If Starlink Succeeds Then SpaceX Revenue Will Be More Than Double NASA’s Budget

Nextbigfuture has calculated how the Super Heavy Starship will make deploying the Starlink satellite network $1 to $2 billion cheaper to launch than with Falcon 9s. The Super Heavy Starship will be able to deploy over five times the number of Starlinks satellites per launch and the cost per launch will be three times less. The lower launch cost will be because of the full reusability.

However, SpaceX could lower the Falcon 9 Block 5 (F9) costs by consistently having ten re-uses of each F9. Currently, SpaceX will soon perform its fourth relaunch of the same first stage and could begin reusing the waterproof farings.

It is worth New York and Chicago $100 million per year to put a premium microwave data connection between the two cities. This shaves 5% of the latency time from pricing updates and order placement. This has a lot of value when a big stock starts making a rapid move up or down.

There would be 190 combinations of pairs of the top 20 financial cities. There are 435 combinations of pairs of the top 30 financial cities. If the top $100 million per year was paid by the top 20 cities, then this would be $19 billion per year. If the premium internet pairing for the connections to 21 to 30 was worth $10 million per year then this would be another $2.45 billion per year. Even with a half-price discount, the total would still be $10 billion per year.

The SpaceX Starlinks could save 30-50% of the latency time. This is because the speed of light is almost twice as fast in space as it is in a glass fiber. The value for the Starlink financial latency reduction should be even higher. Let us say it is double the New York to Chicago price. This means the premium pairing of cities is worth over $40 billion per year.

Other industries may pay for premium pairing but there has to be a lot of money involved and value for shaving 30 milliseconds at some time in the year.

Internet Backhaul and 5G

SpaceX Starlink network will make money by helping improve the entire global internet. They will be able to provide a high bandwidth alternative to fiber.

90 percent of all internet traffic travels over wireline fiber, even if it ultimately goes on a wireless device.

It has been estimated that deploying 5G wireless speeds 10 to 100 times faster than 4G will cost $130 to $150 billion in fiber optic cabling alone over the next 5 to 7 years. There is a 28-page report from Deloitte on 5G and fiber. The Deloitte report was for the USA only. Europe and Asia will also build out 5G.

The SpaceX Starlink network would not replace fiber for the last mile or for less than 2000 miles. However, the backbone connections are where SpaceX Starlink will provide superior value and bandwidth relief.

Consumer Market

The consumer market for internet will be later for SpaceX Starlink. The consumer needs a cheap phased array flat receiver to track the fast-moving low-earth-orbit satellites. The satellites will circle the earth every 90 minutes or so. An antenna would need to track it moving across the sky over a few minutes and then switch to the next satellite. Currently, the Kymeta flat satellite receivers cost about $40,000 each. They are like a flat panel TV in form factor and in factory production. They “should” be able to drop towards the price of a flat panel TV display in price. A 32-inch flat TV can be bought for about $100 and a 40-inch TV can be about $300.

Starlink Funding and SpaceX Will Become Twice as Big as NASA

Given the future value of the Starlink satellite network, will Elon Musk be able to arrange the financing?

I think funding is a certainty. I think they will be able to rapidly ramp to $50 billion per year in revenue. This revenue would be more than double NASA’s annual budget. Direct TV is part of AT&T and makes about $40 billion per year in revenue.

Aggressive Financing in the 1980s and 1990s

Craig McCaw is a billionaire who financed an early cellular network by borrowing against and selling shares in a cable operation.

There have been other times when large telecommunication and satellite networks were built with many billions.

If Elon Musk and SpaceX desired, it seems they could arrange for advanced deposits from the major financial companies. SpaceX needs to get the Starlink satellites to the point where it is clearly “only” a matter of deployment and scaling.

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