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.
