If Starlink Succeeds Then SpaceX Revenue Will Be More Than Double NASA’s Budget

Nextbigfuture has calculated how the Super Heavy Starship will make deploying the Starlink satellite network $1 to $2 billion cheaper to launch than with Falcon 9s. The Super Heavy Starship will be able to deploy over five times the number of Starlinks satellites per launch and the cost per launch will be three times less. The lower launch cost will be because of the full reusability.

However, SpaceX could lower the Falcon 9 Block 5 (F9) costs by consistently having ten re-uses of each F9. Currently, SpaceX will soon perform its fourth relaunch of the same first stage and could begin reusing the waterproof farings.

It is worth New York and Chicago $100 million per year to put a premium microwave data connection between the two cities. This shaves 5% of the latency time from pricing updates and order placement. This has a lot of value when a big stock starts making a rapid move up or down.

There would be 190 combinations of pairs of the top 20 financial cities. There are 435 combinations of pairs of the top 30 financial cities. If the top $100 million per year was paid by the top 20 cities, then this would be $19 billion per year. If the premium internet pairing for the connections to 21 to 30 was worth $10 million per year then this would be another $2.45 billion per year. Even with a half-price discount, the total would still be $10 billion per year.

The SpaceX Starlinks could save 30-50% of the latency time. This is because the speed of light is almost twice as fast in space as it is in a glass fiber. The value for the Starlink financial latency reduction should be even higher. Let us say it is double the New York to Chicago price. This means the premium pairing of cities is worth over $40 billion per year.

Other industries may pay for premium pairing but there has to be a lot of money involved and value for shaving 30 milliseconds at some time in the year.

Internet Backhaul and 5G

SpaceX Starlink network will make money by helping improve the entire global internet. They will be able to provide a high bandwidth alternative to fiber.

90 percent of all internet traffic travels over wireline fiber, even if it ultimately goes on a wireless device.

It has been estimated that deploying 5G wireless speeds 10 to 100 times faster than 4G will cost $130 to $150 billion in fiber optic cabling alone over the next 5 to 7 years. There is a 28-page report from Deloitte on 5G and fiber. The Deloitte report was for the USA only. Europe and Asia will also build out 5G.

The SpaceX Starlink network would not replace fiber for the last mile or for less than 2000 miles. However, the backbone connections are where SpaceX Starlink will provide superior value and bandwidth relief.

Consumer Market

The consumer market for internet will be later for SpaceX Starlink. The consumer needs a cheap phased array flat receiver to track the fast-moving low-earth-orbit satellites. The satellites will circle the earth every 90 minutes or so. An antenna would need to track it moving across the sky over a few minutes and then switch to the next satellite. Currently, the Kymeta flat satellite receivers cost about $40,000 each. They are like a flat panel TV in form factor and in factory production. They “should” be able to drop towards the price of a flat panel TV display in price. A 32-inch flat TV can be bought for about $100 and a 40-inch TV can be about $300.

Starlink Funding and SpaceX Will Become Twice as Big as NASA

Given the future value of the Starlink satellite network, will Elon Musk be able to arrange the financing?

I think funding is a certainty. I think they will be able to rapidly ramp to $50 billion per year in revenue. This revenue would be more than double NASA’s annual budget. Direct TV is part of AT&T and makes about $40 billion per year in revenue.

Aggressive Financing in the 1980s and 1990s

Craig McCaw is a billionaire who financed an early cellular network by borrowing against and selling shares in a cable operation.

There have been other times when large telecommunication and satellite networks were built with many billions.

If Elon Musk and SpaceX desired, it seems they could arrange for advanced deposits from the major financial companies. SpaceX needs to get the Starlink satellites to the point where it is clearly “only” a matter of deployment and scaling.

