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Elon Musk's Plan to Dominate Space-Based Broadband

By Rich Smith - Jun 2, 2019 at 6:13AM

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For SpaceX, launching 60 internet satellites is just the beginning. One day SpaceX internet could blanket the globe.

For five long years, SpaceX CEO Elon Musk has been promising to provide the world with cheap, universal broadband internet service -- from space. On Thursday, he took the first major step toward turning that promise into reality, launching a first batch of 60 "Starlink" internet broadband satellites into Low Earth Orbit aboard a Falcon 9 rocket.

And in doing so, he may have set SpaceX on a course to earn massive profits.

Graphic of an orbital network surrounding Earth

Image source: Getty Images.

Baby steps to space

Launching 60 satellites at once is kind of a big deal. It didn't set any records -- India's PSLV launch in Feb. 2017 was nearly twice as prolific, putting 104 satellites into orbit simultaneously. For that matter, SpaceX itself did a 65-satellite deployment in a single launch late last year.

But even so, the 60 Starlinks SpaceX put into orbit last week constitute a big first step toward the company's ultimate goal of creating a constellation of 12,000 Earth-orbiting internet sats to provide broadband service to all corners of the globe. In a single launch, SpaceX nearly matched the size of the constellation of (much larger) satellites it helped its launch customer Iridium Communications (IRDM 0.78%) put in orbit over the last couple years.  (Iridium's constellation focuses largely on providing satellite phone and data service to maritime and airline customers.) Its launch was 10x the size of OneWeb's initial rollout of six satellites in the satellite broadband constellation that it wants to build.

And commenting on the launch last week, Elon Musk suggested that in 18 months SpaceX could have "more satellites in orbit than all other satellites combined," a boast that appears to imply plans to launch approximately two Starlink missions per month over the next 18 months, or 30 missions in total.

From baby steps to giant leaps

Alternatively, SpaceX could step up the pace by using its more powerful Falcon Heavy rocket to lift Starlinks into orbit. With a payload to LEO roughly three times that of the Falcon 9, flight-proven Falcon Heavy launches could put 1,800 Starlink satellites in orbit in just 10 missions flat -- keeping more launch slots open for SpaceX to service its corporate and government customers.

And then there's "Starship," the massive reusable rocket that Musk hopes to use to take humans to the moon and Mars. Crunching the numbers, I've calculated SpaceX could theoretically use Starship to assemble the full planned Starlink constellation -- all 12,000 satellites -- in 18 months. (That's assuming, of course, SpaceX can also build them that fast.)

Final point: Theoretically, SpaceX could finish its Starlink constellation even faster than that. Already, the company appears to have cut the weight of its Starlink satellites by nearly half. Two prototype Starlinks that the company launched in early 2018 were said to weigh 400 kg (880 lbs) each. The 60 new Starlink satellites just launched, in contrast, weighed just 500 lbs. The smaller SpaceX shrinks these satellites, the more each rocket will be able to carry to orbit -- and the faster SpaceX will be able to get the job done.

Why this is important for SpaceX

Now, why is all of this important? And beyond what it means for consumers who want fast, cheap internet everywhere (and maybe some competition for local cable monopolies), what does it mean for SpaceX itself?

Simply this: Despite what you might think, "space internet" is more than just a side project for Elon Musk. In fact, it's key to his plans for making SpaceX consistently profitable, and providing the kind of massive profits he will need to get a Mars colonization project off the ground.

We know this because, back in 2017, The Wall Street Journal obtained access to a cache of SpaceX documents detailing how the company plans to earn enough profit to finance a manned mission to Mars -- and as it turns out, "Starlink" is key to this plan.

For years, SpaceX has successfully competed for space launch contracts against entrenched incumbent space giants such as United Launch Alliance, but has had to offer very low prices, and subsist on only tiny profit margins in order to break into the business. Putting Starlink in orbit and selling broadband internet access from space could generate significantly better profit margins -- and significantly more profit, period -- for SpaceX. In fact, the documents reveal that SpaceX anticipates earning operating profits on the order of $2 billion annually in 2020. For context, according to data from S&P Global Market Intelligence, that's about twice the profit Lockheed Martin's space business generated last year.

In fact, if all goes as planned, sometime in the 2021-2022 time frame SpaceX could become better known as an internet service provider than a space launch provider -- and generate as much as three times more revenue from that business as it generates from sending rockets to space.

At least until SpaceX takes those profits ... and uses them to build a rocketship to Mars.

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