Starlink fundamental cost per GB equation (and comparison to competition)

[Robotbeat]

As promised here:

You know, you can calculate a minimum cost per GB for Starlink (and compare it to other things, like 4G/5G, cable, fiber, DSL, GSO satellite) as a function of capacity factor (which includes both the altitude of the satellite, angle to the satellite, and distribution of customers around the globe as well as inclination distribution of the satellites), launch cost per kg, hardware cost per kg, and throughput per kg.

Think I might start a new thread. Could give us some idea of whether or how Starlink can compete with various options. (Latency also being a factor that determines value.)

Cost per GB of transferred data:

((cost per kg of satellite hardware)+(cost per kg launch to operational orbit))/((Capacity factor)*(throughput per kg of satellite hardware)*(satellite lifetime))

Or, for a globally available Starlink constellation (cap factor = 25%) launched with Falcon 9 for $1000/kg with a satellite hardware cost of $1000/kg, 2.5GB/s for each 250kg satellite (0.01GB/s/kg), 6.34 year lifetime (200 million seconds):

($1000/kg+$1000/kg)/(.25*.001GB/(s*kg)*2*10^8s) in $/GB = 0.4 cents per GB.

Maybe more realistic for the early days (when only 4 percent capacity factor is feasible, and we're using the more realistic $30 million per Falcon 9 launch instead of the $15 million marginal cost) is:

($2000/kg+$2000/kg)/(.04*(17Gbps/(263kg))*4 years)  in $/GB
 =10 cents per GB.


(Note, this doesn't include the ground portion.)

BTW, Google can do this calculation for you:
($2000/kg+$2000/kg)/(.04*(17Gbps/(263kg))*4 years)  in $/GB

[Robotbeat]

Comcast per-month average user data usage is about 300GB/month. They charge on the order of $60/month. That means their user price is about $0.20/GB (although they only start enforcing a cap at 1.2TB/month, or about 5 cents per GB).

Mobile wireless data plans in the US are about $5-10/GB, but if you're lucky, some of the higher bandwidth (5G?) plans can get you down to about $1.8/GB.

DSL goes for about $35/month and enforces a cap at around 150GB/month usage, but I bet average per user usage is around half that, so let's say 50 cents per GB and 25 cents per GB respectively.

GSO satellite internet charges around $3-5/GB.

[su27k]

Interesting, your number is not that far away from Tim Farrar's estimate:

Another, even more critical consideration is that the underlying cost of data delivery over fixed networks is much, much lower than the retail price. Back in 2016, Dave Burstein noted that it cost ISPs less than 1 cent per Gbyte to deliver internet traffic, and that figure is undoubtedly lower today. That’s the more appropriate basis for comparison with the cost of delivery for Starlink (unlike Handmer’s ridiculous comparison with an obselete 14 year old submarine cable, when most domestic internet traffic doesn’t even need to go outside the US), which (using our 250-500Gbytes per orbit figure above) would have a satellite capex cost alone of 0.7-1.3 cents per Gbyte over 5 years.

[Robotbeat]

So what this tells me is that even in the early days, Starlink should *in principle* still be able to compete with everyone *in the US* other than perhaps cities with cable and fiber where there is enough competition for monthly prices to be below $60/month and where per-user data usages are high.

With Starship, they can probably get both the hardware and the launch costs MUCH lower (although might be limited into how effective they can be at shielding light pollution for how big they can make the Starlink satellites). Starship plus worldwide reach should mean they can compete handily in all but the most dense and most competitive markets, including in markets overseas where cost per GB for all these things is much lower.

If a doubling of bandwidth only requires a 50% more massive satellite, then, roughly speaking a 1 ton satellite could do 200Gbps, so:
($100/kg+$100/kg)/(.25*(200Gbps/(1000kg))*10 years) in $/GB is about 0.01 *cents* per GB. That is much cheaper than bulk data center data transfer costs, i.e. from AWS or whoever., which is about 2-15 cents per GB depending on region (ie 200-1500x as much).
(And this is ignoring improvement in throughput from general technology improvement, i.e. Moore's Law, as that can impact both ground and space roughly equally.)

[Robotbeat]

In the US, you've got to keep in mind that broadband residential internet is very high margin. These companies are near-monopolies so charge near-monopoly prices plus have a ton of overhead in customer acquisition/advertisement. This is why Starlink will be able to be extremely competitive in the US anywhere that isn't super high density.