39 thoughts on “If Starlink Succeeds Then SpaceX Revenue Will Be More Than Double NASA’s Budget”

  1. Speed of light in vacuum is twice as fast as in glass tubes (fiber optics), but yea, you got the right point.

  2. Hi frequency trading market alone is worth 100s of billions and all would pay premium for faster transmission rates, even shaving off 5ms per tcp packet between US and Asia is a humongous improvement thats worth billions alone,

    Now factor in defense, news and media content, spacex is sitting on a goldmine

  3. I look forward to the Consumer side ; as my ISP is horrendously Slow and I gladly vOlustee for Off world work for Elon

  4. I tend to agree but as Bonkers pointed out we are no where near building a structure like that in space. There first needs to be a market for autonomous mining and construction. That said, the O’Neill cylinders are fascinating and are the next step between inhabiting Mars and say, the moons of Jupiter. Once humanity is comfortable with the notion of space travel I think the idea of developing O’Neill spheres will start bubbling to the mainstream conversation.

  5. From being a bit higher up and in a vacuum they can beam lasers to each other. Would not work in the atmosphere very well if at all.

  6. If Starlink is as successful as Elon expects it to be, your shares of Verizon might not be worth as much as you expect them to be.

  7. And where does all the material and energy to build an O’Neill cylinder come from? Think about how large those O’Neill things are! Look how long it took to build the ISS and how much it cost! Maybe in the far future when we have automated asteroid AI based mining/manufacturing self replicating robots. I think Mars is a pretty good alternative!

  8. What can we mine, extract, and grow there to attract colonists…maybe legislate that all sugar & corn must come from Mars…

  9. That’s easy, mechanical wear but more importantly if something goes bad the satellite will be destroyed on reentry whereas the drone might incur damage/lawsuits.

  10. For the partial coverage thing:

    They can probably still sell low-ping bandwidth to HFT traders earlier than that. Buying an hour of being 50 miliseconds ahead of the competition in transatlantic arbitrage trades can already be very profitable, and doesn’t need 100% uptime as long as the uptime is predictable. So there are a few niche high margin markets that could give revenue pre deployment.

    But yes, the big money will start coming in when they have full coverage and can start selling backbone receivers to companies deploying 5G towers, so that the latter don’t need to be connected to a fiber network.

  11. China must be getting a little jittery over Starlink. How are they going to keep the “Great Firewall” if they have to deal with Starlink as a ISP they cannot control?

  12. Great report.
    This is an infopinion from a few months ago…before Musk announced plans to accelerate BFR. BFR would seem able to fill a complete orbit of, say, 120 Starlink spacecraft on a single launch.

  13. I see it like this.
    NASA gets about 18 billion per annum. This is going to drop in a coupe of years.
    Most of this budget is swallowed up in administration and small projects, ie safety, integration, NASA TV, air safety, research, JW telescope etc..
    To double NASA’s budget for a project like a moon base wouldn’t double what it could do, but increase it by a large multiple.
    In a nutshell, this is what SpaceX will be capable of doing.

  14. Same here but those antennas should get a lot cheaper with mass production. In the meantime it makes things easier for small ISPs.

  15. First, I don’t think Elon Musk would put out anything other than a gapless, state-of-the-art service. Second, in a sparse constellation, the gaps would occur randomly every 10-20 minutes all day and night … you could not plan for a long overnight window. Third, there are GEO services (which you used) that are good for large downloads right now. Fourth, the main value of a LEO service is low latency, bi-directional broadband that rivals FIOS. A “gap” is like a 5-10 minute latency vs a 1-2 second latency you might get from current GEO services. No, its all or nothing for Starlink … otherwise spend 1/10th the cost and create a great GEO based service with more capacity but the same speed-of-light-limitations latency.

  16. It is not necessary to have full coverage in order to get revenue. Back when I lived in a rural area, and used satellite internet, your bandwidth was very limited at peak times, so people scheduled downloads at night.

    With Starlink, people could do large downloads as a background task, whenever a satellite was overhead. You would pay less for spotty schedules, but there definitely will be people willing to pay *something* to improve on whatever crappy DSL or 4G system they have now.

  17. First there needs to exist a way to go for a fee, even a high one. Currently we can’t go to the Moon or Mars regardless of our pocket size.

    Once that exists, governments, companies and individuals can find reasons enough to pay for it.

    The first trips will definitely be very expensive, with the first revenue being returned into further development of the rockets (e.g. making them more reusable), resulting in better rockets and cheaper trips.

