Starlink and the Coming Disruptions from Next-Generation Telecommunications Satellite Networks
A convergence of events in mid-2019 are signalling an exciting shift that will change the way Canadians access data and communications in profound ways.
- May 2019 — SpaceX launches first Starlink Mission
- June 2019 — Ontario Teacher Pension plan invests in SpaceX with growth potential of its Broadband Satellite market
- July 2019 — Canadian Government backs Telesat LEO Constellation through its Strategic Innovation Fund
In late 2016 the Canadian telecommunications regulator (CRTC) declared broadband internet to be a basic service. As the graphic below shows, we have some glaring uneven access to this basic service in the country. The obvious and common explanation is the high cost of installing infrastructure across Canada’s vast geography. Long distances between major cities and a density of only 4 people per square Kilometre support this claim.
New satellite networks under development are poised to overcome these geographic obstacles. In May 2019, SpaceX launched the first test constellation of their Starlink satellite network. Starlink and competitors are foreshadowing a future transformed by ubiquitous, cheap broadband access for the entire globe. With the early benefits of the new access to broadband internet falling on remote and undersserved communities across the globe, Starlink, Telesat and other networks will provide the infrastructure necessary to move forward the six categories of Sustainable Development Goals as listed in the graphic below. The goal of this article is to explore some of the context and implications of this next space race through the lenses of geography, technology, economics and policy with a focus on the Canadian context.
Geography
“Our flat, but spiky world” describes the contradictions between two of the better known concepts in economic geography. “The World is Flat” describes the revolution in economic and social participation (at the individual and local scales) that internet access and cell phone tower networks brought to the world in the 2000’s. “The World is Spiky” counters that concept at the city-regional level. Spikiness shows that geography, population concentrations, institutions, place and other factors affect the quality of individual’s circumstances.
In Canada, the above concepts help frame the geographic inequality of data services outside of major cities. Over half of Canada’s population lives in the twenty largest metropolitan areas. Connecting these cities and serving remote populations results in Canada having some of the higest capital expenditure per subscriber in the G7. Next generation satellite networks promise multiple new global networks that can deliver better service at an overall lower cost than the way we are building land-based fiberoptic lines and transmission towers today.
The implications of these networks goes beyond people in remote communities downloading cat GIFs faster. This is a major piece of the underlying 5g+ infrastructure that will enable the Internet of Things, and next generation communications like holographic video conferencing and Augmented Reality worlds. Autonomous Vehicles, farm automation, remote equipment operation for resource camps, environmental monitoring are example industrial areas that will see their data transfer needs explode ten fold over the coming years. This will result in a leapfrog moment for those industries and the quality of data access for people who live in remote communities and work in remote camps. This increase in broadband access for underserved cities and remote communities across the globe may provide an even bigger ‘levelling’ than what Tom Friedman observed (in ‘The World is Flat’) over a decade ago through the proliferation of affordable dial-up internet and cheap cell phone transmission towers.
Technology
Enter the Satellites. The satellite services we think of today (GPS, TV, Radio) come from geostationary satellites (following the earth’s rotation). These networks are characterized as having dozens of larger satellites making a grid around the planet in mid-earth orbit, requiring an antenna that is directed to a single static point in the sky. In contrast, new networks like SpaceX’s Starlink will be a constellation of 12,000 desk-sized satellites in Non-Geostationary Low-Earth-Orbit (NG-LEO.) This moving mesh of orbital platforms paired with new data transmission technologies will open up affordable broadband internet access to almost every settlement on the planet.
Connecting to the starlink network will not happen directly through your phone or computer. As Elon has put it, access to the network requires a “pizza box sized” antenna. These antennae are many generations beyond the TV satellite dish you may be familiar with. A new generation of flat panel systems such as the Kymeta U7 Terminal will tie into local networks through fixed and mobile hot spots:
To dig deeper in Starlink’s tech read this FAQ and visit the Starlink website
Economics
A significant area of cost for these future networks will be in launch costs, which are already being optimized by SpaceX through mastering re-usability of launch vehicles.
