Turns out, launching satellites is costly and has a narrow bandwidth.
That's a LOT of satellites!
Years ago, we bought the lake house and the local cable company wouldn't provide internet service - their last connect was a half-mile away. We called the phone company and they said the same thing - even if we were willing to pay thousands of dollars to run a DSL line to our house (from a mile away) they wouldn't do it - they were already switching to UVERSE or something. This was in the era of flip-phones, so I am not sure if a WiFi hotspot would have worked. We tried a "line of sight" connection to an antenna across the lake, run by a local Mom-and-Pop service, but the service was so intermittent as to not be worthwhile. So we went with HugesNet, which provided internet service from a geosynchronous satellite 22,000 miles in outer space.
It worked well, from a download perspective. Upload was very slow. But the Internet is mostly download. You click a mouse or type a key and your upstream signal is pretty narrow. In response, you receive pages of images, video, and other data. The communications link is asymmetrical which is why "DSL" or "Digital Subscriber Line" was originally called ADSL or Asymmetrical Digital Subscriber Line.
And oddly enough, it was originally developed by Bell Atlantic and tested in Arlington, Virginia, as a means of streaming movies - back in the 1990s. It failed because the test subjects were all young professionals (mostly Asian, as it turned out) and had no time for such foolishness. Someone at Bell Atlantic thought of taking the ruins of this test and using it for Internet service - and broadband was born.
But I digress. Hughes sold off HughesNet to Echostar. It was always a niche service for people like me, who had no other communications choices. Since it used geosynchronous satellites, it had a latency issue for videoconferencing. As fiber-to-home expanded and as cell service exploded, the need to spend a thousand dollars on equipment and over $100 a month for service petered out. We spend $25 a month on our WiFi hotspot and it streams video perfectly - and we can take it anywhere in the US, pretty much. Cell tower antennas pepper the landscape, even in rural areas. We no longer needed the service.
Satellite, on the other hand, has a limited "footprint" particularly for geosynchronous satellites. If you want to stream music on SirusXM, you can't go to Alaska with it - you won't get signal. And if you drive under trees or under a bridge or in a tunnel, well, the signal dies as well. Even a rainstorm was enough to attenuate our Hugesnet signal. Low Earth Orbit satellites, such as used in the ill-fated "Iridium" phone system or in Starlink, solve some of the "footprint" and latency problems, but still have trouble with physical blocking of signals. In order to make these systems work, you have to launch hundreds, if not thousands of satellites, which cost millions to launch and have to be replaced periodically.
Iridium went bankrupt this way - but was bought out of bankruptcy because the CIA and other agencies were using it. Freed of Billions of dollars of debt they had from launching the initial satellites, they soldiered on. But it isn't a service that many people want to use, as cell phones are pretty much workable around the world. The government bailed out Iridium by providing a huge contract and not coincidentally, the new company (now traded on the NYSE) is headquartered in McLean, Virginia. Hmmmm.... What else is headquartered there? Beats me! According to one online source, their P/E ratio is -360 which means they are still hemorrhaging cash. They have since replaced all their satellites once and are poised to do it again. Satellites are not forever!
You may not remember this, but at one time there were two satellite radio services, Sirius and XM. The both lost money so they merged together (you see a pattern here?). Turns out, people didn't want to pay much for the service and since they could stream music on their cell phones (see the pattern again?) most people view XM as merely an annoying feature on their car stereo. And since you can't drive your car into your living room, or wear it around you neck at work, satellite radio turns out to be of very limited use. The work-from-home movement must surely piss them off! How do you reach people during "drive time" if they don't drive!
Oddly enough, SiriusXM has a P/E ratio of 15 which is very good. So they must be making money from someone - just not me. I'd rather stream music from my phone in my car using Bluetooth than to pay crazy prices (and their prices are so elastic and it is annoying to unsubscribe) for the service. Going forward, I am not sure they have a real market, but since every car maker puts an XM feature in their cars (which supposedly, SirusXM pays for, in part) they have a captive audience of the remaining commuters in the world. Hey, some people still pay money for cable, right?