So to respond to Tim Farrar's point, SpaceX is vertically integrated and probably will rely almost entirely on earned advertisement (i.e. media covering Starlink developments and SpaceX doings) plus word of mouth (all those space and Tesla fans!), so they can afford for their backend costs to be a significant portion of the cost their customer pays. This is especially true as SpaceX begins using lasers between satellites and installs terminals directly at data centers, avoiding having to pay any backbone interconnect fees.

A near-monopoly broadband company may be able to charge the customer 20 times what their actual backend costs are, but that doesn't mean SpaceX can't get by with charging only, say, 2-4 times or whatever and still turning a profit.

[Tomness]

I have HughesNet. I pay over $116(USD) a month locked in for 2 years. For their basic package with a data allotment of 35 GB a month with a 50 GB bonus zone from 2am -6am. Sat Internet is the only internet we can get, phone service pretty spotty for data. The only thing we have on the horizon is an Electric company Co-Op Fiber to Home and Starklink.

[Nomadd]

 I just got the latest Verizon phone deal. About $90 for 75GB high speed, but only 30GB of that is hotspot. 600k after that runs out.

[ncb1397]

DSL goes for about $35/month and enforces a cap at around 150GB/month usage, but I bet average per user usage is around half that, so let's say 50 cents per GB and 25 cents per GB respectively.

As someone on DSL, this is news to me. Just double checked the website and it says no data caps and no throttling with plans starting at $39.95 and escalating at $10.00 increments up to $69.95. They are being somewhat coy about what the platinum plan actually means currently in terms of bandwidth speed but they suggest a 500 MB video file will take 26.6 seconds which translates to ~150 mbps. This is pretty rural internet outside of any city limits.

So what this tells me is that even in the early days, Starlink should *in principle* still be able to compete with everyone *in the US* other than perhaps cities with cable and fiber where there is enough competition for monthly prices to be below $60/month and where per-user data usages are high.

I don't see it. Why would I pay $500 up front to get comparable service to the $69.95 plan that provides similar speeds and pay an extra $30 a month on top of that in perpetuity? And that was with free installation with me not having to lift a finger although I did help him route the ethernet cables around the house a few years back.

You can make all sorts of back of the envelope projections ignoring major costs like the ground segment and user equipment, but currently with service being offered, it isn't being born out in real world results.

[Tommyboy]

DSL goes for about $35/month and enforces a cap at around 150GB/month usage, but I bet average per user usage is around half that, so let's say 50 cents per GB and 25 cents per GB respectively.

As someone on DSL, this is news to me. Just double checked the website and it says no data caps and no throttling with plans starting at $39.95 and escalating at $10.00 increments up to $69.95. They are being somewhat coy about what the platinum plan actually means currently in terms of bandwidth speed but they suggest a 500 MB video file will take 26.6 seconds which translates to ~150 mbps. This is pretty rural internet outside of any city limits.

So what this tells me is that even in the early days, Starlink should *in principle* still be able to compete with everyone *in the US* other than perhaps cities with cable and fiber where there is enough competition for monthly prices to be below $60/month and where per-user data usages are high.

I don't see it. Why would I pay $500 up front to get comparable service to the $69.95 plan that provides similar speeds and pay an extra $30 a month on top of that in perpetuity? And that was with free installation with me not having to lift a finger although I did help him route the ethernet cables around the house a few years back.

You can make all sorts of back of the envelope projections ignoring major costs like the ground segment and user equipment, but currently with service being offered, it isn't being born out in real world results.

The 500 up front and 100 monthly are just the costs right now. I remember when ADSL was new (mid to end of the 90s) the prices were very similar. The costs will come down. Guaranteed.

[Robotbeat]

DSL goes for about $35/month and enforces a cap at around 150GB/month usage, but I bet average per user usage is around half that, so let's say 50 cents per GB and 25 cents per GB respectively.

As someone on DSL, this is news to me. Just double checked the website and it says no data caps and no throttling with plans starting at $39.95 and escalating at $10.00 increments up to $69.95. They are being somewhat coy about what the platinum plan actually means currently in terms of bandwidth speed but they suggest a 500 MB video file will take 26.6 seconds which translates to ~150 mbps. This is pretty rural internet outside of any city limits.

