SpaceX’s Starlink Won’t Fix America’s Broken Broadband Market

The service will be a huge step up for some rural users, but it lacks the capacity to really disrupt the nation’s telecom monopolies.
A SpaceX Falcon 9 rocket is seen in this time exposure from Cocoa Beach, Florida as it launches the company's third Starlink mission on January 6, 2020 from Cape Canaveral Air Force Station, in Cape Canaveral, Florida. Image: Paul Hennessy/NurPhoto via Getty Images

Space X’s Starlink satellite broadband service should soon give frustrated rural Americans another broadband option. But while early results from the company’s private beta are showing speeds comparable to cable broadband and DSL, experts say the service will never be able to seriously challenge the country’s entrenched broadband monopolies. 

Starlink utilizes lower-orbit satellite constellations capable of providing faster speeds at lower latency than slow, pricey, and usage capped traditional satellite broadband. The service is expected to enter a public beta this November, with a broader commercial launch expected sometime next year.


But researchers at Wall Street investment firm Cowen this week issued a research note warning that anybody that believes the service will truly disrupt America’s telecom monopolies will likely be disappointed. 

"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. Starlink could offer service to significantly more people using the service at slower speeds. Most ISPs operate under an “oversubscription” model that assumes not everybody will be online at the same time pushing their connection to the limit. But even at slower speeds, Starlink would still barely dent the 42 million Americans that currently lack access to broadband. Cowen analysts also warned that the service won’t be able to scale with U.S. consumer bandwidth demands in the 4K game streaming, cloud storage 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." Starlink did not respond to a request for comment. SpaceX CEO Elon Musk, whose company is lobbying the FCC for up to $16 billion in taxpayer subsidies, has previously made it clear that Starlink wouldn’t pose a real threat to traditional telecom incumbents. “It's not good for high-density situations," Musk told attendees of a conference earlier this year. "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." In addition to the 42 million Americans that lack access to broadband, another 83 million are currently stuck under a broadband monopoly, usually Comcast. Tens of millions more only have the duopoly choice of cable broadband or DSL. This lack of competition results in high prices, spotty service, and some of the worst customer service of any industry in America. Starlink should certainly help. As should comparable services like Amazon’s Project Kuiper, which recently secured FCC approval to launch its own constellation of 3,236 low-orbit satellites. OneWeb, fresh from bankruptcy, has similar ambitions.

Musk has promised that Starlink will offer competitive pricing, but the company has offered no specifics, or whether the service will see the kind of usage caps and bizarre throttling practices that hamper many satellite and cellular connections with limited capacity. Telecom experts this week told Motherboard Starlink will never be a substitute for traditional fiber-optic broadband and will barely dent a problem decades in the making. America has thrown an untold fortune in subsidies and tax breaks at industry giants like AT&T and Verizon in exchange for fiber broadband networks that routinely only wind up half deployed. Low orbit satellites not only lack the capacity to tackle this digital divide, the technology is causing light pollution and headaches for researchers that study the night sky. It’s a growing problem U.S. regulators have refused to seriously address, and some experts say can’t be remedied, despite Musk claims the constellations would have no impact on astronomy. U.S. broadband is an uncompetitive mess, resulting in American consumers paying some of the highest prices for broadband in the developed world. While Starlink will be a huge benefit to a subset of those without access, it’s a far cry from the kind of comprehensive solution needed to finally fix American telecom’s monopolized mess.