    But the first ones going will definitely be paying for it. There is of course, the qualified non astronaut workforce required to build more stuff over there after the first visits. They will be paid to do it, and probably with a nice prime due to the risk.

    Nevertheless, I don’t believe they will have any trouble filling up the positions. They will have a long queue of people wanting to be paid to go to work on the Moon, Mars, etc. Once that option exists.

    If trip costs get down to the levels Musk expected (less than 1 mil USD per trip), people will be going for tourism and adventure.

    But note that for whatever costs we imagine for Mars, going to the Moon will be 1 order of magnitude cheaper, and to orbit 2 orders of magnitude cheaper. When rich people can pay for a cruiser to Mars, a lot more could go to the Moon and practically everyone will be able to pay to go to orbit.

  18. It’s going to take some crazy pyramid investment promises to get talent to up sticks and become permanent Martians. Also, I wonder- what sort of government will support this nascent civilization? Self-government will need to promise the security of our blessed liberties. That discussion should be happening now.

  19. The difference from cellular is that all LEO comm sats concepts need 600-1000 sats operational before they can provide any point on gapless coverage. So it all or nothing. It will cost $3B to light up the first paying (industrial/govt) customer in 3 years. Once this is done then it could be $Billions in very high profit margin revenue pouring into the investors. There are $Trillions in private money that would love such an upside possibility … and they don’t require a say in the day-to-day. $5B of 5 year money should be there for maybe a 25% share. But just like for OneWeb they need to prove user equipment prices toward $2K if they want a broad rural/remote consumer market. But if they follow the Iridium industry/govt/militray/shipping market then $40K end-user equipment will be OK.

  20. Actually I am more concerned with getting a piece of the action than starlink getting funding. I am not concerned about the cost because I have a number of shares of Verizon to sell to fund the purchase

  21. Yeah. Sure they are.

    Funny how ‘Don’t Be Evil’ has caused Google to cooperate with China’s government on censorship and social tracking, and apparently justified their ‘neglect’ of anything that doesn’t please their political leanings…

  22. Besides this won’t be a Wonderland amusement park for a single rich guy. SpaceX wants this to pay for itself so it becomes a permanent ongoing business.

    All the upcoming Lunar and Martian rockets are planned to be commercial enterprises. They want paying customers.

    The high upfront cost comes from the very high initial investment required to have a place people may want to go.

    Governments would like just to be able to go, plant a flag, take pictures and then return; paying customers want reliable logistics, facilities and existing infrastructure.

    It’s good that one can come after the other and both types of customer needs can be fulfilled in due time.

  23. Corporations with social mission statements are far more useful to humanity than corporations driven only by earnings, quarterly reports and prospective bonuses.

    Put another way, humane mission oriented corporations are far more interesting to investors, employees, and the public.

  24. I’m a little disappointed that it is just a backbone alternative. I was hoping for the embedded modem that worked anywhere.

  25. Starlink is our government’s new cyber tool. Langley will have highest priority transfer on the lowest latency network. To Spear the Phish. Musk is neo-Howard Hughes.

  26. One more thing to consider: With small, easily replaceable satellites, it will be much easier to upgrade the Starlink system every few years. The system will require a physical refresh every few years as satellites lose fuel and reenter the atmosphere, which is a good time to install upgrades. So, when G6 or G7 (or whatever the new standard is) comes out, Starlink will just upgrade the replacement satellites and put into orbit within a couple of years. And, unlike ground stations where heavy machinery is needed to lay cables, rewire telephone poles, etc; all Starlink customers need is to upgrade a receiver, like buying a new TV.

  27. Could you Imagine what Musk could do with 30 billion in annual revenue from star link?

    SpaceX could sustain a Mars Colony, Moon base and exploration missions throughout the solar system without any external funding.

    They could start building some huge space infrastructure projects in with BFR.

    The next couple decades are going to be really cool for space exploration.

  28. It’s clear where SpaceX wants to get the money from for their more ambitious interplanetary plans.

    Even a couple of spare billions per year would go a long way in E. Musk hands.

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