So what this tells me is that even in the early days, Starlink should *in principle* still be able to compete with everyone *in the US* other than perhaps cities with cable and fiber where there is enough competition for monthly prices to be below $60/month and where per-user data usages are high.

I don't see it. Why would I pay $500 up front to get comparable service to the $69.95 plan that provides similar speeds and pay an extra $30 a month on top of that in perpetuity? And that was with free installation with me not having to lift a finger although I did help him route the ethernet cables around the house a few years back.

You can make all sorts of back of the envelope projections ignoring major costs like the ground segment and user equipment, but currently with service being offered, it isn't being born out in real world results.

Because SpaceX doesn’t need to compete against DSL and cable *yet*. Mainly just satellite internet. After SpaceX has picked up a million customers in the US, they can start eating into the market share of everyone else, but there’s no reason to lower their prices right now. If anything, they likely will be limited by the number of terminals they can build and send out for the next year at least.

SpaceX could charge $150/month and $750 for their terminal and STILL have massive demand from people stuck on GSO satellite Internet.

[Robotbeat]

Everyone has data caps, although nowadays they’re usually “soft” data caps where they’ll throttle you after you’ve used up 150GB or 1.2TB or whatever.

Read the fine print and look up people who test these things. If you’re pegging your 25Mbps for the entire month, I guarantee you will at LEAST be throttled if not canceled outright.

[Robotbeat]

As a comparison:
Viasat-3 is each $650m, is in GSO so it has 100% geographical capacity factor (BUT still has time of use capacity factor, maybe around 50%?), is 1Terabit/s in capacity and 15 year lifespan (but whether that’s usefully different than, say, 7-10 years depends on how fast cost of data transfer goes down).
So that’s about 1-4 cents per GB depending on how you count.

The latency is terrible, though! That might mean they have a low useful capacity factor because few people want to use it.

[Robotbeat]

There Is, however, some efficiency to be gained in terms of capacity factor in using a higher orbit. One wonders if a Starlink terminal could talk to a satellite in GSO or MEO or a Tundra orbit. SpaceX could employ a few satellites there for handling the data that is less latency sensitive, enabling them to access higher density areas if they use powerful apertures.

[ncb1397]

As a comparison:
Viasat-3 is each $650m, is in GSO so it has 100% geographical capacity factor (BUT still has time of use capacity factor, maybe around 50%?), is 1Terabit/s in capacity and 15 year lifespan (but whether that’s usefully different than, say, 7-10 years depends on how fast cost of data transfer goes down).
So that’s about 1-4 cents per GB depending on how you count.

The latency is terrible, though! That might mean they have a low useful capacity factor because few people want to use it.

Interesting, the 1-4 cents per GB for Viasat 3 and the starlink number of 10 cents per GB in the OP is consistent with a ratio that Mark Dankberg presented and that I saw recently. Those numbers were a low end of $10,000 per gbps-month for starlink and something like $~3,000 per gbps-month for ViaSat 3.

See ~7:49 in the following video


This is marketable bandwidth, so some assumptions about landing rights and that kind of thing while the GEO satellite just targets all of its capacity where it is projected to be needed and useable.

Everyone has data caps, although nowadays they’re usually “soft” data caps where they’ll throttle you after you’ve used up 150GB or 1.2TB or whatever.

Read the fine print and look up people who test these things. If you’re pegging your 25Mbps for the entire month, I guarantee you will at LEAST be throttled if not canceled outright.

I really think I don't, but I am testing it now because my curiosity has got the better of me. You are thinking about larger DSL providers like CenturyLink and Uverse. I linked their policies below.

The CenturyLink Excessive Use Policy (EUP) uses a 1.0 terabyte (TB) monthly data usage limit. This limit applies to all uploaded and downloaded data for all residential CenturyLink High Speed Internet (HSI) customers except for those excluded below.  Of the millions of CenturyLink HSI customers, very small fractions exceed the data usage limit provided with their monthly HSI plan.

CenturyLink is committed to providing an optimal Internet experience for every customer we serve. It is for this reason that CenturyLink places data usage limits on residential plans. The data usage limit applies to residential HSI. It does not apply to business-class HSI.  Residential Fiber Gigabit plans are also not subject to data usage limits. The HSI and video traffic of Prism® TV service customers is also not subject to the CenturyLink EUP.  Any residential customer receiving discounted HSI service under a program to promote broadband adoption in low-income households is also not subject to the data usage limit.

