SpaceX Starlink Just Won A Huge Client

On Saturday, October 24, SpaceX crossed the finish line, carrying the 800 orbiting Starlink broadband Internet satellites it needed to provide “moderate” Internet coverage to large parts of the Earth’s surface. Just two days later, the company officially opened Starlink to “beta” subscribers, announcing high-speed internet service from 50MB / s to 150MB / s at prices as low as $ 99 per month (plus $ 499 from material costs).

Demand for the new service in the United States has reportedly been strong, and demand in Canada is poised to get even stronger – as this month regulators approved Starlink to also offer internet service in Canada.

Well, how’s that?

Yes, indeed, in a tweet heard across the northern hemisphere on November 6, Canada’s Department of Innovation, Science and Economic Development (ISED) announced that it had granted “regulatory approval. for the @SpaceXStarlink constellation of satellites in low earth orbit. ”

How important is this to Canada, and is $ 99 for as little as 50 Mbps internet speeds really a bargain? With Comcast offering 200 Mbps for under $ 50 in metropolitan areas across the United States, you might not think it, but here’s the thing: listen to tweets from (future) elated Canadian customers and hear their whining about being forced to pay, say, $ 46 a month (presumably Canadian) for 6 Mbps, $ 75 for 5 Mbps, or even $ 95 for a measly 2 Mbps, it’s pretty clear that the service offered by Starlink will be a big improvement for many rural users.

Additionally, in a bid to win a $ 16 billion FCC rural broadband contract, SpaceX is working hard to get its speeds up to 1 gigabyte per second – as much as a 20-fold improvement per second. compared to the initial capabilities of the beta service.

Why Canada?

In the meantime, Canada is a logical market for SpaceX to target with the limited number of satellites it has in orbit (the company eventually wants to install 12,000 satellites) and generate revenue to finance its expansion. Although SpaceX promises “near-global coverage of the populated world” by 2021, the Starlink website explains that, due to where the initial deployment of the Starlink satellites is in orbit, SpaceX cannot really provide internet coverage. than “the northern United States and Canada in 2020. ”

It’s not bad with Canada, however, which is happy to take advantage of SpaceX in its offering. As ISED Minister Navdeep Bains explained, “Our government recognizes that high speed Internet access is no longer a luxury – it is essential.”

Local media began reporting invitations to participate in the beta program for Canadian customers this week. According to these reports, SpaceX is offering Canadians almost the exact same price for the service as the United States – CAN $ 129 (about US $ 98) for the service itself and CAN $ 649 (US $ 495) for the hardware. And Musk recently tweeted about a promised “big expansion” of service to Canada “in 6 to 8 weeks.”

What this means for SpaceX – and investors

However, even such modest numbers could be a big deal for SpaceX and a big opportunity for investors. As SpaceX internal documents show, the company hopes to reap up to $ 4 billion in annual revenue from Starlink subscriptions as early as next year, and increase that revenue to $ 22 billion a year by now. 2025, with profit margins of up to 60%.

This implies that within a few years, Starlink – which generated no revenue as recently as last year – could become a $ 13 billion profit machine. Oh, and here’s the best part: SpaceX is planning to go public with Starlink so that you can own some of it. The COO said it herself.