’s Tesla Roadster into space to demonstrate the Falcon Heavy.
Figure 4 (Tesla Roadster Orbiting Earth)
With Musk’s almost religiously loyal following, Starlink already holds a significant advantage simply due to his association and adds to its likelihood for success. In his words, Starlink “is intended to generate a significant amount of revenue and help fund a city on Mars”. By making Starlink a public company, Musk could potentially raise the capital he needs to undertake riskier, more expensive endeavours such as crewed space travel and, someday, a city on Mars.
The CAINZ Digest is published by CAINZ, a student society affiliated with the Faculty of Business at the University of Melbourne. Opinions published are not necessarily those of the publishers, printers or editors. CAINZ, our Partners and the University of Melbourne do not accept any responsibility for the accuracy of information contained in the publication.
Dahye is a Commerce student majoring in Finance and Accounting with passion in the past, current and future financial market, global economy and the development of businesses. Always interested in keeping up to date with current events and excited to share this with everyone through writing.
A first year Bachelor of Commerce student with a passion for all things economics and politics.
Commerce student with a strong interest in economics, finance and business. Pursuing opportunities in the business world.