IN ANOTHER QUEST FOR THE STARS, ELON MUSK IS SET TO REVOLUTIONIZE THE INTERNET, HERE'S HOW.
In a move set to democratize the internet, Elon Musk is launching a slew of satellites to make the internet a reality on every nook & corner of the world. The SpaceX project aims to launch around 1440 satellites in LEO (Lower Earth Orbit) by early 2022. So far, 60 satellites have been launched and are currently being beta tested by the American public.
AN INTERNET BOOM
Currently, millions in Asia, Africa & Latin America are deprived of stable internet access. The map below shows an access disparity between the first world & third world countries.
So the potential consumers of Starlink's service are in the billions already.
THE BUSINESS PLAN
As per its own estimates in 2018, SpaceX believes the whole exercise of launching thousands of satellites will cost around USD 10 billion with costs set to increase due to the COVID induced delay in launches. Now let's break down the numbers to understand its monthly revenue:
By 2025, the global population can be estimated to be more than 8 billion (with CAGR of 1%).
Of these, the major growth centres are set to be in developing & underdeveloped nations where internet access would still be insufficient.
So we can put the consumer base of Starlink at roughly around 1 billion.
Now considering just a quarter of them sign up (250 million) and its ARPU is around $60, then the company will generate a lofty revenue of USD 1.5 billion per month!
Elon Musk knows the power of his venture and has revealed plans to spin off Starlink & launch its own IPO!
SOME CHINKS IN THE ARMOR
However, all is not good for future prospects of Starlink. I have identified some future challenges for the company:
The advent of 5G will pose a major threat to Starlink in the developed world. This is because the current speed of Starlink stands at around 80 MBPS which is a sharp contrast to the lightning-fast 5G speed of 400 MBPS (also current). The wide gap in the speed range will make Starlink an outdated service for the developed Western world.
Another technical issue is Starlink works optimally only in low population density areas. So in critical markets like Bangladesh & Nigeria, the internet speed would further taper down making the service less attractive.
Starlink is not the lone player in the field. Although it does have the first movers' advantage, it can expect fierce competition in the long term. UK's OneWeb (partially owned by the British government) has emerged as a worthy opponent with aggressive plans to launch 400 satellites by 2021 & successful deployment of 16 already in space. Amazon's Project Kuiper, though still in its infancy has the potential to disrupt Elon's plans. Amazon has the financial muscle to gain technological advantage very rapidly. Last but not least is an EU lead satellite consortium which can have government support from many wealthy European nations.
IT SEEMS LIKE ELON MUSK IS SOAKING UP ALL THE HYPE THESE DAYS! ANYWAYS, HOPE THE ARTICLE WAS A GOOD READ. FOR MORE ON MUSK, SEE THE POSTS SUGGESTED BELOW.
CIAO!