SiriusXM, however, has the advantage that their system is one-way. They stream data from satellite(s) and don't have to deal with an upstream channel. This also means they can use fewer satellites (6 rather than hundreds) and in geosynchronous orbit, they tend to last longer. Their bandwidth is fixed, too, so when they increase the number of subscribers or users, it doesn't degrade the service, as would happen with HugesNet or Iridium - or Starlink.
Still, SiriusXM flirted with bankruptcy once, and they stay in business today by.... streaming over the Internet. Since they have so many "big names" signed to contracts, people who desperately have to listen to sports or to Howard Stern, will pay to stream the service. So, once again, the ubiquitous cell phone supplants the satellite. How long before SiriusXM abandons or spins-off its satellite division? When the existing satellites wear out, will they launch new ones? I am sure it is a question the Board of Directors is giving serious thought to. After all, the hardware requirements for streaming on the Internet are far less and far more profitable.
DirecTV and Dish Network are in the same position as Sirus and XM were back in the day, and there is talk the two may merge, as there isn't enough room in the market for two competitors. We see a lot of people using satellite TV in our travels, as many older RV'ers sit in their mega-5th-wheels and watch Fox News all day long (they never go outside, unless they have an outdoor TV as well!). Most RV parks have cable connections, although this is getting rarer and rarer as people switch to streaming over the internet or watching by satellite. 30 years ago, many RV parks had telephone connections at each site, and sometimes you still see the remains of these. Funny how our technology becomes so obsolete so quickly!
I noted before how our neighbors would switch between cable and satellite TV on a yearly basis - taking advantage of introductory offers. The "Cable guy" comes and runs an orange cable on the ground, and later on (weeks later, sometimes) another guy comes and buries it. Ditto for the satellite TV guy. No one expects you to keep the service for long, it seems, and thus the installs are haphazard at best. Remember when homes used to be pre-wired for cable? Those were the glory days - we thought technology was stable.
But of course, I suspect the telcos and cablecos are tired of these constant installs. At our house, we have gone entirely wireless - we use the hotspot for telephone, internet, and streaming video. I finally cut down the telco "drop" going to the house, as I kept hitting it with my extension ladder. Our network interface box is now pretty useless.
Again, as with Sirius, there is no degradation of signal as you add subscribers to DirecTV or Dish Network, as you are broadcasting the same signal to everyone. It breaks down, however, when you try to do pay-per-view or interactive streaming. I wrote Patents on early satellite decoders and one problem we had was the "upstream channel" to communicate PPV requests. Those early decoders had a phone link, which meant you either had to have a separate phone line, or make sure no one was on the phone while you were uploading your selection. One big problem was that most houses didn't have a phone jack near the television. Those were the days! Phone jacks! RJ-11 plugs! Of course, I am old enough to remember the Bell System 404A that I grew up with.
All that being said, it seems that satellite systems that use geosynchronous satellites are a little more profitable than those using "constellations" of satellites that require regular launching to replenish. So DirecTV and Dish Network, even if they have to merge, may still find a way to survive.
Which brings us to Starlink. A recent article online claims that Starlink promised to have 20 million subscribers by 2022 and yet today, they have little over a million. They claim to be profitable - slightly, and just starting this year. But it remains to be seen if they can continue to get more subscribers and also whether they can afford to keep launching satellites.
Like other satellite services, it depends on niche market segments. We see a lot of Starlink users when we travel by RV. So-called "work from home" people are traveling the country by RV in response to the pandemic, and they need a high-bandwidth link to do Zoom meetings. For such niche users, it may be the only choice for a reliable connection. Then again, there is a huge gap between one million and twenty million.
And unlike Iridium, it is doubtful that the CIA will bail them out if they need money. You can't rely on a company where one man decides the foreign policy of your country by selectively turning the system on and off at a whim. I doubt NSA would be amused. Which makes me wonder, whether the agency will provide Zelenskyy with Iridium receivers for their drones, so they don't have to rely on Starlink anymore. Just a thought.
