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“Those who do not remember the past are condemned to repeat it”

George Santayana 

In 2015 Elon Musk presented Starlink as the next revolution in global internet satellite communications. This constellation of twelve thousand small satellites is already under construction with 120 spacecraft already launched aboard the Falcon 9 rocket in the last six months. The network is expected to achieve fledgling operation in the next two years. Nevertheless the Starlink constellation is a remix of a thirty year old business model that was originally a spectacular failure. 

The Schadenfreude of Iridium

The story began in 1988 in Chandler Arizona. While the history of Iridium is disputed and could be fictional, it is alleged that its idea was conceived by Bary Bertiger in the Bahamas. Bary’s wife had struggled to communicate with a real estate agent while they were on vacation on a remote island. When Bary later returned to Arizona exasperated, his wife challenged him to develop a solution. Bertiger brainstormed with Ken Peterson and Ray Leopold to invent the cellular tower in the sky that became Iridium

Another decade would elapse before the first satellite lifted off aboard a Delta 2 rocket from Vandenberg Air Force Base. It took another two years and twenty-one launches to complete the constellation. 

This constellation would have been a monumental achievement had the demand for its services existed, but it didn’t. By the end of the last century, the company was in bankruptcy. The cellular tower in the sky, Iridium, came within hours of crashing back down to Earth like it was the ending of a Bond movie. 

Mobile, 5G, Windräder, Chemtrails, Trees, Climate, Co2

All of this was management’s fault. For example, in 1999 CNN writer David Rohde complained that it was nearly impossible to connect with a sales consultant about purchasing this cellular service. Others complained that the service was horrific. 

It was only with the cash bailout from the United States government for $72 million dollars and a two-year contract that the constellation still exists at all. In December 2000 the government also agreed to a $25 million fire sale of the company and $4 billion debt forgiveness. 

Iridium is still in business today.  

Will it be necessary for SpaceX to secure military contracts to thrive? 

The Availability and Speed of Global 3G

Dr Hexagon commented recently on Reddit that he can connect to 3G and stream Netflix movies from almost anywhere. His statement is memorable because Dr Hexagon says that he resides on remote islands in Thailand and that this feat can be done for $30 a month. Dr Hexagon also expressed worry that the Starlink demand for an antenna would restrict the service to desktop computers. This could be devastating for Starlink since many people utilize their phones for communication. Dr Hexagon also said that he has explored many developing countries and can connect to Facebook and messaging. 

Hexagon’s account is confirmed by research from Opensignal. In their report they say that a decent 3G signal can be acquired more than half the time in 93 out of 95 countries surveyed. Out of the 95 countries surveyed, 3G could be acquired 75% of the time. Twenty-three countries provided 3G service reliably 90% of the time. South Korea provides the best service in the world with Japan in second place. 

The quality of cellular signals also come in a variety of flavors. The speeds can be as slow as 1 Megabits per second for 3G and up to 41.4 Megabits per second for advanced 4G connections in South Korea. The United States placed 19th in availability and 39th in overall speed because of the wide spectrum in speeds on our networks. Afghanistan performed the worst of all. The median speed for all the countries was 8.5 Megabits per second and twenty countries averaged less than 5 Megabits per second. 

This situation can only improve as 5G comes online in the next decade for the most advanced nations. 

Market Competition and Saturation

In the next decade, the sky will be swarming with small satellite networks. Starlink is only the first wave in a series of upcoming satellite platforms. Oneweb is also competing for customers and space with their first nine spacecraft launched in February with 641 more to follow. Project Kuiper is expected to be built of over 3,000 satellites spread across three orbital shells. Should either or both of these networks achieve commercial market share, then economics theory says that Starlink should encounter further price depression. 

Morgan Stanley is currently valuing SpaceX at $33.3 billion. Their analysts could raise the value to $120 billion when SpaceX captures more than 10% of the global broadband market share. Their base valuation for SpaceX with an operational Starlink constellation is $52 billion. This valuation is dependent upon Elon deploying more spacecraft in the next decade then all the spacecraft that are presently in orbit combined and that creates problems. 

