Starlink : Markets and Marketing

[RocketGoBoom]

I expect eventually some kind of European lawfare against Starlink, OneWeb and the like.

Presumably the only legal impact such actions could have would be to prevent these constellations servicing Europe, and would that matter significantly to the economic potential of these systems?  I wouldn't think that these kind of constellation are aimed at providing service for dense areas like Europe.

The bandwidth is available while orbiting over Europe, so SpaceX will want to have customers there.

SpaceX/Starlink does not have to sell direct to consumers in all cases.
If there is regulatory resistance in certain countries due to politics, in those cases Starlink can sell directly to the national champion telecom company in that specific country. Starlink offers every country the opportunity to skip other networks while moving data around the globe.

Germany to Brazil?
Yeah, they can skip North American fiber optic networks now by Deutche Telekom and Telefônica both having service with Starlink.

That is just one example of many ways for Starlink to make money by helping large telecom companies reduce hops in networks for global data.

[Tommyboy]

I wouldn't think that these kind of constellation are aimed at providing service for dense areas like Europe.

I'm from The Netherlands, and while our cities are very densely packed with people, we also have big stretches of agricultural land. These farmers only have telephone wires to their homes with abysmal speeds; some don't reach over 2Mbit/s. No coax (which offers 1Gbit down and 40Mbit up at my place), of fiber (the Dutch equivalent of AT&T, KPN, bought all companies that were deploying fiber and quickly stopped all expansion, just to get every last penny from the aging copper network). Now their only option for relatively affordable broadband is 4g.
I'd say there's at least 100k households that are prime targets for StarLink.

[Tulse]

I'm sure there are areas in Europe that are underserviced for internet, but the number of potential customers there is likely much smaller than in many other less urbanized and less saturated markets. I'm sure that Starlink would love to operate in Europe if it could, but if it can't, it won't be a huge impact to its business (especially if its satellite-based competitors are likewise shut out).

[indaco1]

..I'm sure that Starlink would love to operate in Europe if it could, but if it can't, it won't be a huge impact to its business (especially if its satellite-based competitors are likewise shut out).

They will operate in Europe, one way or another. Europe is a quite big market, quite divided and quite free.

If Starlink will provide lower latency they could place ground stations, say,in Switzerland and serve Germany, France and Italy indirectly routing on fibers for few hundred kilometers.

Furthermore, ship, planes, and country exist in Europe too. It's politically impossible not to allow a B2C service available elsewere including Africa.  Perhaps it will cost more than in the US and will be sold by local telecoms  that will get the lion's share, but it will be available.  Teslas cost more but are sold in Europe.

[DistantTemple]

There has been an ongoing campaign to connect all remote communities in the UK. Starlink will deal with this in one fell swoop, and likely cost the taxpayer little to nothing. This will be a saving against expected costs. It will bail out the current providers from having to step up to the challenge. It will also help with connectivity for (automated) farm machinery etc.

[docmordrid]

>
What I am seeing is a possible progression.

Start with a small base of customers who are chomping at the bit to switch because they are on sat. These customers can be the "beta" set that are used to refine process.  And build up installer networks

Next up convert the high value comcast users of the developed world. They will possibly need more handholding, possibly less. This is a larger base.
>

There are many Comcast / AT&T users who fit in with the satellite group; paying high prices for low bandwidth, data caps and crappy service from  predatory providers. They too are chomping at the bit.

<handwave>

[Rondaz]

This is one reason why the US is a better market for sat BB than almost anywhere else: ARPUs are high enough to support free terminals and a $700 SAC (for Viasat). Starlink SAC will be $1000+ so needs even higher ARPUs (benchmark is SAC =~10x monthly ARPU depending on churn)

https://twitter.com/TMFAssociates/status/1229812971695591424

[Rondaz]

This is one reason why the US is a better market for sat BB than almost anywhere else: ARPUs are high enough to support free terminals and a $700 SAC (for Viasat). Starlink SAC will be $1000+ so needs even higher ARPUs (benchmark is SAC =~10x monthly ARPU depending on churn)

https://twitter.com/TMFAssociates/status/1229812971695591424

[ChrisWilson68]

This is one reason why the US is a better market for sat BB than almost anywhere else: ARPUs are high enough to support free terminals and a $700 SAC (for Viasat). Starlink SAC will be $1000+ so needs even higher ARPUs (benchmark is SAC =~10x monthly ARPU depending on churn)

https://twitter.com/TMFAssociates/status/1229812971695591424

To save others from having to look up these acronyms as I had to:

BB -- Broadband
ARPU -- Average Revenue Per User
SAC -- Subscriber Acquisition Cost

[ChrisWilson68]

This is one reason why the US is a better market for sat BB than almost anywhere else: ARPUs are high enough to support free terminals and a $700 SAC (for Viasat). Starlink SAC will be $1000+ so needs even higher ARPUs (benchmark is SAC =~10x monthly ARPU depending on churn)

https://twitter.com/TMFAssociates/status/1229812971695591424

To save others from having to look up these acronyms as I had to:

BB -- Broadband
ARPU -- Average Revenue Per User
SAC -- Subscriber Acquisition Cost

I do wonder where this person got his $1000 plus cost to acquire each customer for Starlink.  Is that supposed to be largely from the customer premises equipment?  Given Musk's proven knack for free publicity and the widespread hatred of cable companies in the US, I would think customers will flock to Starlink on their own and the only real cost of acquiring customers will be the hardware that has to be mailed to them.

