And liftoff of the Falcon 9.
Elon Musk's SpaceX is known for its frequent launches, which now dominate the space industry.
But what many of these rockets are launching is just as important for the company as the launches
themselves.
Broadband megaconstellation Starlink.
Starlink.
And we saw this garland of little lights, one after another, absolutely
perfectly sequenced.
And it was Starlink.
Starlink is SpaceX's answer to providing global, high-speed internet coverage, using a network of
thousands of satellites buzzing around the planet in a region known as low Earth orbit.
About 342 miles above the Earth's surface.
While Starlink may be a business unit within the broader SpaceX company, it's seen as crucial
to its overall goals of making humanity multi-planetary and exploring bodies
like the Moon and Mars.
Because Starlink is seen as an economic engine for the company.
SpaceX reportedly generated $1.4 billion in revenue from Starlink in 2022.
In early November 2023, SpaceX CEO Elon Musk announced that Starlink had achieved breakeven
cash flow.
Starlink's importance to SpaceX overall as a company is imperative.
Euroconsult estimates that, optimistically, by the end of 2023, this business of
Starlink could represent upwards of 40% of SpaceX's overall business.
This total would be somewhere in excess of $3 billion generated from Starlink.
SpaceX launched its first batch of Starlink satellites back in 2019, and since then, adoption of the service
has ballooned. Starlink now has over 2 million active customers and is available on all seven continents
and in over 60 countries.
Starlink has been praised for its ability to connect remote parts of the world that would otherwise not have
access to reliable internet.
The service has also become indispensable in areas hit by natural disasters and more recently during times of
war, particularly the Russia-Ukraine war.
Elon Musk has also said, "SpaceX will support communication links with internationally recognized aid
organizations in Gaza." Although Musk said in late October that no Starlink terminal has attempted to
connect from Gaza yet.
But Starlink's growing influence is garnering condemnation from some who say that Musk is meddling in
geopolitics.
A Ukrainian official says that you have enabled Vladimir Putin as an aggressor.
What do you say to that?
Meanwhile, the scientific community has its own concerns.
The astronomical community got concerned because the projection of the full
constellation of several tens of thousands of satellites in low Earth orbit was immediately
seen as an interference to both the optical observation and to radio
observation.
But none of this has slowed down SpaceX's ambitions to expand Starlink service even further.
CNBC explores what has led to Starlink's rapid adoption and growing influence.
With around 5,000 active satellites now in orbit, Starlink satellites account for the majority of all the
world's active satellites.
This growth is uncharacteristic in the sense of its magnitude.
Whereas prior satellite service providers have ramped up to anywhere at most between 500,000
to a little bit over a million subscribers, and this has taken, you know, a ten year period, Starlink's race
to 2 million subscribers has taken only the better part of two years.
Experts estimate that the global market for consumer satellite services, including TV, radio and broadband
internet, was worth over $92 billion in 2022, and Starlink could be in a good
position to capture a big piece of this market going forward.
By design, LEO satellite constellations like Starlink are more flexible than geostationary satellite networks
like those operated by legacy satellite internet service providers Viasat and HughesNet.
These satellite service providers have been constrained on capacity.
They launch large geostationary satellites the size of a mini bus weighing multiple tons,
and they last 15 years.
So what ends up happening is they have more boom, bust cycles than Starlink, who tends to
introduce capacity so far at an unrelenting pace, so they're able to onboard more and more
subscribers by continually launching new satellites.
For the incumbent players, they're kind of stuck with what they have.
Although initially conceived for the consumer segment, Starlink's offerings have expanded to serve enterprise
markets, including the maritime and aviation industries.
Starlink is absolutely witnessing explosive growth in the maritime segment, having captured commitments for
over 4,000 vessels by our count as of the third quarter of 2023, and now have
confirmed commitments on over 400 commercial aircraft and business aviation aircraft.
SpaceX has also announced plans to offer cellular satellite connectivity to unmodified smartphones in
partnership with several global telecom partners, including T-Mobile in the U.S.
It's a feature Apple introduced in the iPhone 14, in partnership with U.S.
satellite operator Globalstar.
Your phone or mine, if they're compatible with the T-Mobile network, they will be compatible with
Starlink's direct-to-cell service.
So when you exit coverage areas on rural highways, national parks, just areas of
poor cellular coverage, you'll be able to automatically roam onto a
space-based network extension of T-Mobile's network, essentially.
Another factor that's helped Starlink's rapid growth is the independence with which SpaceX is able to operate.
Starlink is vertically integrated, it makes its own satellites, it launches them, and it's crafted its
own service. So it's almost completely disintermediated in terms of suppliers
and its distribution channels.
It's a portable system.
So when you think about how you connect to Starlink satellites, it's a small
antenna or terminal, fairly inexpensive, and all you need to do is plug it into a power
source.
