Starlink’s LEO System Steadily Gains Global Adoption

SpaceX’s Low Earth Orbit (LEO) internet constellation, Starlink, has recently been activated to come to the assistance of the Ukrainian people who are under Russian siege. Starlink’s network is unlike typical terrestrial broadband networks, as it is less vulnerable to cyber-attacks and beams data via Ku (12-18 GHz), Ka (26-40 GHz), and Q/V-bands, which typically fall within 50 to 75 GHz but are used by the company in the 37.5 to 50.2 GHz range, directly from satellites to flat user terminals equipped with phased array antennas that track the satellites. With the constellation employing optical inter-satellite links in low Earth orbit, Starlink can provide a high-speed, comparatively low-latency broadband internet connection to areas with the company’s terminals installed. The activation of Starlink in Ukraine was no accident, as the company had been working to build overhead capacity over Ukraine for months as part of a planned expansion of Starlink services into Europe and other regions. While the satellite provider appears to be building momentum—given an estimated 250,000 Starlink terminals indicated to be in operation worldwide and close to 2,048 Starlink satellites in orbit, as well as attracting the attention of the international media—the company’s service activation in follow-up markets may find more resistance.

Starlink’s presence in Ukraine is demonstrating the particular coverage and security advantages that satellite solutions can have over the three main terrestrial broadband technologies, which are mobile cellular, Fixed Wireless Access (FWA), and fiber-optics. While these factors are valuable for users, there is another aspect that is indicative of a network’s utility and promise: “data throughput”. In terms of data throughput, Starlink reported a median latency of 40 ms in Q4 2021 and download speeds of 104.97 Mbps in the United States, which was an increase from 87.25 Mbps the previous quarter. While impressive in the context of satellite internet providers, Starlink is still nowhere close to the speed of fixed broadband connections that typically clock in at a median latency of 15 ms and 119.84 Mbps download speed. To remedy this, SpaceX has recently requested to lower the Starlink constellation to an altitude of 540 km (340 mi) and 570 km (350 mi) to provide lower latency and higher throughput in the United States. Alongside this, the recently launched Starlink Premium, designed specifically for businesses and “high demand” users, boasts download speeds of 150 to 500 Mbps and 20 to 40 ms of round-trip latency for a monthly fee of US$500 and a one-time cost of US$2,500 for the antenna. Coupled with the company’s strong capital investment, vertical integration, and reusable booster technology, Starlink’s agility in making iterative improvements in their network’s speed, cost of deployment, and area of coverage shows a rapidly closing gap between satellite and terrestrial broadband.

Market Size and Opportunity

The market opportunity that Starlink is tapping into is significant. ABI Research’s Serviceable Addressable Market (SAM) Potential analysis for global satellite communications predicts there will still be unaddressed broadband demand from 330 million premises, equivalent to 1.3 billion household members, by 2026. With Starlink recently exceeding 500,000 preorders, adoption for its LEO satellite solution is growing and the constellation’s area of coverage will continue to expand. In this regard, the company recently revealed that it had filed paperwork to launch another 30,000 Starlink satellites, on top of the 12,000 already given the green light by the United States’ Federal Communications Commission (FCC). This would effectively deliver a “mega constellation”. For perspective, it is estimated that there are around 4,877 active satellites in Earth’s orbit in 2022. Despite these plans, the company still faces challenges and lost nearly an entire launch’s worth (up to forty) of its LEO satellites due to geomatic storms in February, a financial hit estimated to cost around US$50 million. While the company has acknowledged that its mission is to tap into rural markets, a historically challenging area for terrestrial internet providers, the company’s strong global preorders, filing for constellation expansion, and high-profile move into Ukraine could signal a more aggressive deployment into European and Asia-Pacific (APAC) regional markets.

The worldwide satellite broadband market is growing at a steady rate. ABI Research anticipates the residential satellite broadband market to reach a 5.2 million subscriber base by 2026, with the markets to see the largest growth to be North America and Europe.

Starlink’s strategy in North America could well ratchet up the competition for other North American Satcom providers such as Hughes Network, Telesat, and Viasat. In Europe, satellite broadband operators, Eutelsat and SES, utilize Medium Earth Orbit (MEO) and Geostationary Earth Orbit (GEO) satellites and offer download speeds of between 30 to 50 Mbps. Alongside this, SES focuses on the enterprise market segment while Eutelsat offers solutions for both segments. Starlink could secure market share in the region with its LEO satellites, but there are barriers and competition to overcome.

Europe, and its Satcom providers, are stepping up to face the growing global competition. The European Commission’s reaction to Starlink has been to launch more state-backed initiatives, like the “EU space-based secure communication system”, outlined in February 2022 and expected to cost €6 billion (US$6.8 billion), which is pushing for a European LEO constellation to launch commercial service. Another example is Eutelsat’s recent purchase of a 24% stake in UK-based OneWeb to enable access to a LEO broadband growth engine. Eutelsat has a wholesale strategy and plans to focus on selling to governments, which leverages the company’s strengths, especially regarding its partnerships across Africa, the Middle East, and Europe. With sentiments growing for Europe and the EU, in particular, to become more self-sufficient, the folding of more communities under nationally subsidized Satcom programs will likely be an ongoing trend which Starlink may face. A reality may soon arrive where the company faces difficulties in acquiring customers outside of North America, except in underdeveloped markets. Currently, Starlink has built up operations in various European countries including Germany, France, Spain, Poland, Italy, and Ukraine.