Tuesday, April 16, 2024
HomeDAS & In Building WirelessStarlink: The Launch of Practical Low Earth Orbit Broadband Service

Starlink: The Launch of Practical Low Earth Orbit Broadband Service

What the RDOF Auction Means for Rural Broadband

The FCC’s recently concluded Rural Digital Opportunity Fund (RDOF) auction yielded some predictable outcomes, with few, if any, surprises to industry stakeholders. For consumers, what is remarkable is the significance of the awarding of over $800 million to SpaceX’s “Starlink” branded broadband service. Why this is important, and what it means to competitors and beneficiaries is an important question to ask. This is why.

In any industry, it is predictable with a high degree of precision that when a viable new technology becomes apparent, there is an inevitable effort by incumbents to ‘protect and defend’ traditional business approaches in order to preserve the sunk costs and investments that established the latter’s dominance. A key realization is ‘viability’ of the new entrant. Satellite-based communications is by no means novel or even innovative. However, what has changed is the scope, scale, and performance that the service brings in addition to offering new capabilities that address compelling use cases, which traditional servicers have hitherto struggled to meet. It is not the technology of Starlink per se that is earth-shattering (although, it is quite sophisticated and impressive), but rather the ability to take broadband services to a new competitive level with levels of performance that make it attractive in what is arguably becoming a commoditized industry.

A New Dogma

To illustrate, consider the challenges of pervasive connectivity in mountainous or hilly terrain. Traditional terrestrial approaches necessitate the use of multiple wireless towers and/or broadband distribution systems to provide signal coverage to meet needs. Maintaining and upgrading this infrastructure given evolving wireless community standards coupled with equipment depreciation costs can result in significant total costs of ownership, especially when considering variability in demand, possibly driven by growth or loss of subscribers due to changing factors. Historically, the expense of using traditional satellite service, either due to business model pricing and/or technical practicalities made service via this modality a largely niche offering. Starlink is challenging both of the latter assumptions by creating an ecosystem and constellation of related services that almost overnight presents a compelling opportunity for subscribers.

Creating Value

A good example of how bending staid rules will benefit Starlink and not traditional players is pervasive connectivity to support real-time healthcare monitoring programs. A big lesson of COVID-19 for healthcare providers was the dearth of consistently performing, reliable broadband connectivity for offering telehealth services to managed populations. Several mobile industry analysts have cited lack of favorable business justification to provide the necessary investments in foundational infrastructure as a culprit. Regardless, telehealth monitoring for these groups was severely hampered by unavailability of broadband connectivity, and in an ironic twist, the service challenges were not in rural areas, but in dense, urban centers, including one of the largest cities in the Midwest. In comparison, one can now appreciate the intrinsic value of Starlink: providing broad service availability to large swaths of population centers and rural pockets, where incumbents have struggled to make continuous infrastructure investments. One will immediately recognize attractive and incipient new business opportunities to prospective operators of such services gained at the expense of traditional broadband providers, as in the example above. To quote an old-fashioned expression, “the sky is the limit”…

By Eric B. Abbott

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