And I would expect that the cost of that customer hardware will come down over time.  Way down.  Cable modems have already ridden their cost curve down for many years.  Starlink's customer equipment is only just about to start that journey.

[docmordrid]

>
Given Musk's proven knack for free publicity and the widespread hatred of cable companies in the US, I would think customers will flock to Starlink on their own and the only real cost of acquiring customers will be the hardware that has to be mailed to them.
>

This x100. One Musk tweet and news of StarLink being open for business will keep its US online order list hopping for the foreseeable future.

[dondar]

I wouldn't think that these kind of constellation are aimed at providing service for dense areas like Europe.

I'm from The Netherlands, and while our cities are very densely packed with people, we also have big stretches of agricultural land. These farmers only have telephone wires to their homes with abysmal speeds; some don't reach over 2Mbit/s. No coax (which offers 1Gbit down and 40Mbit up at my place), of fiber (the Dutch equivalent of AT&T, KPN, bought all companies that were deploying fiber and quickly stopped all expansion, just to get every last penny from the aging copper network). Now their only option for relatively affordable broadband is 4g.
I'd say there's at least 100k households that are prime targets for StarLink.

Probably you should learn about your country not from the newspapers.
Mass media pulp is debilitating.

Reggefiber and other much smaller hardware companies (there are at least 2 still very active in Overijsel only, and at least 10 overall in all provinces) were and are technically/financially part of the hardware part of KPN (KPNnetwerkNL now) from the day 1. It started somewhere in 2000-2001.

 They all consumed Dutch state fund (around 12bln euros) destined to "interconnect"local population. The fund was used not completely (some parts around 2 bln were diverted by the politicians to other "more important" areas), and the "last mile" in the areas not still connected is expected to be paid by the budgets of respective provinces.
There are negotiations ongoing, very specific in every particular case.
But the coverage 100% is to be expected "eventually". In the east sooner, in the west later.

 In the provinces where the local authorities are active (Overijsel, Twente specifically is a very good example were even the Bibel Belt villages get fiber to the door) the new connections are still counting and even remote farms get connected, in the area where the ground ownership is a total mess (North and South Holland, Groningen) it is all locked down. KPNnetwerk(NL) financially and managerially is independent from the KPN proper. It's like ProRail vs NS.

Now back to the topic:
Nor the Netherlands, neither UK or France (there are some chances for Germany though  because of funny federal structure) will offer any support or "express" any basic interest toward Starlink. It's moot. Please stop it.
All these countries have extensive very high level state investments, impressive lobbying and closed "family like" guilds which make the chance of entering this market from outside next to impossible. What is even more important there is close relation between these countries in the IT communications  area.

P.S. Somebody has mentioned South Korea. State investments in korean internet infrastructure  are no less impressive than their speeds or prices. At some point (middle 2005) they were investing 10x more than their south neighbors. i.e. Korean state investments vs. total Japan investments in internet infrastructure.

[alang]

"Furthermore, ship, planes, and country exist in Europe too. It's politically impossible not to allow a B2C service available elsewere including Africa.  Perhaps it will cost more than in the US and will be sold by local telecoms  that will get the lion's share, but it will be available.  Teslas cost more but are sold in Europe."

Trade tariffs make a lot of things more expensive across borders.
Simple searches don't suggest any treaties that govern trade tariffs for telecoms services. This might be new territory.

[gongora]

Telecom services are regulated in each country, including satellite services.  There is nothing new about this territory.  Any country can ban Starlink if they want to.

[indaco1]

Any country can ban alcoholics if they want to.

But could be not politically viable in a relatively free nation.

[RocketGoBoom]

Telecom services are regulated in each country, including satellite services.  There is nothing new about this territory.  Any country can ban Starlink if they want to.

Ban? No, they cannot. Eutelsat already provides this service via GEO satellites. It is called Konnect and is available in all European countries, Russia and Africa.

There is no chance that Starlink will be banned by Europe. Europe is still a market based economy and does allow competition. Europe can tax Starlink and regulate it, but they cannot ban it. And if some bureaucrat tries to ban Starlink, Elon will make them look stupid, file lawsuits everywhere, and he will probably win.

[DistantTemple]

Telecom services are regulated in each country, including satellite services.  There is nothing new about this territory.  Any country can ban Starlink if they want to.

Ban? No, they cannot. Eutelsat already provides this service via GEO satellites. It is called Konnect and is available in all European countries, Russia and Africa.

