Not long ago, Elon Musk bragged that SpaceX’s Starlink Internet service had more than 500,000 reservations around the world. Starlink currently has more than 69,000 active customers, with Elon Musk bragging that the company achieved 69,420 “simultaneously active users” in a June 25 tweet.
The company currently operates in 12 countries with plans to have Starlink capable of operating online by September. This is, of course, pending regulatory approval, which has often been a cause of frustration for Elon Musk’s companies. Elon Musk has frequently made sharp comments about regulatory agencies while dealing with investigations and delays in scheduling caused by bureaucratic slowdowns. He has also blasted Starlink rivals like ViaSat for filing regulatory objections to the launch of Starlink satellites:
Now Elon Musk acknowledges that SpaceX has been bleeding money while getting the infrastructure in place for Starlink. Besides the always-costly launch costs even when SpaceX can reuse Falcon 9 rockets, SpaceX has been selling Starlink terminals at a loss. The equipment needed to connect to the Starlink constellation costs consumers $499, but Elon Musk says that the equipment costs SpaceX $1,000 each to manufacture.
If so, SpaceX has already managed to bring the cost down from the $1,500 apiece that SpaceX president Glynn Shotwell said they cost in April. Musk says that the company is working on getting that cost down still further.
“Obviously, selling terminals for half price is not super compelling at scale to millions. 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,” he said while giving a presentation at the Mobile World Congress conference in Barcelona.
In the past, the high cost of entry has been discouraging to both companies that may be interested in establishing an Internet-providing satellite constellation and the people who would benefit the most from having access to reliable, high-speed satellite Internet service but don’t have any affordable way to access existing Internet satellites. If access to reliable broadband Internet can be made more affordable, the market could include billions of potential customers that live in rural or low-income regions. According to the below video by the Tony Blair Institute for Global Change, the “digital divide” caused by the previous lack of investment in rural and low-income regions could be closed by 2030 with an aggressive push to close it.
A consortium that includes the UK government bought Starlink rival OneWeb out of bankruptcy, to the annoyance of Virgin Galactic, which previously owned a stake in the company and planned on providing launch services for it. (Elon Musk may be annoyed by the move, too, considering that OneWeb falsely claimed that a Starlink satellite nearly collided with a OneWeb satellite while the latter was being launched.) Efforts to close the digital divide also include partnerships between SpaceX and the UK and United States governments to bring improved broadband Internet access to rural areas.
Due to the financial and regulatory obstacles, Elon Musk has expressed concern that SpaceX could go bankrupt while attempting to complete the Starlink constellation and establish itself in the satellite Internet market. It certainly wouldn’t be the first time that Musk’s companies were nearly bankrupt. SpaceX’s legal team went to bat to break up cronyism that gave the United Launch Alliance (ULA) a near-monopoly on launches of military satellites in a last-ditch effort to save the company from bankruptcy. Tesla nearly went bankrupt due to challenges in developing and manufacturing the Model 3 electric sedan, which is now its consistently highest-ranked model in safety tests conducted by Consumer Reports and the Insurance Institute for Highway Safety.
Both companies have bounced back from the edge of financial ruin since then. For SpaceX, though, bouncing back this time may mean gaining a healthy market share of what president Glynn Shotwell estimates to be a $1 trillion market. If Starlink can be made profitable, she says, it could help fund Elon Musk’s ultimate goal of establishing a thriving settlement on Mars.