Elon Musk’s Starlink Won’t Be the Game Changer You Think

While Starlink insists it’s poised to disrupt the broken U.S. broadband market. Reality, competitors, and the law of physics will make that promise a steep uphill climb.

Sep 17 2021, 1:00pm

Elon Musk’s Starlink, a next-generation satellite broadband service, will be a good thing for those without broadband, or those stuck on antiquated DSL. While early reviews have been mixed, the Starlink beta currently offers download speeds around 100 Mbps for $100 a month (plus a $500 equipment charge), a big upgrade for rural America.

But it’s unlikely that Starlink is the silver bullet for the country’s broadband access woes. The problem, experts say, is how many users will actually be able to get service. Limited satellite capacity means limited sign up slots, many of which will be quickly gobbled up by Elon Musk fans eager to advertise their unwavering fealty to the planet’s second wealthiest human. That could leave many without access left out in the cold.

For context, somewhere between 20 and 42 million Americans lack access to broadband. Another 83 million live under a broadband monopoly. Millions more are stuck under a duopoly involving a cable giant (usually Comcast) and an apathetic phone company. There’s simply no way Starlink can get anywhere close to making a dent in a problem this size.

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Wall Street telecom analyst Craig Moffett calculates Starlink will only be able to serve somewhere between 300,000 and 800,000 subscribers during its first few years. On the high end, with a fully deployed fleet of improved 42,000 low orbit satellites years from now (there’s roughly 1,639 in orbit right now), he suggests the service will likely top out at 6 million users. 

And that’s being optimistic, Moffett said. It’s also assuming that Starlink can remain financially viable as it scales up service, something even Musk has admitted may not be possible in a low orbit satellite industry that has seen no shortage of past failures

“Starlink will play an important role in bringing broadband to unserved areas, and that’s a welcome contribution,” Moffett told Motherboard. “But it is unlikely that Starlink will disrupt the market that is already served by terrestrial alternatives.”

That’s not to say that Starlink won’t have a role to play in improving broadband access, just that anybody expecting a major revolution may want to temper their enthusiasm. A survey this week suggested many consumers don’t really understand the service won’t have the capacity to deliver service to most major metropolitan areas, something Musk has acknowledged

“Starlink is a huge advance versus previous generations of satellite broadband, but the receiving equipment is too expensive, the speeds are too low, and the cost of service is too high for Starlink to be a serious alternative to a cable or fiber broadband connection where one is available,” Moffett said. “The highest and best use of their scarce capacity will be serving the rural market, and that is almost certainly where they will direct their energies.”

Here too Starlink isn’t without its limitations. For many rural Americans, high broadband prices due to limited competition are the primary reason they don’t have broadband, and a $100 per month charge—plus a $500 up front equipment fee (something Musk says should get cheaper over time), will likely keep the service out of the reach of many.

“More competitors in the broadband market are always welcome, and depending how Starlink's commitments shake out in practice, it could certainly make a difference for some,” Dana Floberg, a telecom expert at consumer group Free Press, told Motherboard. “However, the affordability digital divide is a systemic problem that can't be resolved by any single new competitor, but requires an active regulator and legal authority to ensure the broadband market operates justly and reasonably with an eye towards building equity, not just profit.”

Instead, U.S. lawmakers have often focused on kneecapping telecom sector regulators, and throwing billions of poorly-spent dollars into the nation’s deep, dark, monopoly void.

Floberg’s group issued a study last year highlighting how major internet service providers (ISPs) gamed the FCC’s broken subsidy system to nab billions of dollars for deployments they may not deserve and don’t make sense. In Starlink’s case, the company received $886 million to deliver service to locations ranging from airport parking lots to traffic medians.

Many scientific researchers have also criticized Starlink for the technology’s light pollution, which they say creates problems with scientific research that cannot be fully mitigated. At the same time, Starlink competitors are taking increased aim at the company as they collectively jockey for subsidies, subscribers, and lucrative government contracts.

Amazon—which is planning its own low-orbit satellite service for 2023—has been bickering with Starlink for weeks in government filings over which company is a bigger stickler for government regulation. ViaSat, clearly wary of potential competition, earlier this year filed an unsuccessful lawsuit attempting to freeze Starlink launches, claiming they harmed the environment. 

Michael Dell-backed RS Access, a wireless ISP that’s also facing potential rural competition from Starlink, this week urged the FCC to investigate Starlink’s pre-order claims, implying the company could be artificially inflating both its reach and potential customer count.

“Their claimed order information appears to be merely an indication of potential customer interest, not a commitment to purchase services, or for the company to provide them,” the company told Motherboard in a statement. “We trust that the FCC will thoroughly examine these questions.”

Neither Starlink nor Space X responded to a Motherboard request for comment. 

Customers haven’t been without their complaints either. A number of eager Starlink customers noted this week that after shelling out a $100 down payment for “Dishy McFlatface”—the affectionate name given the Starlink user terminal—it has been virtually impossible to get company customer service to update them on the status of their order.

The broken U.S. broadband market needs any competition it can get. And Starlink absolutely will be a game changer for those out of range of traditional or decent broadband options, assuming users can actually get—and afford—the service. But those expecting a massive revolution and disruption of the status quo probably shouldn’t be holding their breath.

Tagged:

Internet, elon musk, SpaceX

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