Musk says Starlink ‘nice complement’ to fiber, 5G

Elon Musk sees Starlink, the SpaceX low-earth orbit (LEO) satellite broadband venture, as a complement to terrestrial 5G and fiber, as the service works to connect remote and hard-to-reach places around the globe.

Starlink has over 1,500 satellites launched and recently reached 69,420 active users, Musk said during a keynote presentation during Mobile World Congress (MWC) 2021 in Barcelona. He suggested Starlink is on its way to having a few 100,000 and “possibly over 500,000 users within 12 months.” In May, Starlink had more than 500,000 signups.

Starting in August the LEO satellites “should have global connectivity everywhere except the poles,” Musk said. The service is currently operational in 12 countries, with more added each month.

“It’s a nice complement to fiber and 5G,” Musk said, adding that the service could be a cost-effective method for data backhaul for telco companies. He noted that Starlink provides latency similar to fiber and 5G, with an aim of getting it below 20 milliseconds.

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Starlink has “two quite significant partnerships” with major telcos, according to Musk, who said he couldn’t disclose more details – as well as discussions with a number of others. In addition to backhaul, another route it's pursuing is regions where governments require operators deliver service to rural areas in order to obtain 5G licenses. In locations where the business case might be tough Starlink can cover the most difficult to reach portion – with Musk citing 3-5% of the customer base.

“Those are the two sort of deals we’re doing,” he said. “Where a 5G licensee has a rural requirement from the government, or where they do have 5G towers but the difficulty is backhaul.”

Starlink investment could be up to $30B over time

Musk ventured that over time investment in the low-earth orbit satellite broadband service could reach $20 billion to $30 billion, as it targets sparsely populated and medium-density locations.

Before Starlink starts generating positive cash flow, total investment is at least $5 billion and maybe up to $10 billion, Musk said at MWC.

“I think we’ll have to keep investing a great deal after that to not be made irrelevant by continued improvements” and extensions in cellular, and to be on par or below price competitiveness of lower-cost satellite connectivity.

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For investment after reaching positive cash flow, he put out an estimate of potentially in the $20-30 billion range, or “a lot basically.”

When it comes to recouping investment from subscribers, Starlink user terminals or dishes currently cost the company more than $1,000 – something it wants to lower.  

“We are losing money on that terminal right now” and Starlink is working on developing next-gen terminals that provide roughly the same level of capability but cost a lot less, Musk said. Users pay about half at around $500 for a terminal (plus $100 per month for service) – and he wants to bring that number down as well, to around $300 or $250.

“Obviously selling terminals at half price is not super compelling at scale,” Musk said.

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What Starlink is doing is making it easy to install. He noted it doesn’t require a professional installer and takes less than five minutes, with two steps of pointing at the sky and plugging in.

Another goal, he noted, is to avoid the path of some other LEO broadband ventures by not going bankrupt.

Overall Musk is “pretty excited about the future” and while he doesn’t want to get over confident, he said it’s “looking quite positive.”

Updated to correct '100,000' figure from '100,00'.