While Starlink might be useful in providing Internet to rural areas and under-serviced third-world countries, those are the types of areas where people are least willing to pay for such service. Sure, the dictator's wife might enjoy internet access in some third-world country, but is that enough to pay for all those satellites? Are work-from-home RV'ers enough as well? Remember, I am typing this on a 20-year-old laptop hooked into my Walmart hotspot using poverty service at $25 a month for 100GB. Why would I need Starlink? Why would anyone?
(UPDATE: The problem for Starlink is the same that Dentists face. America has more Dentists per capita than many other countries, even wealthy countries. Yet in many rural areas, there are a dearth of Dentists! Why? Well, you can't make money pulling meth teeth in West Virginia. But you can make enough money to buy a yacht, if you do cosmetic dentistry in Boca Raton or Hollywood. So they go where the money is, just as the telcoms go where the high-income, high-density neighborhoods are.)
In a way, this is the same "cherry-picking" phenomenon that has plagued communications since the days of the telegraph. Jerrold company was founded by a guy in rural Pennsylvania who developed the temperature-compensated line amplifier. To get TV service, he put an antenna on a local mountain top. His neighbors saw this and asked to tap in. He added more people and had to develop the hardware, including amplifiers, to increase signal strength as it degraded over the lines. Cable television was born - as a rural service.
But by the 1980's the "wired cities" movement took hold. Cable companies vied for lucrative concessions from cities and counties to wire the dense neighborhoods. It was more profitable to go after dense cities than sparse rural areas. See my comments above about trying to get Internet at the lake house. So communications companies have always favored low-hanging fruit - dense areas with high incomes and lots of subscribers.
It is why, during the depression, the government funded efforts to bring electricity and telephone to rural areas, often using cooperatives (a friend of mine still has telephone and internet service from one such co-op - literally a Mom and Pop operation!). The government had to step in and promote and subsidize these services as the companies didn't want to spend the capital on such a thin and poor subscriber base.
So therein lies the conundrum for Starlink. It is a nice "gimmie" to the niche users who cannot connect any other way, but it is not going to attract a lot of rural users as they cannot afford the service. Meanwhile, the telcos have peppered yet another water tower with 5G antennas. Why pay for satellite anything when you can stream it through your phone or hotspot?
Starlink, like Iridium, DirecTV, HughesNet, and Sirius, will remain a niche market, not a mass-market service. And whether it can keep making money, while still launching satellite after satellite, remains to be seen.
So what is the point of this? Well, if they decide to "go public" with an IPO, well, think about it carefully. Given the chequered history of direct satellite services, it seems like a long-shot bet. And something tells me that they will find a way to show four quarters of increasing profits, before "dropping" an IPO on Wall Street.
How else are the investors going to make money?
UPDATE: Another advantage that cellular 5G has over satellite anything, is that you need not "set up" an antenna to get a signal. To use HughesNet, DirecTV or any other type of geosynchronous satellite service, you have to align your "dish" with a point in the sky. This means you have to have a line-of-sight with the satellite, which often frustrates RV'ers. Why don't they cut down all those pesky trees! I can't watch Fucker Carlson on Fox! Dammit!
Even Low Earth Orbit satellite systems need a line of sight and usually the antenna needs to be "set up" or at least that is what I have seen with RV'ers using Starlink. On the other hand, my cheap-ass hotspot is plugged in to a USB port in our trailer (which has like 12 of them) and I can get WiFi in the truck as we go down the road - even under bridges and sometimes even in tunnels! Nothing to set up, it always works!
I am typing this from a mountain top in West Virginia. Four bars of service, too. The cell phone network has expanded so quickly it has made satellite services redundant. Gee, I wonder who spread all those nasty conspiracy theory rumors about 5G? You don't suppose.... Nah!