Why Starlink satellite system faces huge challenges

Starlink is what’s known as a megaconstellation – a network of satellites in low-earth orbit. The ultimate goal of this incredible innovation is to supply affordable internet access across the planet, especially in rural and remote areas beyond the reach of traditional connections.

You might even say it’s the first time the globe will have truly created something that is available to everyone – and, from my perspective, at least – this is highly commendable.

And the ‘mega’ part of the name is certainly well-coined. When completed, Starlink will initially comprise more than 12,000 satellites, with paperwork filed at an international regulator for 30,000 additional satellites. The company says it expects to attract half-a-million subscribers by mid-2022.

While Starlink is the brainchild of Elon Musk, the billionaire behind Tesla and SpaceX, there is a multitude of other companies vying to provide internet from space, too.

This bright new era bodes well for connectivity, but it does seem there are hurdles on the route to getting the satellites up. “SpaceX needs to pass through a deep chasm of negative cash flow…to make Starlink financially viable,” Musk tweeted. “Every new satellite constellation in history has gone bankrupt. We hope to be the first that does not.”

My research has led me to the following observations:

The cost – Earlier this year, the company suggested it will cost $30 billion to keep Starlink in orbit, after admitting investment costs before it achieves fully positive cash flow would be $5-$10bn.

This almost unimaginable amount, on top of the years of research, development and manufacturing, needs to be recouped by subscribers to the service. Starlink would need a good few million subscribers paying about $99-a-month each to recoup a $5bn investment in a year’s time, analyst Tim Farrar, president of TMF Associates, told Reuters news agency.

Early adopters are always thin on the ground in my experience, especially when the current costs of signing up for Starlink’s services are priced at an unaffordable amount (even while Starlink is absorbing around two-thirds of the cost to consumers) for many of those in areas (like emerging economies) that Starlink is supposed to support.

The weather – Weather has plagued satellite-based services in the past, and Starlink is no exception. Early adopters in the US report failure and lags due to overheating of equipment in hot weather. And heatwaves are becoming more common.

Beta-testing subscribers have complained of patchy connectivity due to the weather, with online jokes about cooling the equipment with a garden hose.

The price to users – While it’s touted as a service for all, the initial set-up and monthly subscription fee is beyond many people living in the very communities Starlink is supposed to benefit – as I mentioned earlier, $99-a-month is too high for many.

Add in the terminal costs and fitting costs, and the service currently only holds appeal for those who can afford it. While there may be those in remote, rural parts of the world, who can afford such a subscription fee, they will surely be few and far between.

The company says the biggest challenge is reducing the cost of the terminal (the equipment that provides the link between the satellites and the service user). Starlink has already managed to more than half the terminal cost from an initial cost of $3,000. SpaceX president Gwynne Shotwell said she expects it to be available for a few hundred dollars within the next year or two.

The number of subscribers – Given the high – and ongoing – cost of launch, Starlink aims to capture at least 5 percent of global internet users – that’s tens of millions of people; but at the current price point, it’s not affordable or cost-effective for most users.

There will need to be demand to make it work – and that demand will need to be fed by more powerful, upgraded satellites, to avoid the annoying outages I highlighted above.

There will be government subsidies, apparently, with news that nearly $900m in Federal Communications Commission subsidies are being made available to Starlink to aid its mission of bringing the internet to rural areas.

The competition – Starlink, of course, is not alone in its internet space race. Competition will mean there will be casualties. Reuters reports Amazon subsidy Kuiper has a $10bn directly competing project, while OneWeb – a collapsed satellite operator rescued by the British government and India’s Bharti Group – has vowed to be in the game as well, citing funding in excess of $2.4bn.

Of course, Starlink benefits from having its own infrastructure – Musk’s sister company, SpaceX, provides the launch technology, while Starlink is manufacturing its own satellites, terminals and communication chips.

Despite all these hurdles, I see Starlink as a beacon of hope in all our technology futures. Watch this space!