Starlink is taking over the space market

A view from space. Telecommunication and High-Speed Internet. Satellites Flying Around Earth.

(Image credit: Getty Images)

published 13 September 2024

To help you understand what is going on in the tech, business and space sectors our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

SpaceX’s big internet bet is taking off. The rocket company’s fleet of small satellites, called Starlink, is delivering fast internet service to millions of satisfied users around the globe. One standout example: There are 400,000 users in Canada, many of them in rural spots. In the U.S., many users of traditional satellite service have shifted to Starlink, which has higher speeds and unlimited data.

The success is a huge feat and comes as a surprise to many space industry insiders. Space-related ventures are always hard, and Starlink’s many obstacles included huge costs and technical challenges.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-200-80.png

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Earlier this year, space intelligence firm Quilty Space estimated that Starlink had 2.7 million global subscribers and was on pace to make $6.6 billion in revenue for 2024. The service had fewer than 250,000 subscribers just two years ago and is rapidly taking customers from the current top two consumer satellite broadband companies, Viasat and Hughes. For example, Viasat has lost over 300,000 subscribers since Starlink’s 2020 debut. That’s half of its broadband customer base, and it’s hard to see how it will ever recover.

It's a remarkable shift for the space industry, which historically has been marked by severe data constraints and a slow pace of change. Amazon’s coming satellite constellation will only add to the disruption for consumer, business and government internet service markets. The retail giant’s Kuiper constellation will consist of thousands of small satellites over the next few years. Expect the retailer to test a variety of business models, such as giving Amazon Prime members discounted internet plans or using the bandwidth to track shipments.

With both SpaceX and Amazon flooding the space market with unprecedented data capacity, traditional satellite companies will have to respond. Starlink’s 6,000-plus satellites already dwarf the entire global satellite capacity available in 2019 by 50-to-1, according to technology market research group Analysys Mason. “Incumbents face an ever-increasing threat from Starlink and, eventually, Kuiper,” said Christopher Baugh, a partner at the company, in a recent article.

Starlink has a huge head start, but Amazon has deep pockets and a steadfast commitment to Kuiper, including courting the U.S. military as a major customer.

Despite the early success, Starlink still faces many challenges. Some markets and areas will be constrained by bandwidth, which affects speed and the number of users offered service. Sales are well below SpaceX’s initial rosy estimates, which means it will have to fight harder for new customers and lobby for government subsidies. Price reductions, antenna rentals and other deals may be necessary to stoke subscriber growth in coming years, especially in some overseas markets. A growing customer base is needed to fund new satellites, launches and ground technology.

The upshot for businesses and consumers: Cheaper satellite internet plans in coming years, making internet beamed from space a more compelling option, even beyond typical hard-to-reach locations. For consumer home service to a dedicated location, Starlink offers plans for $120 per month with unlimited data, plus a one-time fee of $300 for the antenna. Business plans start at $140 per month for 40 gigabytes of monthly data. Starlink recently partnered with Comcast to sell its satellite service to business customers, an example of how it plans to make inroads in new markets.

Many investors wonder if Starlink will go public, but it’s not likely this year, as the company continues to expand and work on top-secret military satellite projects. An IPO is something SpaceX is mulling in the longer term, but it’s in no rush right now.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

John Miley is a Senior Associate Editor at The Kiplinger Letter. He mainly covers technology, telecom and education, but will jump on other important business topics as needed. In his role, he provides timely forecasts about emerging technologies, business trends and government regulations. He also edits stories for the weekly publication and has written and edited e-mail newsletters.

He joined Kiplinger in August 2010 as a reporter for Kiplinger's Personal Finance magazine, where he wrote stories, fact-checked articles and researched investing data. After two years at the magazine, he moved to the Letter, where he has been for the last decade. He holds a BA from Bates College and a master’s degree in magazine journalism from Northwestern University, where he specialized in business reporting. An avid runner and a former decathlete, he has written about fitness and competed in triathlons.