Growth In Satellite Launches: Starlink, Kuiper, The Chinese, and More

Satellite competes with terrestrial broadband because they are both access technologies. But all satellite networks generate traffic for the terrestrial backbones including the subsea cables. After all, there is a little content stored in space! 😃 Hence satellite Internet providers must use data centers just like every other technology in the telecom world. Inter-satellite free space laser communication will bypass in some cases to a limited extent the terrestrial backbones, but this is really just a drop in the bucket. It works mostly for low bandwidth applications like email and instant messaging.

The graph shows the number of objects launched into low earth orbit from 1960 onward. This includes manned space craft, satellites, and unmanned spacecraft. Note that the dominant factor is SpaceX putting Starlink LEO satellites into orbit. In addition, Amazon Kuiper is deploying slightly over 3,000 LEO birds with the bulk of the fleet flying into orbit in 2025 and 2026. China's LEO launches began in 2024 and should add at least 32,000 satellites through 2035 if current plans hold up (Geespace, Shanghai Spacecom Satellite Constellation, and Hongqing are three players; there are others and the situation is constantly evolving). On top of that the EU is giving 6 billion Euros to a consortium of European satellite providers to build a global LEO network called IRIS that will serve Europe under the guise of digital sovereignty.

Not surprisingly, I expect a capacity glut. Every major period of intense satellite or fibre optic construction has resulted in excess capacity that lasted at least a decade. Indeed, the Atlantic has still not recovered from the 7 major cables built during the 1998-2001 period. And the dotcom boom resulted in notable satellite bankruptcies including Iridium. See this link for a detailed study of the Iridium fiasco: https://www.smithsonianmag.com/air-space-magazine/the-rise-and-fall-and-rise-of-iridium-5615034/.

I forecast that the glut will lead to satellite provider bankruptcies. I also believe Kuiper has a greater chance of commercial success than Starlink because Amazon has much lower terrestrial network costs,  can acquire customers at much lower cost by targeting its incumbent customer base, and  provide better customer service. In addition, Kuiper will not have Starlink's severe debt burden. Even the services are tailored better with Kuiper offering up to 400 megabits using a compact terminal. If you look at the dotcom bust, the American CLECs suffered from high customer acquisition costs that rendered their business models not viable long term.