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