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The Starlink Project - Is Elon Musk Going to Single-Handedly Revolutionise the Internet?

Editor, TRANSFIN
Jan 27, 2021 2:30 PM 5 min read
Editorial

Elon Musk’s ideas may be unorthodox but his ambition for leading-edge scientific escapades can be hardly overstated. 

Question is, what do you expect of a centi billionaire who has his own car company, construction company, neurotech research and space venture?! Let lines between science fiction and reality become more and more blurred. 

And that's precisely where his newest project is headed. The Starlink internet service, conceived as the brainchild of Musk as far back as in 2015 is being touted as a revolutionising initiative in satellite internet access. 

It has been described as a "game changing" idea that is well on its way to optimise and economise internet usage in the coming days, especially in remote locations of the world.

What is Starlink Internet? 

To put it simply, Starlink is a space-age idea that enables broadband-like internet usage through a fleet of communications satellites in far-flung locations that have little or no access to other means of internet. 

Mr. Musk's aerospace company SpaceX parents the Starlink Project by aiming to mass produce and launch a 'constellation' of small satellites into Low Earth Orbit (LEO). These satellites will then work in tandem with ground receivers and provide satellite internet connectivity. 

 

What is Satellite Internet? How is It Different From Other Internet? 

The internet as we know today, largely refers to "Broadband" internet which is an upgrade on the earlier dial-up connections. Broadband can be wireline or wireless depending upon the way it is connected to your Internet Service Provider (ISP). 

The conventional modes of broadband that we access are through DSL, cable or fibre optic means. The Broadband internet travels through these media through copper telephone lines, coaxial cables or fibre cables. Satellite internet, on the other hand, enables connectivity through the Earth-orbiting stations operated by the ISPs. 

Traditionally, it works by sending data from your computer to the satellite dish on your house. From there, the data is transmitted to a satellite sitting in a geostationary orbit above the Earth's equator. Following this, the satellite sends your data to your ISP's Network Operations Center (NOC) which then retransmits the signal all the way back to your computer. This has been around for years now, but bandwidth is limited and latency (time-lag in connection) is high.

 

What Are Starlink's Plans For Satellite Internet Connectivity? 

Starlink, in contrast, aims to bring in low latency and high bandwidth internet. 

Now how would that work? 

The problem of latency and speed is a technical construct and the most foolproof way to solve them is by stacking up a greater number of satellites within LEOs. This is where Starlink comes in with its ambitious target to launch 42,000 satellites over the next decade or so. 

The first batch of 60 satellites was launched in May 2019 and a total of 955 satellites have been launched as part of the Starlink venture so far. SpaceX has also begun a series of beta-testing programmes (final round of testing before the product is launched before a wider audience) for Starlink in a few parts of the US, Canada and the UK since last year.

 

Let's Talk Finances 

Initially, Mr. Musk's plan was to launch 12,000 satellites, which was projected by analysts to grab a share (3 to 5%) of the global telecom industry's total business annually and even propel SpaceX to become a $52bn company. 

However, with the updated plans for 42,000 satellites recently, this calculation matrix has significantly deviated. By his own admission, the Starlink Project is expected to cost Musk's company anywhere between $30bn to $50bn per year. But then again, company executives have estimated that post the full-scale employment, the project could also earn as much as $30bn a year, which is more than 10 times the annual revenue of its rocket business. 

In December 2020, the Federal Communications Commission (FCC) in the US granted SpaceX with $885.5m worth of federal subsidies to support rural broadband customers through the Starlink network. This is good news for the company since it gives them an anchor customer base to generate an assured source of revenue to build on. 

But there are other concerns. Commercial sales of the Starlink kit has begun, which is reportedly being sold at $99 per package with a one-time installation fee of $499. But in order to connect subscribers to the Starlink network, customers need to purchase a user terminal (AKA "UFO on a stick") which alone costs $2,000. So, the challenge of reducing its cost over time and making terminals last longer (5-10 years minimum) remains imminent in making the project profitable. 

FYI: A report published by Business Insider estimates that SpaceX may eventually need to outsource the production of Starlink's Satellite dishes in an effort to cut costs, but still incur up to $2,000 in loss with each single sale! 

Let us also not forget that the satellite internet business had turned the tide earlier on many prominent tech biggies (including Microsoft with its funding of Teledesic). 

Things seem to be moving forward lately as the company has also begun partnering with Microsoft to connect the latter's cloud computing network to its satellite network. Bankruptcy continues to strike many capable players who have launched into this sector (Iridium, Globalstar, OneWeb). In fact, Amazon has also bagged FCC approval to launch 3,236 LEO satellites for its Project Kuiper, which it claims has an edge over Starlink, given its "prototype phased-array antenna" which conveniently fixes Starlink's user terminal problem.

The Fault in Our Starlink 

So, yes! Mr. Musk can take the company public all he wants but one remains curious as to how one could possibly turn a business of such massive scale into steady revenue growth quarters, with the saddles of billion-plus investments, crucial technical hurdles, history of competitive delinquency and increasing competition in the sector. 

Not to forget serious concerns from a regulatory and environmental perspective. 42,000 satellites are five times the number of satellites that have been launched into space in all of history. The sheer amount of orbital space debris that is poised to originate from this "iron-fencing" exercise of outer space is a combative concern for all of humanity's future space explorations. 

Astronomers have also pointed to the possibility of "light pollution" caused by the deployment of these many satellites. And ultimately, signal interference, which is pegged to be the most likely outcome of Starlink's operations when telcom signals of other operators collide with the satellites, has expectedly caused furor from the industry. 

So, if nobody else will say it, perhaps it falls on us to remind Mr. Musk that if he is going to undertake an unprecedented venture of a scale as giant as this, he might as well ensure that his tech enables greater than just a couple hundred Mbps-increase in download speed. Else, enjoying PlayStation on Mars is going to be a real struggle!

FIN.

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