Musk set to tout Starlink progress as cost, demand hurdles linger

Reuters
Washington Published: Jun 29, 2021, 12:39 PM(IST)

Elon Musk (file photo). Photograph:( Reuters )

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Musk on Tuesday is expected to discuss Starlink's progress in a speech at the Mobile World Congress telecommunications event, an audience with a lot at stake in the fate of Starlink

Don Joyce, a Nokia director working from home at a remote lake cottage in Canada, recently abandoned his painfully slow phone-line internet in favour of satellite broadband service Starlink, offered by Elon Musk's SpaceX.

Starlink, which cost him C$600 dollars (US$486) for hardware and a lofty C$150 monthly subscription, provides 'blindingly fast' speeds when uploading videos or streaming movies, he said.

But the beta test customer said he experiences dropouts during calls on Microsoft Teams and Zoom.

"If you're in the city and you have alternatives, I wouldn't recommend it. But if you're in the country, like in the middle of nowhere and you're getting pathetic internet service, then it's definitely a competitor."

For billionaire entrepreneur Elon Musk, founder of electric vehicle manufacturer Tesla Inc, the success of one of his biggest bets may come down to just how many people like Joyce are out there.

Musk on Tuesday is expected to discuss Starlink's progress in a speech at the Mobile World Congress telecommunications event, an audience with a lot at stake in the fate of Starlink. If the service is successful, it could vastly expand the reach of broadband internet around the world, connect Tesla vehicles, and even provide a new platform for traders and others with exotic internet needs, people familiar with the Starlink plan said.

But to do that, it must avoid the fate of similar satellite ventures that have preceded it.

"Not bankrupt, that would be a big step," Musk said last year. "That's our goal."

SpaceX's Starlink division launched its 'Better Than Nothing Beta program' in the United States last October, with data speeds up to a competitive 150 megabits per second. Early reviews are mixed, with some users complaining of the problems that have always plagued satellite internet: sensitivity to weather.

Recent heat waves have caused new problems.

"I'm gonna have to spray it with a garden hose to reboot my internet... That just feels so wrong," a Reddit user who said he lives in Arizona posted earlier this month, along with an error message saying "Offline: Thermal shutdown" and "Starlink will reconnect after cooling down".

SpaceX President Gwynne Shotwell in April said the firm has 'a lot of work to do to make the network reliable'. The company on Tuesday did not have an immediate comment.

Service should improve with more satellites and other improvements: Starlink has launched over 1,700 of its 260 kilogram satellites so far, and envisions more than 40,000.

The economics are daunting nonetheless. Musk has said Starlink could serve less than 5% of internet users and still generate $30 billion a year in revenue. Critics called that wishful thinking.

"Is the demand there for tens of millions of subscribers at that price point?" asked analyst Tim Farrar, president at TMF Associates. "In most parts of the world, if you said to someone, your broadband service will cost you 100 US dollars a month, they'd be like, incredulous."

He said there might be wealthy people in isolated areas, "but there's just not very many of those people".

He said Starlink would also struggle for enough capacity to support that level of demand, especially as people are consuming more data for video streaming. That would mean "significant additional expenditure on upgrading the satellites and adding more satellites."

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