There is no chance that Starlink will be banned by Europe. Europe is still a market based economy and does allow competition. Europe can tax Starlink and regulate it, but they cannot ban it. And if some bureaucrat tries to ban Starlink, Elon will make them look stupid, file lawsuits everywhere, and he will probably win.

and

Nor the Netherlands, neither UK or France (there are some chances for Germany though  because of funny federal structure) will offer any support or "express" any basic interest toward Starlink. It's moot. Please stop it.

Usually "stop it" is best from moderators! 
Northern England, Wales, and particularly Scotland (with its wonderful islands) have lots of remote communities, and farms etc. Previous funds for connecting them have left the job quite unfinished. I suspect far from trying to exclude Starlink, existing companies will be relieved when Starlink solves this problem and allows them to walk away. Starlink will also likely do this with (little or) no state funding.
The UK has stepped to the right... the free market is being trumpeted... to deny (competition from) Starlink would be a complete joke!
Alternatively/additionally British Telecom could resell Starlink (if SpaceX agreed).

[gongora]

Northern England, Wales, and particularly Scotland (with its wonderful islands) have lots of remote communities, and farms etc. Previous funds for connecting them have left the job quite unfinished. I suspect far from trying to exclude Starlink, existing companies will be relieved when Starlink solves this problem and allows them to walk away. Starlink will also likely do this with (little or) no state funding.
The UK has stepped to the right... the free market is being trumpeted... to deny (competition from) Starlink would be a complete joke!
Alternatively/additionally British Telecom could resell Starlink (if SpaceX agreed).

The other major constellation launching now happens to be based in the UK.

[RocketGoBoom]

I do wonder where this person got his $1000 plus cost to acquire each customer for Starlink.  Is that supposed to be largely from the customer premises equipment?

And I would expect that the cost of that customer hardware will come down over time.  Way down.  Cable modems have already ridden their cost curve down for many years.  Starlink's customer equipment is only just about to start that journey.

I have seen articles and comments in online forums that phased array antennas are about $30,000 each and those are the new ones just introduced in the past year. The only entities that buy these things are airlines, the US military, government entities, etc. Many of the comments have been extremely doubtful that SpaceX and OneWeb are going to be able to get the prices down to consumer levels anytime soon.

I have no idea if this is true or not. I find it hard to believe that the parts involved cost anywhere near that amount. $30,000 probably takes into account low volume production, lots of R&D recovery, salesman commissions, etc.

But at the end of the day, I have no idea what a consumer quality phased array antenna is going to cost SpaceX on a per customer basis. I wish someone would provide us with some solid info.

[RocketGoBoom]

Which competitors in the satellite data business are most vulnerable to Starlink competition?

In my opinion, it is companies like Viasat and HughesNet for the USA. They have GEO satellites, lousy service with bandwidth caps and high latency. Their customers hate them, but have no other options.

Viasat (stock symbol: VSAT) and HughesNet (Echostar owner: SATS).

<snipped data on Vianet>

Full Disclosure: I am short VSAT stock.

I wanted to follow up on the second competitor I mentioned in this post, Echostar, which owns HughesNet (stock symbol: SATS),

I have been doing a lot of reading about EchoStar to try to get a handle on how they will survive the coming of OneWeb and Starlink. EchoStar used to own Dish Network, but they spun off and split the satellite TV and the satellite data into two separate companies. EchoStar (SATS) is now a pure play on satellite data, but with only GEO satellites providing their services.

HughesNet, the brand of their satellite internet service to rural homes and businesses, is absolutely hated by it's customers. From reading the forums, they despise HughesNet with a passion. It is slow, the data caps are horrible. The latency is horrible. But many of their 1.2 million rural customers have no other option.

EchoStar is junk bond rated and has about $2 billion in debt. It seems more stable than Viasat, because EchoStar has a lot more cash in the bank to service that debt. Viasat has tons of debt, but also very little cash in the bank.

So what happens when Starlink starts accepting customers? Tons of EchoStar HughesNet customers are clearly going to jump ship ASAP and there are 1.2 million of them paying an average of about $100 per month for lousy service.

I don't see a survival path for EchoStar long term. They have plenty of cash in the bank, but they are losing money every quarter already and Starlink has not even started competing yet. So the cash drain will become measurably worse later this year.

Full Disclosure: I shorted EchoStar stock (SATS) and Viasat (VSAT) recently and plan to stay short for at least thru 2020. I think as Starlink starts accepting customer signups, the market will wake up to the existential threat that this poses to Viasat (VSAT) and EchoStar (SATS).

I usually don't run around talking about these things and I understand this is not an investment forum. But the technical understanding on this forum is WAY higher than anywhere else and it seems fairly obvious to me that there is not much of a future for either of these companies with OneWeb and Starlink coming and both being well funded. Just my opinion.

My only real concern about the success for Starlink is the cost of the phased array antennas, because from everything I have read, they are expensive.