Elon Musk targets Telecom for next disruption with Starlink Internet

Photographer: Paul Hennessy / NurPhoto / Getty Images

Elon Musk became the richest person in the world this month by shaking up the global auto industry and disrupting aerospace heavyweights with reusable rockets. Now he is focusing on another business dominated by well-established incumbents: telecommunications.

Musk Space Exploration Technologies Corp. has launched more than 1,000 satellites for its Starlink Internet service and is recruiting first customers in the US, UK and Canada. SpaceX told investors Starlink is seeking a share of a $ 1 trillion market comprised of in-flight internet, marine services, demand in China and India – and rural customers like Brian Rendel.

Rendel became a Starlink tester in November after struggling for years with slow internet speeds on his 160-acre farm overlooking Lake Superior in Michigan’s Upper Peninsula. After paying around $ 500 for the equipment, FedEx arrived with a flat dish and an antenna. For $ 99 per month, Rendel now gets speeds of 100 megabytes per second for downloads and 15-20 for downloads – much faster, he says, than his old ISP.

“It’s a game-changer,” said Rendel, a mental health counselor, who can now easily watch movies and set up meetings with clients through Zoom. “It makes me feel as if I am part of civilization again.

For months, SpaceX has launched Starlink satellites on its Falcon 9 rockets in batches of 60 at a time, and Starlink’s 17th launch took place on January 20. that have raised concerns about eye pollution for astronomers.

But the Starlink network in low Earth orbit, closer to the planet than traditional satellites, is enough to allow SpaceX to deploy the service along broadband across North America and the UK as SpaceX sends more satellites, the coverage area will increase, expanding the potential customer base – and revenue stream – beyond today’s initial stages.

SpaceX did not respond to a request for comment.

“The big problem is that people are happy with Starlink’s service and economy compared to other alternatives,” said Luigi Peluso, managing director of Alvarez & Marsal, which tracks the aerospace and defense industries. “SpaceX has demonstrated the viability of its solution.”

Last year, Gwynne Shotwell, chief operating officer of SpaceX, said that Starlink is a company that SpaceX – one of the most beloved venture capital firms in the United States – is likely to rotate and become public. That leaves the possibility that another Musk firm is offering stock after last year’s sensational market gains by Tesla Inc.

Starlink will face stiff competition. While fiber optic cable is widely considered too expensive to install in remote areas and many rural locations, cellular connectivity is expected to make great strides with 5G and then 6G. Meanwhile, a number of innovative attempts to extend cellular to unserved areas are being developed by other well-heeled companies such as Facebook Inc.

“There will always be early Starlink followers who think anything Elon Musk comes up with is cool,” said John Byrne, Telecom Analyst at GlobalData. “But it’s hard to see the satellite’s trajectory keep pace with the improvements brought about by cellphones.”

Risk of congestion

SpaceX, based in Hawthorne, Calif., Is primarily known for launching rockets for global satellite operators, the U.S. military, and NASA. Last year, SpaceX made history by becoming the first private company to fly astronauts to the International Space Station.

Starlink marks SpaceX’s first foray into a truly consumer-oriented product. SpaceX has never tried to maintain solid service while increasing customer base.

“Like any network, Starlink is going to get rave reviews when it is underutilized,” said industry analyst Jim Patterson. “However, he will face the same congestion issues as his peers as they expand their base.”

Then again, SpaceX says the service will improve as it builds more infrastructure.

“As we launch more satellites, install more ground stations, and improve our networking software, data speed, latency and availability will improve dramatically,” Kate Tice, a senior engineer at SpaceX, said in a livestream of a Starlink mission in November.

Fervor of the fans

Starlink is gearing up for a big 2021, hiring software engineers, customer support managers, a sales manager and a country launch manager.

The fan fervor that has made Tesla cars such a hit with consumers and retail investors extends to Starlink. Facebook groups, Reddit threads and Twitter are filled with reports of the first customers sharing images of their download speeds. You Tube has videos of people “Unpack” their Starlink dish and go through the initial setup.

Ross Youngblood lives in Oregon and works remotely as an engineer for a tech company in San Jose. He owns a Tesla model X and closely follows All Things Musk. He had Starlink before Thanksgiving.

“I plugged everything in and it started to work,” Youngblood said. “It’s going to be very disruptive and I don’t think enough people are paying attention to it.”

Many other customers are waiting behind the scenes. In December, the Federal Communications Commission awarded SpaceX $ 885.5 million in grants as part of a larger effort to bring broadband to more than 10 million Americans in rural areas. SpaceX will focus on 35 states, including Alabama, Idaho, Montana, and Washington.

“Aging infrastructure”

“We cannot continue to invest in aging infrastructure,” said Russ Elliot, director of the Washington State Broadband Office. “With Starlink, you can be anywhere. The cost of construction in deep or expensive rural areas is now less of an issue with this optional technology. “