But making its equipment user friendly has not come cheap for SpaceX.
Early on, the company faced steep costs to manufacture its consumer antenna.
Production was initially estimated to be as high as $3,000 per unit.
At the time, SpaceX charged consumers $499 for its equipment, meaning the company was eating a lot of the
cost, since SpaceX has cut the manufacturing cost of its antenna to under $600 and
charges residential customers $599 to buy them.
Starlink's ease of use and deployment has made it an indispensable tool in the Russia-Ukraine war.
The big benefit of Starlink and how it's being used in Ukraine today, it is
communications. It's providing a pathway for the military, for
civilians to stay connected to the outside world.
It allows a pathway for the military to communicate with each other and to provide command and control
direction to their forces.
SpaceX began offering its Starlink service to Ukraine at the request of Ukraine's digital minister Mykhailo
Fedorov, back in February 2022.
Here's Musk reflecting on Starlink's importance at the 2023 Viva Technology conference in Paris.
Russia had actually taken out all of the satellite communications and all of the ground communications,
except for Starlink. It was the only one that was still operating, and even today, it is still the only
one that is effective at the front lines.
And Starlink today is the backbone of the Ukrainian military communications.
One of the other benefits that we're seeing in Ukraine from the use of Starlink is its overall
resilience. With thousands of satellites on orbit at any given time, it makes it a lot harder to jam
all of those satellites or to target them all.
The other benefit just how agile and quickly they can move.
So as Russia has sought to jam Starlink, they've been able to make software
updates on the fly to mitigate the effect of that jamming and to keep people connected.
But SpaceX has expressed reservations about how its technology is being used by Ukraine offensively,
specifically to coordinate drone strikes.
During a conference in Washington, D.C.
in February 2023, SpaceX president and COO Gwynne Shotwell said that while the
company had been, "really pleased to be able to provide Ukraine connectivity and help them in their
fight for freedom," she emphasized that Starlink "was never intended to be weaponized."
Questions about Starlink's and Elon Musk's outsized influence on the war came to a head when it was
revealed that in September 2022, the SpaceX CEO had refused a request by Ukrainian military
officials to turn on Starlink service in Crimea, which would have allowed for a sneak drone attack on a
Russian naval fleet.
According to the author of a recent biography about the tech billionaire, Musk refused to cooperate because
he was worried that a Ukrainian attack on Russian vessels would have provoked the Kremlin into launching
a nuclear war. The magnitude of his influence is not lost on Musk.
At one point, the SpaceX CEO wrote, "Between Tesla, Starlink & Twitter, I may have more
real-time global economic data in one head than anyone ever."
I think what's important to remember about the use of Starlink in Ukraine is there
was not a contract signed with the government or with our U.S.
Department of Defense, so there weren't necessarily terms and conditions that Starlink had to
meet for the government customer.
In June 2023, the Department of Defense did sign a contract with SpaceX for its use of Starlink in
Ukraine. SpaceX has also won a Department of Defense contract worth up to
$70 million to make a military-specific version of Starlink called Starshield.
Seeing the influence Musk's Starlink may have on geopolitical matters has prompted some countries to
invest in their own satellite networks.
The European Union has said that it will contribute €2.4 billion to help build out a constellation that's
expected to reach full capacity by 2027.
China is building out its own low Earth orbit satellite internet network, after the country made it
clear that it didn't want Starlink services being offered to its citizens.
Taiwan, wary of Musk's ties to China through his other venture, Tesla, too, has expressed interest in a
proprietary satellite network to help shield the country from a potential assault from China.
SpaceX has said that it eventually wants to launch as many as 42,000 Starlink satellites into orbit.
Competitors including Amazon, Eutelsat OneWeb and Telesat want to launch thousands more satellites.
And that's not even counting the several nations planning their own megaconstellations.
The concern of the astronomical community is mainly due to the fact that these satellites are
very numerous. We are moving from the 2,200 satellite of two,
three years ago in orbit to something that will be 40,000 or even
100,000 satellites.
So for most of the time during the night, these satellite are illuminated by the sun.
And so they are visible in the sky and they interfere with the observation, in particular with photographs
that the astronomers take for their research.
This image, taken from a telescope in Chile in November 2019, illustrates the concerns from astronomers.
The telescope, meant to see images of distant stars and galaxies, instead captured the light trails of 19
Starlink satellites.
Observations from the Hubble Space Telescope, long lauded as a vital research tool for astronomers, have
also been affected.
Benvenuti says SpaceX has been responsive to concerns from the scientific community.
He points to several design changes SpaceX made to its satellites to reduce their brightness, but says more
needs to be done.
The final solution is to know exactly, for every satellite, the precise position in
the sky at any time from any observer.
