SpaceX’s Starlink Eyes $6.9 Billion Prize

Earlier this month, the British government unveiled a new 5 billion pound ($6.9 billion) initiative called “Project Gigabit,” an infrastructure project that hopes to bring gigabit broadband to rural regions that have been historically underserved. For areas that are especially difficult to reach with traditional infrastructure, the U.K. believes that satellite internet could represent a compelling option.

That’s where Elon Musk and his rocket company SpaceX come in.

SpaceX has engaged the U.K. in negotiations to participate in Project Gigabit, according to Sky News and CNBC. SpaceX has been leveraging its reusable rocket technology to regularly launch Starlink satellites for over three years as it steadily deploys a constellation of satellites into low Earth orbit (LEO) that can beam internet back down to the planet.

SpaceX has launched over 1,200 satellites for the network thus far, while Musk has plans to bring that total to 42,000 in the years and decades ahead.

Starlink is already available as a beta program to customers in select regions, and the company says that users can expect download speeds of 50 Mbps to 150 Mbps initially, which is comparable to many people’s cable broadband speeds.

Over time, data speeds and performance will improve as SpaceX continues to build out infrastructure like ground stations while further developing its networking software.

Culture Secretary Oliver Dowden reportedly says that Starlink could be the most promising way to deliver broadband coverage to rural areas in the U.K., according to Sky News. However, other alternatives such as balloons or autonomous aircraft are also under consideration. 

SpaceX Faces Competition from OneWeb 

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) had spent years exploring the idea of delivering high-speed broadband from balloons as part of its Loon subsidiary, but the search giant recently decided to shut down the division due to concerns around commercial viability. Loon had only scored a few commercial contracts throughout its history.

Satellite internet has struggled to gain traction for decades, in part due to the high costs historically associated with launching the devices into space on rockets. But thanks to SpaceX’s ability to reuse its rockets, the cost of access to space has plummeted dramatically, potentially unlocking a new wave of innovation.

The British government acquired a partial ownership stake in OneWeb last year, an LEO satellite internet company that had fallen on hard times and declared bankruptcy.

The buyout and restructuring infused OneWeb with fresh capital, and OneWeb resumed the deployment of its satellites in December. The U.K. could potentially choose to leverage SpaceX’s Starlink or OneWeb, or some combination of both.

Several years ago, the Wall Street Journal got its hands on SpaceX’s financials, which included a forecast that Starlink could garner 40 million subscribers by 2025 and generate $30 billion in revenue.

Musk has also suggested that Starlink could go public as a standalone public company in “several years” after it can generate consistent financial results.

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