Starlink's strong expansion has made Musk the nightmare of global broadband giants?

In the slowly growing and heavily indebted telecommunications industry, CEOs already face enough problems, and now Musk has added a new challenge for them. The founder of SpaceX is attracting millions of broadband users worldwide through its satellite internet service Starlink. However, the political stance of this ally of US President Trump may spark controversy overseas and lead to strong opposition from regulators towards the company, becoming a major issue. According to data from Harvard University astronomer Jonathan McDowell, Starlink currently has nearly 7,000 satellites in orbit, and the number of its global internet users doubled to 4.6 million in 2024. As a subsidiary of SpaceX, Starlink also stated that its internet traffic in space, rather than from Optical Cable Corporation or mobile networks, has doubled. It is understood that Jeff Bezos' Amazon.com, Inc. (AMZN.US) is trying to catch up with Starlink through a similar project, Project Kuiper. For some major traditional operators, such as the $130 billion US cable TV giant Comcast Corporation Class A (CMCSA.US) or the $30 billion French company Orange, there is still reason to remain calm. After all, satellites in Earth's orbit are difficult to provide faster or more reliable connections than underground fiber optics. In areas where fiber optics are widely available, users have little reason to switch to Starlink's service, especially considering its $120 monthly fee and hundreds of dollars in equipment prepayment. Therefore, many industry observers believe that Starlink only makes sense in underserved rural areas. In these places, broadband companies like the $20 billion UK telecom company BT can even use Starlink's services to expand their networks, avoiding the need to build infrastructure in remote areas. Starlink could also become an ally for mobile operators: T-mobile US (TMUS.US), controlled by Deutsche Telekom and valued at $280 billion, is launching a satellite-to-cell service based on the SpaceX satellite network. However, the arguments of optimistic people in the telecommunications industry also have flaws. First, they overlook the fact that some of the world's largest telecommunications markets still lack sufficient home broadband services. In India, for example, according to the country's telecom regulator, India has only 41 million fixed internet users, while wireless users reach 904 million. In other words, most people rely on mobile data for internet access, which means that home broadband providers like Starlink have a huge opportunity in the market. This also explains why India's telecom giant Jio (a unit of India's richest man Mukesh Ambani's Reliance Industries) is concerned. Last November, Ambani wrote to regulators, calling for a review of the potential impact of Starlink and Kuiper before allocating satellite spectrum. The Indian government plans to allocate spectrum through administrative allocation rather than auctions, actually reducing the barriers to entry for foreign companies like Starlink. Indian telecom companies are concerned that Musk's first-mover advantage in space could allow him to capture a large number of broadband users in the country with the highest population in the world. Considering Starlink's rapid rise in other markets, these concerns are not unfounded. After launching services in Nigeria in 2023, the company became the country's third-largest internet provider in less than a year. From June to September 2024, its user base in Kenya doubled in just a few months. By November, due to the surge in demand, the company had to temporarily suspend new user registrations in some parts of East African countries. However, it is not only telecom companies in emerging markets that need to be cautious. Musk is known for bold business ventures and he has set his sights on the United States as well. Research firm Quilty Space estimates that 57% of Starlink's home users are in its domestic market. According to Quilty's analysis, the average revenue per user (ARPU) in the North American region is also the highest in the world, at around $115. From Starlink's perspective, the US market offers a range of attractive conditions: according to data from the Fiber Broadband Association, the US lags behind leading countries like South Korea and France in broadband penetration, with only 57% of households having access to fiber optics. At the same time, American consumers are relatively affluent and willing to pay a premium for satellite internet. Even in the UK, where fiber coverage reaches 75%, Starlink has reason to enter the market, as satellites can only generate revenue when they pass over a country. Therefore, Musk's motivation is to avoid any blank areas on Starlink's customer map - after all, some income is better than none at all. Researchers at Enders Analysis believe that by 2027, Starlink may occupy about 3.5% of the UK broadband market share, equivalent to about 1 million users. This is not disastrous for existing operators, but in an industry that requires massive investment and historically struggles to achieve capital returns, this undoubtedly adds pressure. In addition, advances in satellite technology in the future may narrow the performance gap with fiber optics. Musk's history of bearing huge losses in pursuit of market dominance should also alert operators in developed countries. Starlink's global reach means that even if it only captures a small fraction of the market in each country, it could become one of the largest internet providers in the world. According to data from the World Bank, there were approximately 1.5 billion fixed broadband users globally in 2023. Assuming this figure remains constant and Starlink captures 3.5% of the market share, its user base could reach 50 million. Based on Quilty's estimated global average ARPU ($90 per month), Starlink's annual revenue could eventually reach around $57 billion. In comparison, Comcast Corporation Class A's US broadband division had revenue of $26 billion last year, with enterprise services revenue of $10 billion.One billion dollars. Analysts estimate that the fixed-line business of Deutsche Telekom will have sales of $230 billion in 2024.Global expansion obstacles Currently, the direct obstacle to Starlink's global expansion seems to be Elon Musk himself, whose controversial political positions may alienate some governments and potential customers. Before Trump suspended tariffs on Canada, the Ontario government threatened to cancel a $68 million Starlink contract. The Italian opposition party criticized Prime Minister Meloni for considering a five-year agreement with SpaceX, reportedly worth up to 1.5 billion euros (1.6 billion USD). This example may provide some comfort to the CEOs of existing operators. However, it cannot be ruled out that countries and regulatory bodies, like India, will continue to prioritize additional competition in the broadband market, thereby opening the door to Musk. Even if they don't, Bezos' Kuiper project may play a similar role in the future as Starlink, while avoiding political controversy. The fundamental problem faced by global broadband providers is that tech giants with deep pockets have already turned their attention to satellite broadband, with no signs of slowing down.