And so we are working with the companies to have this information and create a
service that can be used by any observer, and they will know when the
satellite is crossing their field of view, and they can plan their observation in a way
that this disturbance is avoided.
Satellites also pose a threat to radio astronomy.
The interference to the radio observation is a very serious one and very difficult one,
because this satellite are there to transmit information toward the
ground in microwaves.
So the only solution is to switch off the transmission when the
satellite is in view of one of the large radio observatory.
So what we are trying to do now is to negotiate with the company, to have the
switch off the transmission when they are over these facilities.
The massive number of anticipated satellites has also led to fears of a proliferation of debris, which some
experts worry may eventually render large parts of Earth's orbit unusable.
And then there's the potential risk to people on Earth as satellites are de-orbited.
In the past, SpaceX has said the lifetime of a Starlink satellite is about five years, which means
satellites must be frequently replaced to maintain service.
A recent report by the Federal Aviation Administration, which is responsible for issuing launch
licenses for satellites in the U.S., and nonprofit research group, The Aerospace Corporation, predicted
that by 2035, Starlink satellites would account for 85% of the risk to aviation and people on the
ground from falling space junk.
The report went on to say that by 2035, if Starlink satellites did not fully burn up in the atmosphere
before falling back to Earth as designed, the FAA expects one person on the planet to be killed or
injured every two years as a result of Starlink satellite debris.
In a letter dated October 9th, 2023, SpaceX disputed the report, saying that the report relied
on "a deeply flawed analysis that falsely characterizes reentry disposal risks associated with
Starlink." The letter went on to say that a lack of knowledge, a flawed methodology and an overreliance on
outdated data contributed to "distorted analysis that makes preposterous,
unjustified, and inaccurate claims regarding Starlink disposal risk to people on the ground and to
aviation," and requested that the FAA "correct its report to Congress."
SpaceX's response to the FAA analysis really centered on the data that was
underlying the report, and pointed to the fact that not only was the data from
satellites that were not Starlink, but also that the company's own track record shows
that Starlink satellites completely burn up when they enter the Earth's atmosphere.
The FAA declined CNBC's request for an interview, and SpaceX did not respond to our request for an interview.
Benvenuti says that while he doesn't believe that there is a risk of stray Starlink debris injuring
anyone, he does have some environmental concerns.
The chemical composition of these satellite that returned to Earth, they are burned into
the higher atmosphere.
What would be the effect of that is not known and is not completely fully studied.
So the impact on the space environment should be fully studied before we continue to populate the
low Earth orbit with such a large number of satellites.
There's no question that Starlink has grown a tremendous amount in just a few short years.
But whether SpaceX can keep up this pace remains to be seen.
The pace of growth that Starlink has exhibited will be difficult for them to keep up going
forward, and for a couple of reasons.
On the first end, there's a certain degree of demand saturation that's happening where
after the service was introduced and now it's been two years in many markets, the lowest hanging fruit in
terms of the subscribers who are most desperate for a better service, have likely already moved over to
Starlink. We've also seen evidence that Starlink is having to spur demand in the market
by reducing the cost of its user terminals.
It's run promotions where its baseline costs in the U.S.
of about $600 for the equipment have been reduced to as low as $150 in
Canada, in rural areas.
And the same has been done in Australia and Japan, for example, in localized, targeted campaigns.
Starlink's success, many believe, is closely tied to SpaceX's other major undertaking, Starship.
SpaceX hopes to use the massive next-generation reusable rocket to launch cargo people and a lot more
satellites. But development of the rocket has hit a number of delays.
In order for SpaceX to keep Starlink on that hockey stick like growth that it's seen so far,
the company needs Starship to begin flying.
Starship is a much larger and more powerful rocket than the current method that SpaceX uses to get its
Starlink satellites into orbit, which are its Falcon 9 rockets.
To meet both the expansion of the network by launching more and more satellites into orbit, as well as
replace aging satellites over time, SpaceX needs Starship flying regularly to
be able to meet that overall growth trajectory.
Competition in the consumer satellite internet market has also been heating up.
One service that's expected to be a big challenger is Amazon's Project Kuiper, which launched the first of
its satellite prototypes in October.
Amazon plans to begin beta testing its network with customers by the end of 2024.
Amazon is adopting a similar approach in terms of its vertical integration, manufacturing the satellites to a
certain extent, launching them themselves through an affiliated company, Blue Origin, and they'll be
making their own user terminals and leveraging their e-commerce platform to deliver these pieces of
equipment and services remotely to the same swath of users as Starlink.
In the future, you will see much more of these types of Leo broadband
internet systems.
It provides a tremendous amount of flexibility and mobility, and that is a tremendously powerful not
just for national security, but to connect disadvantaged populations, rural populations
that don't have that kind of connectivity today.