The Low Satellite Life Expectancy of Starlink's Network

According to FCC filings Starlink shut down almost 500 Starlink satellites during the first half of 2025. The company had them reenter the atmosphere where they burned up. What is striking is that these satellites were all less than 5 years old. The general consensus is that LEOs have a life expectancy ranging from 5 to 8 years. Shorter than expected life spans for the satellites will hit Starlink's income statement hard by increasing network depreciation and replacement needs. However, Starlink has managed to lower its LEO's manufacturing costs down to $500K versus initial figures around $1 million. So these production economies of scale might offset some of the higher than expected depreciation. However, there are also rocket launch costs as well. It costs Starlink about $3 million to put a satellite into orbit. The Falcon 9 costs $67 million per flight and delivers 23 LEOs into low Earth orbit.

As a private company Starlink financials are a bit of mystery. The company press releases indicate a hefty $8 billion in 2024 revenue. But costs have remained invisible. My concern is that the financial picture may not be as rosy as the revenue figure suggests. Depreciation for LEO networks is quite high because low orbit means they will eventually experience a fiery death. Their orbits are not stable. With Starlink satellites lasting less than the five year minimum typically projected for these systems, depreciation and capital expenditures end up quite high. We also don't know how much revenue is recurring versus one time installation charges. However, it may profit maximizing to kill satellites early as new models offer much higher throughput at significantly lower cost per bit. A final factor is that Starlink is clearly subsidizing the terminal user equipment in some countries. It is charging nothing for the kit and delivery in many Eastern European countries. 

Nonetheless, there is more uncertainty surrounding Starlink than its investors and cheerleaders are willing to acknowledge. Moreover, competition is on the horizon with the Kuiper constellation and the Chinese entering the arena soon. So the luxury of being a de facto monopoly will soon disappear. The general rule of thumb is that a market requires four suppliers to crash prices and eliminate what economists call monopoly rents or excess profits (profits higher than in a competitive market where price equals marginal cost). It will be interesting to see if enough entry into the LEO market occurs to tank pricing.