June 12, 2024
Elon Musk touts SpaceX surging internet growth, but still says goal is to avoid bankruptcy

Elon Musk touts SpaceX surging internet growth, but still says goal is to avoid bankruptcy

“Our goal is not to go bankrupt,” Musk said at the Mobile World Congress conference in Barcelona, acknowledging that all previous attempts to build a satellite-based internet network in low-Earth orbit has ended in failure, bankruptcy or a pivot away from a direct-to-consumer business model. SpaceX began launching satellites for the Starlink network in 2019, and has built up to a rapid pace of deployment, launching more than 780 in the past six months alone.

Elon Musk during a keynote speech by video conference at the Mobile World Congress fair in Barcelona on June 29, 2021.

The Starlink program is separate from SpaceX’s Dragon program, which aims to ferry people and goods to the International Space Station, and the Starship program, which is intended to one day bring humans to the moon or Mars, or haul massive satellites into orbit. Starlink, on the other hand, is SpaceX’s first foray into the satellite market.

It’s a take on an idea first proposed decades ago but never fully executed: Use thousands of satellites working in tandem from low-Earth orbit — which is the area below 1,000 km (620 miles) — to blanket the planet in high-speed interent connectivity. With roughly half the world’s population still without reliable internet access, the concept could be a game-changer. But it’s not without its challenges.

Elon Musk's SpaceX now owns about a third of all active satellites in the sky
Despite strong demand for Starlink services and promising early reviews, SpaceX’s experimental satellite-internet business is not out of the woods financially, Musk revealed. He said that the user terminals that Starlink customers need to access the network cost SpaceX $1,000 to build, but the company is selling them for $500. (SpaceX president Gwynne Shotwell also said in April that SpaceX had brought the cost of producing its terminals down 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.”

Long before SpaceX began building up its constellation of internet satellites and allowing beta testers to start using the service, industry experts warned that developing affordable user terminals would be among the toughest technological hurdles SpaceX would have to cross.
In the 1990s, several well-funded ventures attempted to build satellite constellations similar to Starlink. All of them either changed plans, went bankrupt or liquidated after realizing it would be impractical or too expensive.
SpaceX gets almost $900 million in federal subsidies to deliver broadband to rural America
SpaceX is among a new crop of companies — which include Amazon and Softbank-backed OneWeb — that are trying again.

SpaceX has by far the biggest head start in building up its constellation and signing up users. Musk said he expects to have “possibly 500,000” Starlink customers within the next 12 months.

Whether or not that strong demand pans out will be crucial for SpaceX. Musk said he expects to sink between $5 billion and $10 billion into Starlink before the business is profitable. Even after that, Musk said SpaceX will “keep investing a great deal after that point in order to not be made irrelevant by improvements in” competing technologies, such as 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.”