OVERVIEW: Starlink and the Growing Pie in the Sky
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Just over two and a half years after SpaceX’s Starlink first rolled out its beta service, the satellite internet company now has more than 1.5 million subscribers. With more than 4,000 satellites operating in orbit, the Elon Musk-owned company’s global coverage is active in over 50 countries around the world.
For a tech company, that would be fairly standard growth. But by satellite broadband standards, it’s blistering. Where is it coming from?
Within the sector, it feels like Starlink overnight went from a speculative and ambitious project to conversation- and market-dominating force. With SpaceX jumping from 1 million subscribers in December to over 1.5 million five months later, I spoke with Brent Prokosh, senior affiliate consultant at France-based Euroconsult, to better understand the balance between Starlink expanding the pie of satellite broadband versus taking bites out of the slices of prior top players, such as U.S. firms Viasat and Echostar’s Hughes.
“As a general point of reference, it took Hughes a good part of eight years or so, from the 2008 to the 2015-2016 timeframe, for them to get to about a million subscribers from pretty much zero in the U.S.,” Prokosh told me. Starlink’s rise by comparison has been “spectacular,” he added.
By his estimate, “something on the order of 50% to 70%” of Starlink’s base is from “growing the pie portion, as opposed to taking” from incumbents, with Hughes and Viasat in total losing “less than 500,000 subscribers.” But those numbers change based on region and customer vertical. Prokosh pointed to the U.S., Brazil and Australia as three mini-case studies.
In the U.S., the “rural market is pretty fragmented,” he said. Starlink “introduced a service that leapfrogs the capability, although not quite the cost,” of existing satellite and terrestrial competitors. Prokosh likened it to when Hughes first rolled out its service at 1.5 Mbps back in the day, which was well above other offerings at the time.
Brazil, he noted, is the most dramatic example of Starlink taking share from incumbent satellite providers, where Starlink has added nearly the same amount of customers that Hughes has lost. It’s also lowered prices locally to about $35 a month (versus the $120 a month base in the States).
But Australia’s a different story: Prokosh said, according to the country’s reporting in March, Starlink is up to 120,000 subscribers, while the incumbent satellite service provider NBN has seen only slight customer decay from its peak of about 106,000 customers.
“This is clear evidence of the pie absolutely growing because of Starlink, as opposed to just drawing from established business of other operators,” Prokosh said of Australia.
With Starlink going after nearly every market vertical – from consumers to governments and everything in between – Prokosh noted customers are often just adding Starlink to existing options.
“In maritime … it’s almost all net growth for the industry right now, because what’s happening for the most part is that the vessels adopting the service aren’t dropping their incumbent service yet – they’re trialing Starlink,” Prokosh said.
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