Subsea Cables & Internet Infrastructure

The author argues that the stodgy business community is underestimating Amazon's threat to Starlink. Amazon is developing a wholesale model for LEO capacity that dovetails perfectly with its terrestrial network superiority over Starlink. At this point Starlink is pretty much everyone's enemy: "While Starlink also offers business tiers, its ambition to become a global consumer telco makes it a threat to carriers. For a company like Verizon or AT&T, Starlink is a frenemy: a partner today, a predator tomorrow." In contrast, Amazon wants to be everyone's friend. Amazon's dedicated 1 gigabit Ultra terminal will be sold to carriers that will deliver Internet to the premise via 5G connections. In rural Michigan I encountered households whose home routers were linked to the Internet via 5G mobile frequencies. Mobile carriers have found 5G demand to be very weak. Hence their spectrum is underutilized. Here's the solution. Amazon realizes that succ...

Let's be clear. LEO satellite service is an unproven business model. Obviously, if prices are high enough or the service is a monopoly, it will work. But no complete financial picture is public at this point. This is why the planned 2026 IPO is so interesting. The prospectus will reveal enough to make an informed judgment. But despite stubborn optimism to the contrary, there is no strong evidence that LEO Internet is highly profitable. I doubt even Starlink investors have the company's complete financial details except for a few high profile venture capitalists. Starlink does release an annual report. It is best characterized as a slick marketing pitch designed to give the impression that Starlink is an unstoppable juggernaut that reflects historical inevitability. All Bow to Caesar. What are the missing details? 1. Depreciation. 2. Customer acquisition costs. 3. Operating expenses. 4. Capital replacement costs. Depreciation is important because LEOs are like...

The LEO satellite business model is one of the most interesting topics in telecommunications today. LEO satellites are not a 'new technology'. It is really just a new approach to providing Internet access without any intellectual or patent moat to prevent the entry of new competitors. There could be a know how moat, but the number of LEO satellite networks entering the market over the next 5 year suggests it is very shallow. LEO satellites provide Last Mile access using low Earth orbits ranging from 300 kilometers (180 US miles) to 2,000 kilometers (1200 miles). Each bird as they are affectionately called in the industry takes only 90 to 120 minutes to complete an orbit. Their orbits can take a variety of shapes. For example, a LEO orbit could be elliptical in order to achieve a closer approach to the Earth at some points along the path for more detailed image or data collection. Or the LEO could fly longitudinally from North Pole to South Pole and back again. Hence LEO satelli...

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 ...

 Amazon announced yesterday it is launching its Kuiper constellation service in 2025. The UK will be the first country to go live. Up to now Starlink, which has 4.6 million customers, has faced no competition. But the huge buzz around Starlink is not really warranted. Yes, it is a great technical achievement particularly given that a customer is being handed off from one service satellite to another approximately every 30 minutes. However, what ultimately matters are financial results. Undoubtedly, Starlink is bleeding lots of cash. There is no way one can build a massive network prior to significant sales and avoid it. Satellites cannot be upgraded. So they must be fully loaded from day one which sharply increases the capex. Furthermore, the key metrics determining profitability and net cash flow are unknown. These metrics include customer acquisition costs. The American CLECs mostly went under during the dotcom era because it cost too much to acquire customers. Starlink has also...