I wanted to share a few thoughts as Starlink approaches 5 million subscribers—a milestone achieved in just over 4 years since launching its beta service in November 2020. This growth is particularly impressive when compared to the performance of traditional satellite service providers.
Destruction in the GEO broadband market
A significant portion of Starlink’s growth appears to have come at the expense of competing GEO satellite services. For instance, both Viasat and Hughes have experienced notable declines in their subscriber bases during the same period. Specifically, Viasat’s subscriber count dropped from 596,000 at the end of December 2020—just as Starlink launched—to 205,000 by the end of December 2024. This represents a loss of nearly two-thirds of its subscribers in just over four years.
Hughes has also seen a significant decline, though the impact appears less stark because it reports global subscriber numbers. At the end of December 2020, Hughes had 1,564,000 subscribers. By September 2024, this number had dropped to 912,000 broadband subscribers—a decline of 42%, or roughly 2 out of every 5 subscribers.
These numbers highlight the significant threat posed by LEO satellite services to traditional GEO service providers. While this impact is currently most evident in the satellite broadband/fixed access market, broadcast services are also experiencing a decline as alternative options are widely available. These trends underscore the urgency for GEO providers to develop robust and effective strategies to address the LEO challenge. Many leading GEO players have already adopted such strategies, including LEO-GEO partnerships, acquisitions, and even building their own LEO constellations.
Squeezing the WISPs
This point brings the example of the Canadian market but applies to other markets as well. In mid-2024, Starlink announced that it had reached 400,000 Canadian subscribers. Considering there are approximately 1.8 million dwellings in Canada classified as “moderately remote”, “more remote”, or “most remote”, this translates to a penetration rate of just over 22%, assuming all of Starlink’s customers are in these areas. In other words, more than 1 in 5 rural or remote Canadian households now have a Starlink connection!
Starlink’s growth is occurring, in part, at the expense of rural Wireless Internet Service Providers (WISPs). Many rural wireless networks are patchy and stretched thin, offering low data rates at high prices. While Starlink pricing is not cheap, some will buy it for its higher offered data rate and potential improvement in quality of service compared to typical WISPs.
However, Starlink is not the only challenge facing WISPs. They are also facing significant competition from government-subsidized fiber development programs. These programs have accelerated in response to the COVID-19 pandemic, and there is still substantial funding available for further development. WISPs are squeezed between competition from LEO satellites and fiber deployments. For this reason, some WISPs have pivoted to seek grants for fiber deployments, which is a wise strategy. Other WISPs have opted to exit the market and sell to larger entities that can build economies of scale. For the remaining WISPs, it will be imperative to carefully assess their market and devise and execute a clear strategy to mitigate such destructive market dynamics.
Starlink’s penetration impacts the sales of fixed wireless equipment vendors, particularly those offering unlicensed-band solutions. Assuming an average of 20 rural subscribers per typical unlicensed-band FWA access point (AP), Starlink’s growth could have displaced up to ~250,000 APs from the market. In reality, the number should be lower because many Starlink subscribers were previously served by other technologies, including GEO satellites, or had no service at all. Nevertheless, Starlink’s impact on the FWA equipment market exceeds a few tens of thousands of access points. Companies such as Ubiquiti, Cambium, Tarana, Mikrotik, Mimosa, and others are particularly at risk.
Encroaching on Subsea Fiber Cables
There is a potential overlap between satellite services and subsea fiber cables in certain market segments, particularly in northern coastal communities such as those in Alaska, Canada, and parts of Northern Europe. For remote communities, Starlink introduced its Community Gateway service, which was first deployed in Alaska. This service can scale up to 10 Gbps/month, with pricing set at 75,000/Gbps/month and an upfront capital expenditure charge of $1.25 million.
The challenge with serving these northern communities lies in their geographic spread and low population density, which make the business case for subsea fiber cables difficult without significant government funding. For example, the planned FISH South subsea cable in Alaska aims to connect several communities, including Cordova (population ~2,400), Yakutat (~500), Gustavus (~600), Hoonah (~1,000), Juneau (~32,000), and Pelican (~100).
Despite challenging economics, Starlink is unlikely to fully replace subsea fiber in such scenarios for several reasons. Starlink’s opex-based model contrasts with the capex-based model of subsea fiber cables, which aligns better with equity investing and financing from both government and private sources. As a result, while Starlink may serve as a viable solution for inland remote communities, its use in shoreline remote communities is likely to be a temporary gap-fill solution.
Another example of overlap is in connecting oil and gas (O&G) platforms. In many cases, Starlink is a viable solution. However, large O&G platforms with long operational lifespans and proximity to dry-plant infrastructure remain more likely to be served by subsea fiber due to its reliability and high capacity.
Concluding Thoughts
The disruptive nature of Starlink is poised to extend into other sectors, such as maritime and aviation, as the company aims to broaden its service offerings. Diversifying geographically and across different service types is essential to drive higher network efficiency. LEO satellite networks are inherently low-utilization networks due to the concentration of traffic in specific regions. By expanding its geographic reach and service portfolio, Starlink can increase network utilization, which directly impacts profitability. However, the question remains: Will Starlink overcome the ever-moving goalpost of profitability?