SpaceX has launched over 1,500 internet-beaming satellites into orbit, signed up over 69,000 customers, set up ground stations in 12 countries, and plans to expand its one-of-a-kind network’s coverage all over the world — except for the North and South poles — by next month. Nonetheless, SpaceX CEO Elon Musk stated on Tuesday that not running out of cash is a top priority.
“Our goal is not to go bankrupt,” Musk said at the Mobile World Congress in Barcelona, acknowledging that all previous attempts to build a satellite-based internet network in low-Earth orbit have failed, resulted in bankruptcy, or resulted in a shift away from a direct-to-consumer business model. SpaceX began launching Starlink satellites in 2019 and has quickly ramped up its deployment, launching more than 780 in the last six months alone.
The Starlink program is distinct from SpaceX’s Dragon program, which aims to transport people and cargo to the International Space Station, and the Starship program, which aims to one day transport humans to the moon or Mars, as well as transport massive satellites into orbit. SpaceX’s first foray into the satellite market, on the other hand, is Starlink.
It’s a reimagining of a concept that was first proposed decades ago but never fully realized: To blanket the planet with high-speed interent connectivity, use thousands of satellites working in tandem from low-Earth orbit — the area below 1,000 km (620 miles). With roughly half of the world’s population still lacking reliable internet access, the concept has the potential to be game-changing. However, it is not without its difficulties.
Despite high demand for Starlink services and positive early reviews, Musk revealed that SpaceX’s experimental satellite-internet business is not financially viable. SpaceX built the user terminals that Starlink customers need to access the network for $1,000, but the company is selling them for $500, according to him. (In April, SpaceX president Gwynne Shotwell said the company had reduced the cost of producing its terminals from $3,000 to $1,500.)
“Obviously, selling terminals for half price is not super compelling at scale to millions,” Musk said. “We’re working on next-generation terminals that are providing the same level of capability [and] roughly same level of capability, but it costs a lot less.”
Industry experts warned that developing affordable user terminals would be one of the most difficult technological hurdles SpaceX would have to overcome long before SpaceX began building its constellation of internet satellites and allowing beta testers to begin using the service.
Several well-funded ventures tried to build satellite constellations similar to Starlink in the 1990s. After realizing it would be impractical or too expensive, they all changed their plans, went bankrupt, or liquidated.
SpaceX is part of a new wave of companies that are trying again, including Amazon and Softbank-backed OneWeb.
By far, SpaceX has the most time to build up its constellation and sign up users. Within the next 12 months, Musk expects “possibly 500,000” Starlink customers, according to Musk.
It will be critical for SpaceX to see if that strong demand materializes. Musk estimates that he will invest between $5 billion and $10 billion in Starlink before it becomes profitable. Even after that, Musk stated that SpaceX will “keep investing a great deal after that point in order to not be rendered obsolete by improvements in” competing technologies like ground or cellular service.
Over time, SpaceX’s investment in Starlink could grow to $20 billion or $30 billion, Musk said. “It’s a lot.”