How the Starlink and SpaceX relationship could make Elon Musk even richer

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SpaceX on Thursday launched 48 Starlink satellites into orbit off the coast of Florida. From Arizona to Alabama, people could see gleams in the sky as satellites circled around Earth’s atmosphere.

Those streaks of light could be the reason Elon Musk becomes a billionaire, according to an October report from Morgan Stanley sent to USA TODAY.

Morgan Stanley predicted a base valuation of $ 100 billion for SpaceX, mainly thanks to innovations within Starlink.

“We have long viewed SpaceX as several companies in one,” the report said. “But the biggest contributor to our estimated baseline estimate of $ 100 billion for the company (case of $ 200 billion) is the satellite communications company Starlink LEO which has achieved a number of important milestones these days. last months.”

So what is Starlink and how will Elon Musk become the world’s first trillionaire?

Starlink Can Bring High Speed ​​Internet Across The Globe – As Well As Big Money For SpaceX

Starlink is a broadband Internet service specializing in extending coverage to rural and remote communities. It does this by launching a “constellation” of satellites into low Earth orbit via SpaceX rockets.

Musk has created a “symbiotic” relationship between SpaceX launches and Starlink satellite deployments, where advancements in either area can benefit both sides of the business, Morgan Stanley said.

As SpaceX rockets become more sophisticated, they can handle larger and more frequent payloads of Starlink satellites. As the Starlink satellites gain more and more customers around the world, they validate and redistribute money to the SpaceX rocket program.

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Rocket launches have been a key way for SpaceX to tap into the expertise of NASA, which has maintained a long presence in space through the International Space Station (ISS).

“We have had a continuous human presence in low Earth orbit for about 20 years now. But the ISS is nearing the end of its life,” said Phil McAlister, director of commercial spaceflight at NASA. “Before this end of life, we want to have commercial destinations, commercial space stations in low earth orbit so that we can continue our human research.”

NASA’s support and funding has helped SpaceX send a significant number of satellites into space and create its own low-earth orbit presence. Starlink now has more than 1,700 Internet-transmitting satellites rotating overhead, according to Florida Today, which is part of the USA TODAY Network.

Ordinary people can pre-order a Starlink kit that includes a terminal (used to connect to the satellite providing the Internet) that they would install themselves in their own homes. The Starlink kit costs $ 499 and internet service would cost $ 99 per month.

Starlink Internet: SpaceX begins accepting orders from Starlink Internet service

While the upfront costs for consumers to set up the terminal are high, it costs SpaceX even more, with Morgan Stanley estimates reaching over $ 2,000 per terminal. SpaceX hopes to achieve economies of scale and eventually lower terminal costs to $ 250 for consumers, Morgan Stanley said.

Access to broadband in rural areas is lacking, despite the rise of fiber

Starlink’s addressable market is significant, given that much of the world still lacks high-speed internet.

In the United States, according to February 2021 data from the Pew Research Center, only about 72% of adults in rural areas have broadband at home. The Pew Report also found that older people, racial minorities, and “those with lower education and income levels” are less likely to have broadband service at home.

These problems are acute for people living in rural communities across America, like Dawn Sutton of Alamance County, North Carolina.

Sutton lives on a country road in southern Alamance County, where internet cables stop just a mile from her house. Over the past few years, she and her neighbors have regularly contacted Internet service providers asking them to extend access and have been continually denied.

In order to complete his work, Sutton visits his son’s house every day and has been doing so for months.

Theoretically, companies could lay cables in these areas, but the cost of doing so often outweighs the benefits, leaving people like Sutton stranded.

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“If you’re a business… what’s the return on your investment for you if you spend a lot of money to connect three households? Explains Kathleen Stansberry, a professor at Elon University who works with the university’s Imagining the Internet Center. “It doesn’t make a lot of business sense for most companies to do that and develop services for just a handful of users. “

While this might apply to fiber companies, it doesn’t necessarily apply to SpaceX and satellite technology.

With SpaceX’s existing rocket technology, launching satellites into space may be a faster way to help people in rural areas access the Internet, given the high cost of deploying fiber-optic infrastructure. , according to CNET.

Income generated by Starlink can help “the company to attract significant capital at attractive rates,” the Morgan Stanley report states. This could fund the development of more complex launches, such as Starship, a rocket that Musk says could eventually take people to Mars.

Michelle Shen is Money & Tech digital reporter for USA TODAY. You can reach her @ michelle_shen10 on Twitter.

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