Reuters, June 29 – Don Joyce, a Nokia director who works from home at a remote lake cabin in Canada, recently ditched his extremely slow phone line internet in favor of Elon Musk’s SpaceX’s satellite broadband service Starlink. When uploading videos or streaming movies, Starlink, which cost him C$600 (US$486) for hardware and a hefty C$150 monthly fee, produces “blindingly fast” rates, he added. However, during calls on Microsoft Teams and Zoom, the beta test consumer reported dropouts. “I wouldn’t recommend it if you’re in the city and have other options. However, if you live in the country, preferably in the middle of nowhere, and you have poor internet connectivity, it is unquestionably a rival.” The success of one of billionaire entrepreneur Elon Musk’s biggest bets, electric vehicle manufacturer Tesla Inc (TSLA.O), may come down to how many people like Joyce are out there. Musk is set to speak on Starlink’s progress at the Mobile World Congress telecommunications expo on Tuesday, in front of an audience with a lot riding on the company’s success. According to those acquainted with the Starlink concept, if the service is effective, it could greatly expand the availability of broadband internet around the world, connect Tesla vehicles, and even give a new platform for traders and others with unusual online demands. But, in order to accomplish so, it must avoid the fate of previous satellite ventures. Last year, Musk stated, “Not going bankrupt would be a significant milestone.” “That’s what we’re aiming for.” Last October, SpaceX’s Starlink subsidiary announced the debut of its “Better Than Nothing Beta program” in the United States, with data speeds of up to 150 megabits per second. Early feedback has been mixed, with some customers citing the same issues that have plagued satellite internet in the past: weather sensitivity. New challenges have arisen as a result of recent heat waves. “To restart my internet, I’ll have to sprinkle it with a yard hose… “That just feels so wrong,” a Reddit user from Arizona wrote earlier this month, accompanied by an error message that read “Offline: Thermal shutdown” and “Starlink will rejoin after cooling down.” “.. Gwynne Shotwell, SpaceX’s president, said in April that the company still has “a lot of work to do to make the network reliable.” On Tuesday, the corporation had no immediate reaction. More satellites and other enhancements should improve service: So far, Starlink has launched over 1,700 of its 260 kilogram satellites, with a goal of launching over 40,000. Despite this, the economics are formidable. According to Musk, Starlink could service less than 5% of internet users while still generating $30 billion in income every year. That was dubbed “wishful thinking” by critics. “At that pricing point, is there demand for tens of millions of subscribers?” asked analyst Tim Farrar of TMF Associates. “In most parts of the world, if you told someone that your broadband service would cost them $100 per month, they’d be shocked.” “There may be wealthy folks in secluded locations,” he remarked, “but there aren’t very many of those people.” He added that Starlink would struggle to meet that level of demand due to a lack of capacity, especially as users consume more data for video streaming. This would necessitate “major additional expenditures on satellite upgrades and satellite additions.” RURAL SUBSIDIESNearly $900 million in Federal Communications Commission subsidies slated for Starlink to extend the internet to rural regions could help alleviate price pressures. COVID-19, according to Jonathan Hofeller, vice president of SpaceX, underscored the necessity for “access to decent internet” anywhere on the planet. Perhaps more crucially, Starlink claims that by creating its own terminals and satellites, it will be able to reduce prices. A person familiar with the matter said it had engaged experts from chipmakers Broadcom Inc (AVGO.O), Qualcomm Inc (QCOM.O), and others to design its own communications processors, similar to Tesla’s strategy. Shotwell stated in April that Starlink expected the terminal cost to be in the area of a few hundred dollars within the next year or two, down from $3,000 previously. Last year, Musk wrote, “Lowering Starlink terminal cost, which may sound pretty mundane, is actually our most difficult technological task.” Starlink also benefits from SpaceX’s capacity to launch at a low cost. “You can do incredibly technically complicated things at a reasonable cost when you own bits of the stack,” said Misha Leybovich, a former Starlink sales director. Nonetheless, the competition is expected to be strong. Kuiper, an Amazon.com Inc (AMZN.O) subsidiary, is working on a direct competitor, while OneWeb, a bankrupt satellite operator rescued by the British government and India’s Bharti Group, has pledged to compete as well. In the meantime, terrestrial telecom operators are rushing to roll out high-speed fifth-generation (5G) broadband services. Previous low-Earth-orbit satellite attempts were killed by the quick expansion of wireless and terrestrial broadband, as well as expensive prices. Iridium Communications Inc (IRDM.O), supported by Motorola, went bankrupt after billions of dollars in investment, while Teldesic, funded by Microsoft Corp (MSFT.O) founder Bill Gates, suffered a similar fate. Iridium Chief Executive Matthew J. Desch told Reuters that SpaceX, Amazon, and others have “created quite a race” in which “no one is completely sure whether there is a big enough market for it.” Hyunjoo Jin and Supantha Mukherjee contributed reporting, and Jonathan Weber and Christopher Cushing edited the piece. The Thomson Reuters Trust Principles are our standards. Continue reading