Surge In Satellite Deployments

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 little content stored in space! 😃 Hence satellite Internet providers must access data centers just like every other technology in the telecom world. Inter-satellite free space laser communication will bypass the terrestrial backbones to an extent, 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. As of January 2025, Starlink has 6,932 in space. In addition, Amazon Kuiper is deploying 3,236 LEO birds with the bulk of the fleet flying into orbit in 2025 and 2026. WebOne has 650 LEOs deployed across the sky. 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/MEO network called IRIS that will serve Europe under the guise of digital sovereignty. Almost 300 birds are planned. 

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 subsea route has still not recovered from the 7 major cables built during the 1998-2001 boom. The dotcom boom also resulted in notable satellite bankruptcies including Iridium. See this link for a detailed study of the Iridium fiasco and its rebirth: https://lnkd.in/dPp-M-j9. 

I forecast that the glut will lead to major 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 large incumbent customer base, and understands consumers better. Furthermore, Kuiper will not have the debt burden that Starlink faces. If you look at the dotcom bust, the American CLECs suffered from high customer acquisition costs that rendered their business models flawed. Starlink is following the dotcom build and they will come model. While it faces less competition than most new telecom players during the dotcom era, Starlink must acquire a lot of customers at low cost quickly in order to cover its high fixed network costs. The upcoming IPO prospectus should shed light on the health of body of the beast.