With Starlink, Elon Musk Is Once Again Showing How To Make Economies Of Scale Work

Starlink
Elon Musk made some interesting comments a month ago about Starlink, the satellite communications company launched via SpaceX, saying that his plan is to create antennas for use on trucks, ships and planes to provide internet to vehicles of a certain size, though not yet to cars, due to the size of the antennas.

Musk continues to disrupt the telecommunications industry: using the idle capacity in his rockets to launch waves of up to sixty satellites at a time has already allowed him to have 1,321 in orbit at a much lower cost than than is usually associated with these kinds of operations. Some 12,000 have already been approved, with a further 30,000 licenses also under scrutiny.



What’s more, these satellites are located in an orbit sixty times closer to the earth than conventional satellites, which changes all the usual approaches to satellite communications and allows it to offer internet access that is sufficiently fast and with the latency needed to play video games competitively. This means that, on the one hand, they are easier to see with the naked eye at night— although the company has worked hard to reduce their luminosity — while they could also be used for activities that until now were prohibitively expensive.

As with all Musk’s projects, this is once again a case of leveraging and anticipating the economies of scale that will be obtained at a later stage: first, the possibility of launching satellites much more cheaply thanks to cost sharing with SpaceX’s increasingly recycled rocket launches. Second, the anticipation of the possibility of progressively reducing the size of the antenna required for terrestrial reception from the first “UFO on a stick” to the current models capable of being installed on a vehicle of a certain size. The pricing approach also responds, obviously, to these parameters: although the initial $499 for the connection equipment plus $99 monthly fees might seem appropriate only for users who have no other choice, the idea is to reduce this price as scale allows, which will make it possible to end up being competitive with what many telecommunications companies are offering today with terrestrial fiber around the world.

Even the U.S. military has understood the concept, and is considering using Starlink’s constellation of satellites as the basis for a new alternative system to GPS.



Believing that the rules of an industry or business cannot change by considering accelerated implementation of economies of scale or design changes is a common misconception. If you thought you knew everything about satellites and what they could do… think again.

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