The Kessler Syndrome and The End of The Space Race

In the 2013 movie Gravity, a runaway torrent of debris pulverizes the Space Shuttle Explorer while it is in orbit upgrading the Hubble Telescope. Our hero Ryan Stone played by Sandra Bullock is compelled to pull tricks to survive its destruction and finally land back on Earth. This deluge of wreckage is originally triggered by a Russian missile test. 

While this disaster is a work of fiction, the depicted Kessler Syndrome is real. In 1978 Ronald Kessler of NASA predicted that a collision could trigger a self-sustaining chain reaction in space. This abrasive reaction would devour orbiting satellites down to shrapnel that then continues the destruction. In real life this disaster would put an end to the space race. 

The risk of the Kessler Syndrome only rises with more spacecraft in orbit. Starlink, Oneweb, and Kuiper are planning to add nearly 16 thousand more to the mix. 

Last Thoughts

The creation of Starlink is a retake on a thirty-year-old idea that evolved into Iridium before spectacularly failing. It was only through government contracts and a bailout that the network still exists today. The risks of the Starlink constellation stalling is only compounded by the presence of cheap 3G cellular networks accessible in most of the world. SpaceX is also facing headwinds from its competition Oneweb and Kuiper. Assuming that SpaceX can deploy a productive constellation, the congestion of low earth orbit with spacecraft raises the risk of the Kessler Syndrome. 

SpaceX will need to construct a unique broadband service to succeed. Even with a unique product their success isn’t guaranteed without government backing. 

1 COMMENT

  1. Hi, I disagree with what you wrote, but sometimes conflicting opinions are needed.
    The difference between the examples you made and Starlink, which leaves a good chance of success for Musk’s company, can be summed up in one word, efficiency.

    One of the most important aspects in telecommunications, especially for the use we make of it for hours and that I do in the future is latency.

    Iridium is a constellation of 70 geostationary satellites that orbit 36,000 km from the earth and have a big problem in terms of latency. Iridium provides very bad service because it has a theoretical latency of 240 ms:
    (36,000 km x2) /300,000 km / s = 0.24 s = 240 ms.
    The recorded latency is 1800 ms. More than a second.

    Interlocutor 1:
    Hallo? —>


    Party 2:
    —> Hello?

    Starlink satellites orbit 500 km / 1000 km above the earth, with a theoretical latency of 6.6 ms.
    (1000 km x2) /300.000 km / s = 0.0066 s = 6.6 ms.
    The latency recorded is between 30 and 99 ms which is on average proportional with the multiplier used for the first example x7.5 compared to the theoretical latency.

    Interlocutor 1:
    Hallo? —>
    Party 2:
    —> Hello?

    Now imagine communicating between New York and Rome, the cable that connects the two cities passes through
    Rome —> London -> Miami -> New York.
    and it is roughly 11,000 km long (probably a lot more)
    If I wanted to talk to a friend from New York, using an FTTH connection, in New York I would receive his voice and video with a delay of about 550 ms. A great asset for global communications that will be increasingly useful in the future.

    The two services are not comparable in terms of efficiency.

    3G is not efficient or at least, it is not currently, just as 4G is not, maybe 5G will be but the installation proceeds slowly. It costs a lot to wire the antennas that transmit these signals, and the market we must consider is that of “white areas” where the cost of installation and excavation is even greater because there is no existing infrastructure. In these areas of the world, the cells do not exist or are scarce and they cannot guarantee sufficient bandwidth to serve the current demand, the situation will only get worse in the future. Telecommunications companies are dinosaurs and exploit their current market conditions but are reluctant to invest in new infrastructures despite the substantial national and EU funding. Maintenance is expensive because, in most cases, fault finding systems are inefficient and databases poorly organized.

    I don’t speak out against Morgan Stanley, I really wouldn’t be fair. Without going far, just see what he said about Tesla.

    Having said that, I believe that the surrounding conditions, both of the market and of technologies and the commitment / engineering employed to create Starlink, will give the company great market opportunities.

    To conclude, the thing that makes me happiest is that this program creates a basis that will also allow people who are in the most diagiated areas of the planet to have access to the information that is the aspect that has allowed us to progress as a species.

    With respect and love.

    Andrea Maria Brambilla

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