The mercurial billionaire, who is unusually involved in his companies, has huge commercial interests in China, and a growing foothold in Australia.
Five hundred and fifty kilometres above the Earth, satellites speed across the sky, beaming internet to more than 120,000 Australians. Across the globe, the same network helps Ukrainian soldiers get online in areas where Russia has knocked out infrastructure on the ground.
The extent to which the surprisingly sleek units from Elon Musk’s Starlink are undermining the National Broadband Network, and exciting the country’s largest phone companies, shows how the influence of the world’s richest man is growing in Australia.
Elon Musk’s Starlink could be the kingmaker in Australia’s telecommunications sector, which was worth $33.5 billion last year. David Rowe
But Musk’s deployment of Starlink after the war started, and subsequent threats to withdraw it just months later, caused alarm in Kyiv and Washington. The episode showed the potential problems of one mercurial man controlling such vital infrastructure.
“I am a fan of Musk in many respects,” says Dr Malcolm Davis, a space researcher at defence think tank the Australian Strategic Policy Institute. But, “in a geopolitical sense, obviously, I have concerns.
“You have one person, Elon Musk, who is unpredictable in terms of his personality and his beliefs. And I think everyone just needs to look on Twitter [now known as X] to see exactly what we’re talking about.
“And he does have links with China that I think are concerning.”
Those links come through Tesla, Musk’s electric vehicle manufacturer. More than half of its cars were made in China last year, according to its annual report, and Tesla hopes the Chinese government will let it expand its enormous Shanghai factory.
Davis’ fear is that the Chinese government will use carrots or sticks to put pressure on Musk to curtail access to Starlink as a geopolitical tool. Musk is a United States citizen and has much larger business interests there than anywhere else. But he has nonetheless flirted with positions contrary to American foreign policy, such as advocating a ceasefire in Europe that could result in Ukraine formally surrendering swaths of its territory.
If Musk were to try to buy an Australian internet provider, he and his companies would face extensive due diligence from the Foreign Investment Review Board that might consider his actions in Ukraine and elsewhere. But Starlink, which is part of the rocket company SpaceX where he is founder, chairman and CEO, has been built by Musk from scratch, allowing him to escape such scrutiny. The upstart satellite company already has a foothold in Australia’s $33.5 billion telecommunications sector, giving rise to some concern among experts about what Musk could do with it.
Starlink is now the world’s largest network of satellites delivering internet from space. A simplified version of it works like this: ground stations, such as one on the outskirts of Broken Hill in far west NSW, beam data up to the satellites, which are about the size of a pizza box and powered mostly by solar energy. The data is then beamed back down to customers who connect via a small dish, and vice versa for uploads.
The actual logistics and engineering behind Starlink are enormously complex. The system relies on a growing number of satellites, which number more than 4000 and must be replaced as they fall out of orbit and burn up.
But while the costs of deploying so many satellites are vast – Musk has suggested between $US20 and $US30 billion – their value once installed is enormous. The more users who join, the more satellites Starlink can afford to deploy, and the better the system gets, giving it some of the self-reinforcing characteristics of a natural monopoly like an electricity grid or rail network.
Already the National Broadband Network is bleeding rural customers to Starlink because its pair of Sky Muster satellites orbit much farther from Earth and therefore have longer delays when sending data to customers. Service on the dishes is being expanded, but they are still hundreds of thousands of customers short of their potential.
In an earnings call earlier this month, NBN Co chief executive Stephen Rue pre-empted questions from analysts about Starlink, which did not respond to a request for comment.
“I’m often asked whether [low earth orbit satellites like Starlink] are an existential threat to our business,” Rue said. “Well, the answer is no.”
He insisted wired connections would always be needed to handle the huge volumes of data Australians need to watch things such as Netflix and TikTok. But that has not stopped the NBN asking low earth orbit satellite companies, which include the British One Web and Amazon’s Project Kuiper alongside Starlink, for information on potential partnerships.
Could the NBN partner with Starlink, despite Musk’s spotty record? “Things like security, for example, is a key thing that we think about a lot, as you can imagine,” Rue told The Australian Financial Review in an interview in mid-August. “But I have no specific comments to make on individuals.”
Regardless of which way the NBN goes, Starlink’s growth in Australia will accelerate. Telstra has signed a deal to provide home internet via Starlink, starting later this year.
Optus has made a bigger move, striking a pact to let customers connect to Starlink directly from their mobile phones, beginning with text messages late next year.
Though the Optus Starlink service will initially be limited (it won’t work inside, for example), the deal represents a glimpse at a tantalising prize: letting users get online anywhere in Australia, no matter how remote. It could make Starlink the kingmaker in Australia’s telecommunications sector.
Optus did not directly respond to questions about whether it trusted Musk. A spokesman said instead that “a group of smart technologists and serious businesspeople run Starlink” and pointed to its existing customer base in Australia.
Telstra was more forthright, with a spokeswoman saying “of course” it trusts Musk and Starlink. “We would not enter an agreement with a supplier we did not think was trustworthy,” she said.
In June, the US government announced a deal to fund Starlink access in Ukraine. Musk, despite his frequent anti-government posturing, is no stranger to agreements with governments. Tesla is a beneficiary of electric vehicle subsidies, including in Australia. SpaceX is paid by NASA for rocket launches.
“[Musk] has been able to wrangle extraordinary sums of taxpayer money to fund everything he’s doing as well,” says Mick Ryan, a retired Australian Army major general who is now a non-resident fellow at the Centre for Strategic and International Studies, a US think tank. “That shouldn’t go unstated.”
But Ryan sees Musk’s web of contracts with Western governments, duties to his US-based companies, and a thicket of security laws as buttressing his reliability. “So perhaps [Musk’s ties to China] are not as big a threat as we think,” he says.
A bigger risk, Ryan says, is that China will develop a rival network to Starlink, depriving the West of a strategic advantage.
Jim Bridenstine, a former NASA administrator, has a different view of just how much the US government has come to rely on Musk.
“There is only one thing worse than a government monopoly. And that is a private monopoly that the government is dependent on,” Bridenstine told the New Yorker. “I do worry that we have put all of our eggs into one basket, and it’s the SpaceX basket.”
Australia is not nearly so reliant on Musk. Starlink is a licensed internet company here and is bound by laws that require the operators of critical infrastructure to identify risks. Telstra and Optus are within those laws too, and will have to think about issues with Starlink as part of their partnerships.
“We expect entities with obligations under relevant legislation to meet these obligations and to take all reasonable steps to ensure the security and integrity of their operations,” a spokesman for the Home Affairs Department said.
Follow the topics, people and companies that matter to you.
Fetching latest articles
The Daily Habit of Successful People