The initial constellation of 60 Starlink satellites was launched on a Falcon 9 that flew for a record 3rd flight and successfully landed again. The current cost of a Falcon 9 mission is $50-62 million, with the cost projected to eventually be $5–6 million/launch (2018.) The Falcon Heavy and Big Falcon Rocket could further reduce cost by hurtling larger numbers of satellites into orbit per launch. This will be achieved as they further reduce manufacturing costs and get around 10 flights out of each rocket airframe.
The estimated cost of launching the Starlink network will be $10–15 billion. For some contrast, the total revenues for Canadian Telecoms annually was over $67 billion in 2018. This suggests that Starlink and other NG-LEO networks are going to soon be making a lot of money with much lower capital investment than incumbent telecoms are used to. With the relatively low price-point of Kymeta-like systems, businesses, institutions and individual large properties will be able to finance their own satellite connected micro-data-networks that will seriously threaten the current business models of telecommunication companies worldwide.
Policy
SpaceX’s internal mission and strategic importance to US’ NASA and DOD makes it currently incompatible with becoming a publicly traded company in a ‘short-term profits-first’ environment. Starlink’s infrastructure provides a path to creating a (subsidiary) public telecommunications company. This will open a customer base beyond their current government and corporate satellite launch services. Democratizing access to broadband for the sake of a better humanity is in line with previously stated goals of SpaceX founder Elon Musk. However we can’t assume that Starlink will be able to create the same level of B2C service that we can expect from Tesla’s promised autonomous taxi service. Instead, it’s likely that regulation and protectionist measures in different jurisdictional regions will dictate access to the network through existing national telecom companies. In part, this will happen due to maintain jobs and protect tax revenues from telecom services and thier workforce.
The Canadian government’s investment in the Telesat constellation is strategic on many levels. Below is a list of all the networks that participated in public consultations by the government in 2017.
With 13+ companies (Amazon and China are the bigger players not listed) planning various types of constellations, we can envision a future where our 5g cities turn into a 5g planet with universal broadband data delivered to every corner of Canada and the world. As this happens, governments will have to balance regulatory decisions based on protecting old industries and giving into the exponential returns offered by these next-gen networks.
With hundreds of thousands of jobs at stake and the billions in tax revenues and activity at risk, creative destruction is inevitable. As with any major disruption, job losses will be filled with new, better and worse job opportunities. What politicians aren’t necessarily always able to consider, is the outsized return on investment that allowing less regulated access to these next-gen global data providers is going to produce.
Conclusion
“The more brains that have their basic needs met, the more brains we have to solve our biggest collective problems.”
So, some new tech that is 100–1000X cheaper and 10X better is going to disrupt a big, stable and highly protected telecom industry in Canada and other nations. Why should I care?
The reason all of the above should be exciting you is the world of possibilities it creates. The reduction of uneven broadband access mentioned at the start of the article has more economic upside than any single industry’s transformation. Getting 2.3 million Canadian households and the remaining 3.8 billion human brains across the planet online is the real endgame and revolution. We need to open our eyes to the coming disruption and balance our losses against the social and economic gains we will achieve through what we build on this next-gen infrastructure. With individual’s smartphones (or equivalent) expected to reach 39 GB of wireless traffic per month by the year 2024, you can get an idea of how your data use will double 2–3 times over the next 5 years. Alongside that, the 10X+ explosion of data from the trillion sensor economy, increased bandwidth from cloud based platforms such as Google Stadia and future spatial computing environments such as the MagicVerse are likely to outpace our ability to expand terrestrial networks fast enough.
SpaceX is moving into a quiet position to launch one of the next big IPOs. Unlike most public offerings, its beneficial social impacts and value it will offer to each of us is staggeringly higher than most stocks that have launched in history. The only thing that could make it even better is for the company to launch on Eric Reis’ Long Term Stock Exchange, allowing for SpaceX mission of ‘creating a multi-planetary civilization’ and all its terrestrial benefits to take priority over quarterly earnings calls.
