Report Notes Musk's Starlink Won't Have The Capacity To Truly Disrupt U.S. Telecom

from the not-good-enough dept

We've noted a few times that while Space X's Starlink will be a very good thing for a limited number of rural customers out of the range of traditional broadband options, it's not going to truly disrupt the busted U.S. telecom market in any revolutionary way. The service should be a step up from traditionally expensive, capped, and sluggish old-school satellite broadband, since new low-orbit satellites can provide lower latency service at a price point Elon Musk insists will be competitive.

That said, the financial analysts at Cowen came out last week to note that even at its current maximum of 12,000 such satellites, Starlink will never have enough capacity to truly service more than 485,000 subscribers at full capacity:

"While Starlink has the ability to provide a practical satellite-based broadband solution for the underserved, the capacity has limitations in most of the US especially considering the growing demand for bandwidth driven by in-home data-rich applications and devices," the firm wrote in a research note first spotted by Light Reading.

Starlink currently has 650 satellites in orbit, with 12,000 planned by 2026. But even at full capacity the researchers estimate the service won’t be able to service any more than 485,000 simultaneous data streams at speeds of 100 Mbps.

Granted most ISPs operate under the "oversubscription" model, which correctly assumes that not all customers will be using the full throughput of their connection all day, every day. So Starlink can certainly offer slower speeds to notably more people. Especially if (with no net neutrality and a Trump FCC that couldn't care less about it) Starlink utilizes strange throttling technology that limits what users can do with those connections. But even that would barely dent the estimated 42 million Americans that lack access to any broadband, or the 83 million currently stuck under a broadband monopoly (usually Comcast).

Musk himself has acknowledged this limited capacity means Starlink won't be a major player in any major urban or suburban U.S. markets. That brings us to the other problem Cowen raises, namely that low orbit satellite will never really be able to scale with consumer demand the way traditional fiber optic broadband can. Especially not in the cloud computing, 4K game streaming era:

"US broadband consumption, and the speeds that users demand, is continuously growing," Cowen wrote. "Thus, as satellite throughput and technology continues to progress, so too will demand for faster speeds. As such, our analysis shows that LEO satellites will continuously be a step behind wireline telco/cable operators in meeting US consumer demand for broadband."

So yes, Starlink will be a good thing for a limited number of folks out of range of decent broadband or somewhere on a boat. But anybody framing this as a massive disruption to the status quo (something the press tends to enjoy doing when Musk is involved) is misrepresenting what the service will actually accomplish. As Starlink lobbies the FCC for up to $16 billion in subsidies, it's also worth remembering that U.S. taxpayers have thrown countless billions at existing monopolies for fiber optic networks that routinely wind up only half deployed.

Which is to say we could focus on state and federal corruption, and the decades of fraud and cronyism that have gifted entrenched telecom giants like AT&T, Comcast, and Verizon massive geographical monopolies. Then finally just deploy the coast to coast fiber networks American taxpayers have likely already paid for several times over with the help of pissed off communities. Or we could do nothing about that problem, over-hype half-measure efforts to re-invent the wheel, then grumble in a few years about the fact we never seem to quite fix America's stubborn "digital divide."

Filed Under: broadband, capacity, competition, elon musk, satellite, starlink
Companies: space x, starlink

Space X's Starlink Won't Be The Broadband Disruption Play Many People Think

from the don't-get-your-hopes-up dept

After initially obtaining an FCC license for up to 1 million Starlink satellite broadband customers in the United States, Space X last week quadrupled that estimate, and is now hopeful that 5 million Americans will sign up for service. To be clear: Space X's service won't be taking on traditional broadband providers in major metro areas. Instead, the company will be using thousands of low orbit satellites (with lower latency than traditional satellite broadband) to deliver marginally decent service to under-served rural Americans, assuming it winds up being profitable longer term.

In a country where an estimated 42 million can't get any broadband at all (during a raging pandemic, no less), any little improvement helps. By and large, most major outlets have framed Starlink as a massive disruption of the broadband industry:

"Starlink is the company’s ambitious plan to build an interconnected network of about 12,000 small satellites, to beam high-speed internet anywhere in the world. To date, SpaceX has launched more than 500 Starlink satellites. In addition to getting the satellites in orbit, SpaceX will need to build a vast system of ground stations and affordable user terminals if it is going to connect consumers directly to its network."

