Whether or not it makes business sense isn't really what I was talking about. I was talking about the home dish costing $1k. That sounds like it could easily be reduced significantly unless there is some underlying tech reason.

Also: they plan to use Starship when it's available which has 10x more capacity. If it really is fully reusable as advertised, that is going to really drive down the launch cost.

But your calculations don't take into account that they are not at anywhere close to a full constellation: they are only at 4k out of the 40k they need so they literally can't support higher numbers. Their new generation of satellite is also suppose to be doing some in-orbit routing or something like that which would I would assume will really help on the bandwidth front. How much that affects their maximum subscriber base when they are fully deployed I don't know but it's bound to be a lot more possible subs than they have now.

I mean, this could be a spectacular flop like Iridium but a lot has changed in 20 some years not least of which is the cost of launch.

Mike

As I mentioned elsewhere, I'm not sure that the current economics are the real economics. I'm pretty sure they've been purposefully throttling demand because they still don't have the capacity so it would make sense to overcharge in the mean time. Is there something inherent in their cpe that makes them much more expensive than, say, satellite tv dishes? I can see marginally more because of the LEO aspect, but isn't that mainly just software? It wouldn't surprise me that the main cost is the truck roll.

- Starlink currently reports around 1.5M subscribers. At $110 a month, that's $165M in revenue, 

- A Falcon 9 launch is billed out at $67M. A Falcon 9 can carry up to 60 Starlink sats. That's ~667 launches to reach the stated goal of 40k sats in the constellation. So roughly $45B in just launch costs, if you assume the public launch price. (Because if they are launching their own stuff, they aren't launching an external paying customer.) 

- The reported price per sat is $250k. 

Assuming they give themselves a friendly internal discount, the orbital buildout cost are in the neighborhood of $30B for launches, and $10B for sats.

- The satellite failure rate is stated to be ~ 3% annually. On a 40K cluster, that's 1200 a year. 

That's about 20 more launches a year, and $300M for replacement sats. Let's round off and say that's $1B a year there. 

 So far, that's a $40B buildout with a $1B annual run rate. And that's just the orbital costs. We haven't even calculated the manufacturing costs of the receiver dishes, terrestrial network infra cost , opex from staff , R&D, etc .

Numbers kinda speak for themselves here.

I mean, I get that Musk is sort of a cuckoo bird but say what you will he does have big ambitions.

Ambition is good. But reality tends to win the day. As does math. 

   

On Sat, Jun 17, 2023 at 4:38 PM Michael Thomas <mike@mtcc.com> wrote:

On 6/17/23 1:25 PM, Tom Beecher wrote:

Won't Starlink and other LEO configurations be that backstop sooner
rather than later?

Unlikely. They will remain niche. The economics don't make sense for those services to completely replace terrestrial only service. 

Why would they put up 40000 satellites if their ambition is only niche? I mean, I get that Musk is sort of a cuckoo bird but say what you will he does have big ambitions.

From my standpoint, they don't have to completely replace the incumbents. I'd be perfectly happy just keeping them honest.

As I mentioned elsewhere, I'm not sure that the current economics are the real economics. I'm pretty sure they've been purposefully throttling demand because they still don't have the capacity so it would make sense to overcharge in the mean time. Is there something inherent in their cpe that makes them much more expensive than, say, satellite tv dishes? I can see marginally more because of the LEO aspect, but isn't that mainly just software? It wouldn't surprise me that the main cost is the truck roll.

Mike

On Fri, Jun 16, 2023 at 4:17 PM Michael Thomas <mike@mtcc.com> wrote:

On 6/16/23 1:09 PM, Mark Tinka wrote:
>
>
> On 6/16/23 21:19, Josh Luthman wrote:
>> Mark,
>>
>> In my world I constantly see people with 0 fixed internet options. 
>> Many of these locations do not even have mobile coverage. 
>> Competition is fine in town, but for millions of people in the US
>> (and I'm going to assume it's worse or comparable in CA/MX) there is
>> no service.
>>
>> As a company primarily delivering to residents, competition is not a
>> focus for us and for the urban market it's tough to survive on a ~1/3
>> take rate.
>
> I should have been clearer... the lack of competition in many markets
> is not unique to North America. I'd say all of the world suffers that,
> since there is only so much money and resources to go around.
>
> What I was trying to say is that should a town or village have the
> opportunity to receive competition, where existing services are
> capped, uncapping that via an alternative provider would be low
> hanging fruit to gain local marketshare. Of course, the alternative
> provider would need to show up first, but that's a whole other thread.
>
Won't Starlink and other LEO configurations be that backstop sooner
rather than later? I don't know if they have caps as well, but even if
they do they could compete with their caps.

Mike