CenturyLink does not currently charge customers a fee for excessive data usage. CenturyLink will weigh variables such as network health, congestion, and the availability of customer usage data as factors when enforcing this policy. Customers who have exceeded their monthly data usage limit and are subject to EUP enforcement will be notified by CenturyLink via web notification and/or written communication.

Customers who are subject to EUP enforcement are given options to reduce their usage, subscribe to a higher-speed residential HSI plan, or migrate to an alternate business-class HSI service. Our EUP is application neutral; it only considers the total usage (bytes transferred) over a defined period of time independent of protocols, applications, or the content that is generating the excessive usage.

Customers who repeatedly exceed the EUP usage limit, and interfere with other customers' use of HSI service, are subject to the CenturyLink HSI terms of service.

For additional detail about the EUP, view the questions and answers (PDF).

https://www.centurylink.com/aboutus/legal/internet-service-disclosure/full-version.html

The 150 GB limit for DSL appears to be derived from AT&T, but they seem to be one of the strictest. Assuming the basic service is $50, the most you would pay in a month is ~$250 for overages. They also allow for actual unlimited service, just not over DSL. If you are on Uverse over DSL and you are getting overages every month, Starlink would be attractive. Assuming that overages or heavy throttling don't start to apply when they have a network under load and have to balance users against each other.
https://www.att.com/help/internet/usage.html

[Michael S]

I just got the latest Verizon phone deal. About $90 for 75GB high speed, but only 30GB of that is hotspot. 600k after that runs out.

The company I work for has the "phone over the Internet"(I must admit this is a bit beyond my knowledge). if the latency we have been hearing about can be maintained as the customer base is increased, could Starlink work as a 'reverse hotspot'? Or, is this a stupid question?

[Nomadd]

I just got the latest Verizon phone deal. About $90 for 75GB high speed, but only 30GB of that is hotspot. 600k after that runs out.

The company I work for has the "phone over the Internet"(I must admit this is a bit beyond my knowledge). if the latency we have been hearing about can be maintained as the customer base is increased, could Starlink work as a 'reverse hotspot'? Or, is this a stupid question?

You should be able to use Starlink just like any wifi phone service. The problem I was talking about would be using it for a wider phone service with a bunch of customers. There are some pretty Byzantine laws about supplying voice service as a business. Using Starlink as a telco pipe for areas already authorized for service by that telco should be simple. The hard part will be dealing with regulators who got the job by flunking out of Walmart greeter school.
 I'm pretty out of date too, and wasn't that good when I was in date, but you use to get good latency and small buffer size for voice over internet phone services by the internet provider supporting a higher class of service for your call to keep the data flow nice and smooth. It gave voice calls higher priority than people watching cute kitten videos and kept the data buffer as small as possible.
 Can't say I really know what you mean by "reverse hotspot".

[Robotbeat]

Cable providers who bundle phone service don’t have a separate phone line. They just run the phone data over their own internal network. Starlink could do the same. For TV, too, actually. No reason Starlink satellites couldn’t broadcast satellite TV.

[Robotbeat]

It’s worth noting that Viasat-3 hasn’t been launched yet and averaged over its whole lifetime, Starlink (which will upgrade several times over 15 years plus launch on the cheaper Starship) could well have a much lower cost per GB.

[Nomadd]

Cable providers who bundle phone service don’t have a separate phone line. They just run the phone data over their own internal network. Starlink could do the same. For TV, too, actually. No reason Starlink satellites couldn’t broadcast satellite TV.

I'm still wondering about the tv part. So many people stream the latest episode when they get around to it as opposed to broadcast episodes, how do they keep the system from getting clogged up by 40 million individual streaming episodes of "Backstabbing moron douchebags who say things like protein instead of food in order to appear intelligent, in some generic Survivior clone of the month"?

[Robotbeat]

They could still broadcast like a regular cable or satellite company does. That way if 1000 people in the beam are watching the Super Bowl or whatever, they don't need 1000x the bandwidth. But streaming video (like youtube) uses normal bandwidth.

I would bet that streaming video is already the majority of data usage for broadband. I have regularly wondered if it might eventually make sense to keep a nearline Netflix cache on Starlink satellites once the satellites get larger.