But those thinking that Starlink is going to truly disrupt the broadband industry at large probably shouldn't be holding their breath. Even the industry-cozy FCC has expressed skepticism about Musk's latency claims. And Musk himself has made it clear the service won't be a big threat to incumbent broadband providers because there just won't be enough capacity available to offer the service in major metro areas. No limit of marketing hype will be able to defeat the law of physics:

"The challenge for anything that is space-based is that the size of the cell is gigantic... it's not good for high-density situations," Musk said. "We'll have some small number of customers in LA. But we can't do a lot of customers in LA because the bandwidth per cell is simply not high enough."

Again, that's not to say Starlink won't be a positive advancement for rural broadband users, but it's mostly a play aimed at a niche market American companies have, time and time again, deemed to costly to serve after some initial flirtation. In time, Space X may as well. Given there have been so many failed attempts to disrupt the heavily monopolized residential US telecom sector (especially in low orbit satellite), it makes sense to wait for a fully commercial launch -- and to see what pricing and weird usage restrictions are applied -- before getting too excited about Starlink's potential for meaningful innovation.

It's also worth noting that existing telecom monopolists just love using emerging technologies as justification for regulatory apathy (read: we don't need oversight because the sector is just so darn competitive). As we saw with failed broadband over powerline (BPL) technology or wireless tech like WiMax, that usually involves radically over-hyping emerging competitors as mystical panaceas in a bid to suggest that reasonable adult oversight of the sector is no longer needed. That's certainly the tactic being used for 5G (another technology that won't be as disruptive as claimed for a laundry list of reasons), and I'd wager that Space X and Amazon's low orbit satellite experiments will soon be abused in the policy arena by AT&T, Comcast, and Verizon in much the same way -- even if the actual impact on incumbent businesses will likely be negligible.

Filed Under: broadband, competition, elon musk, leo, low earth orbit, satellites, starlink
Companies: spacex, starlink

Space X Starlink Beta Starts In 6 Months, Bringing A Glimmer Of Hope To Crappy US Broadband Market

from the disrupt-the-undisruptable dept

The US broadband market is a competitive mess. US telcos have routinely refused to upgrade their aging DSL lines, as the return on investment has never been fast enough for Wall Street. That has left cable giants like Comcast and Charter (Spectrum) with bigger broadband monopolies than ever before. While many see 5G wireless as some sort of competitive panacea waiting in the wings, there's a litany of problems (cost, reach, competition eroding M&As) that suggests folks should temper their enthusiasm.

Then there's satellite broadband. Long despised by consumers for slow speeds, inconsistent performance, high prices, and usage caps, the sector is poised for disruption by a number of low-orbit satellite ventures. These new offerings offer significantly lower latency using a litany of smaller low-orbit satellites. One of the major players is of course Space X, whose Starlink satellite broadband service is slated for a public beta six months or so from now according to Elon Musk:

The beta is poised to include both Europe and the United States, which the company previously stated should see a full commercial launch sometime later this year. After launching another 60 Starlink satellites yesterday, Musk indicated there were now "420 operational Starlink satellites" preparing to offer service. The service offers the promise of some significant disruption to a sector that very much could use a competitive kick in the ass.

That said, Starlink may never truly challenge the domination of telecom monopolies like AT&T and Comcast. For one, it's still far too early to know what kind of speeds or prices users will be looking at, and it's quite possible that the price point, throttling restrictions, or usage caps could result in the service being a flimsy alternative to fixed-line broadband. Musk has also previously noted how while the service latency should be a LOT better than traditional satellite broadband (20ms versus 200ms or higher), the service isn't going to have the kind of bandwidth needed to seriously compete in denser urban or suburban markets:

"The challenge for anything that is space-based is that the size of the cell is gigantic... it's not good for high-density situations," Musk said. "We'll have some small number of customers in LA. But we can't do a lot of customers in LA because the bandwidth per cell is simply not high enough."

Keep in mind that the US broadband industry is routinely peppered by well hyped potential disruptors that consistently fail to deliver.

Broadband over Powerline, for example, was widely hyped as a competitive panacea by folks looking to deregulate the telecom sector, only to fall flat on its face due to interference issues. The current FCC has similarly justified its pandering to existing monopolies with the promise that competition (be it 5G or satellite) is just around the corner. But there's no shortage of low-orbit satellite ventures thatn have fallen flat on their face, and there's no shortage of politically powerful companies (AT&T, Verizon, T-Mobile, Comcast) busily lobbying to ensure another major competitor never upsets the apple cart.

That said, there's still hope that Starlink offers a genuine, helpful option to users left out of reach of traditional options. With more than 42 million Americans still unable to get any broadband at all, and millions more unable to afford it due to limited competition and high prices, the US broadband sector can certainly use all the help it can get.

Filed Under: broadband, competition, elon musk, satellite broadband, starlink
Companies: space x, starlink