geo companies don't care much about launch cost since it's infrequent, and SpaceX has not shown starlink has a path to be profitable. I know it's the cool thing to do to love SpaceX, but separate the launch from the satellites. the latter hasn't shown it's sustainable unless there's a large influx of government subsidies.
Let's say they have 12k satellites. With oversubscription at 10? and a third of time over land? but 20gbps capacity for 200mbps connections, you get 333 users per satellite. 12k gives you 4 million users, at $100/mo or $1.2k/y. I'm going to drop that to $80/mo because Starlink need to pay for backhaul, so let's say $1k/y because it's round. So $4 billion annually. Over 12 years of satellite lifetime that's 48 billion. Satellites cost $300k to make, so subtract another 4 billion for production (44 remaining). Sats are launched in batches of 50, requiring 240 launches. Internal costs are somewhere between 30 to 60 million, it's unclear because of reuse, let's say 50 million for 12 billion launch costs, leaving 3 billion a year.
And then there's some operational costs which they pay from that.
So Iunno, it doesn't seem as extremely profitable as my first calc, but it's still probably pretty profitable. And any improvement they make to the satellites over time just adds on top. (Also I don't think they actually have $50 million internal cost per launch.)
edit: Terminals "reportedly cost around $1000 to make" and are sold for $500, so nbd, subtract another 2 billion per customer-lifecycle.
This calculation illustrates the problems of subtracting a big number from another big number.
Here's some of my math:
* Each customer brings in $1.2k/year.
* Satellites have 20 gbps of bandwidth, and consumers today are reporting about 50 mbps links.
* Maximum capacity is then ~1000 customers/sat because a 50 mbps connection takes 100 mbps of capacity to run duplex, and you need to double that again because customer data needs to get to backhaul.
* Satellites will spend significant time over water, and even more time over people who aren't paying - remember, metro areas all have cheaper cable internet. I would give these ~10% capacity at most.
* Satellites have 5 year life, but some fraction of them fail early - let's say that averages to 4 year replacement, and that estimate is at the high end of Musk's original estimate.
* One satellite is capable of $1.2M annual revenue, assuming 100% utilization, or $5M revenue over its life.
* Satellites cost $250k to manufacture, and $1M to launch ($50M per launch of 50 sats, making the math simple). Let's raise the unit cost to $1.5 million assuming a very good yield on satellites making it to orbit.
* The profitability of a single satellite is heavily dependent on utilization: At 10% utilization, each satellite makes $500k of revenue over its life. Satellites have to run at 30% utilization to break even.
* Customers receive a ~$1k subsidy to access the network in terms of the discount on the dish. This means we have 1 year per customer to break even on the customer. Assuming 3 year customer/dish lifetime (and assuming we will subsidize dish replacements when they break), we have only ~$2k margin per customer over 3 years, or $700 per year amortized.
* Now, the per-satellite gross margin drops to around $3-3.5M. This means that you now need up to 50% utilization to break even on a satellite.
What this all means is that starlink, if it is ever profitable, will be profitable based on niche use cases where they can charge extremely high subscription prices. Use cases like airplanes, yachts, offshore oil platforms, and military deployments. Customers who aren't paying a lot per subscription are dead weight.
By making slightly different assumptions, we have dramatically different conclusions.
It's a round number, and assumes about 10% loss. But also, they can't make or launch the sats for $1.25 million each yet, so it might not be a bad number.
Also, by my math, 5:1 oversubscribed is about breakeven, and it appears to be what Starlink does (reports of 10-50 mbps by users).
Just to note, 5:1 oversubscription wouldn't give you 10-50mbps unless everyone was using the connection at full rate at once. That's why (quick google) DSL services often oversubscribe by up to a 100:1.
I can't edit anymore, so correction: Current sats only have 6y lifespan, which drops us to 1.3 billion yearly, but I think that's partially cause they're still iterating on them. It seems clear that satellite lifespan is the main factor for profit.
Very bad source. I go into why in more detail in this comment, but to keep it short: his numbers are lies and he knows it too - some of his screenshots are photoshopped to preserve his narrative. He has an agenda - an anti-Elon Musk agenda - and has no intellectual integrity.
Read around and that thread a bit and you'll see that people confirmed my claims and that those who doubted it and checked his numbers themselves observed a three order of magnitude difference* in his cost estimation versus their estimate.
This isn't a source to get informed by, but one that makes you delusional.
He claims the terminal costs at least 3× the retail price and will never make a profit because of it
He also claims that its product offering brings nothing new to the table compared to hughesnet and viasat which is wrong imo as offering 1/10th latency of these products is a gamechanger.
Sorry, I'd do better but I'm on mobile, I think it's worth a watch at 1.5×
- After lying about SpaceX launch costs, he later posts screenshots of articles. One of those articles had the true launch costs. The image was photoshopped to remove this launch cost.
- When posting pricing information for competitor services, he uses their lowest cost tiers for their highest cost service provision. He also falsely implies that SpaceX and other satellite providers are providing comparable services despite the latency difference. This is all part of his effort to mislead with regard to demand.
- When quoting speed test results, he uses outdated alpha information. He argues that speedtests would not improve, but at the time he posted the video the speed tests results did improve. He knew this. You can tell because he claims there is a government conspiracy to favor SpaceX for funding for rural internet. This reveals he knows that they qualified for this. Which reveals that he knows his speed test numbers are out of date.
- He lies about the number of launches SpaceX will have to do, double counting replacement launches. I might think these sort of things were an honest mistake, but the pattern of behavior is clear. Given any information, he distorts it and attempts to paint a bad narrative, going as far as photoshopping or proposing government conspiracies. It is obvious he did a great deal of research - so it is absurd to give him the benefit of the doubt with regard to ignorance.
TL;DR - Watching that video will make you uninformed and delusional, not informed. It is not worth watching. The person who made it is not trustworthy. You are linking, not to a skeptic, but to an Elon Musk conspiracy theorist.
When I brought this video up, I just wanted to provide a voice from the other side of the debate. I did not really verify its contents and wanted to hear what other people had to say about it.
I'm familiar with the mobile satellite sector and I can say for a fact that he is right about the cost of the terminal being couple times higher than $500, though getting at the exact number would require a considerable amount of digging.
I got things to say about the attitude in this micro-thread though: I'm sure y'all heard the saying "If you don’t read the newspaper, you’re uninformed. If you do, you’re misinformed". I like that quote, but I always felt like some elaboration should follow.
By all means, do watch/read/consume anything and everything, and first use introspection, ie. ask yourself "Am I qualified/informed/sane enough to reach a conclusion about this matter?", and if your answer is yes then use your critical thinking neurons to reach YOUR conclusion. Then still try to verify it with your peers, or if you can find any, experts in that particular field. Personal attacks (along with other logical fallacies) have no place in a civilised discussion.
Basing on the above, if the Starlink opposers are as desperate as you say about distorting the facts to advance their narrative, it only increases my confidence in the project. You see, I did not end up being delusional, just reached a logical conclusion to the extent of my abilities.
So all in all, thanks for taking the time to write this up.
You're wasting your time arguing with a TSLAQ idiot. They will just ignore all your facts and keep spreading lies. I bet they also use Jenny McCarthy as the source for their vaccine information.
