Last week, CEO Elon Musk revealed via Twitter that the space-faring firm has received more than 500,000 orders for Starlink. The satellite constellation, which has grown from 60 satellites in May 2019 to more than 1,000 satellites in orbit today, is designed to offer high-speed, low latency internet to anyone with a view of the sky.
If Starlink’s customer base grows, the math shows that with enough sign-ups to the service, Elon Musk might actually fund his most ambitious and potentially most expensive dream yet — a city on Mars.
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What is Starlink?
First, a quick refresh. Satellite internet offers online access to anyone with a view of the company’s constellation orbiting overhead. Unlike fiber connections, satellite internet doesn’t depend on what the infrastructure on the ground is like. It is ideal for rural and underserved areas, but historically, these services have paled in comparison to traditional connections for a couple of important reasons.
Other satellite internet services suffer from high latency, which means it takes a long time to receive a response from a server. Response-sensitive tasks, like Zoom calls, become painful if not impossible. Starlink aims to reduce the latency by placing its satellites in orbit at a much lower altitude, around 550 kilometers above sea level, and by having far more of them. The firm has applied for permission to launch as many as 42,000 satellites.
Starlink entered beta testing in late 2020. Users in the United States pay a $499 one-off fee (taxes and shipping not included) for a Starlink Kit, which includes a dish and a router. Once they are hooked up, they then have to pay $99 a month for internet access.
The service currently offers speeds of around 150 megabits per second, but SpaceX plans to eventually reach up to 10 gigabits per second.
What does Starlink have to do with a city on Mars?
Musk wants to take the money from Starlink and use it to fund the construction costs for his ultimate ambition — a city on Mars. This has always been the plan. In 2015, when Musk announced the Starlink project, he said it was “all for the purpose of generating revenue to pay for a city on Mars.”
As Inverse has previously reported, Musk wants to use SpaceX’s under-development Starship rocket to send humans and cargo to Mars as soon as possible. The goal is to establish a self-sustaining city on the Red Planet by 2050. This is not a cheap ambition. Musk claimed in October 2019 that the Mars city would cost between $100 billion and $10 trillion.
Musk’s figure is based on a couple of assumptions:
- A self-sustaining city on Mars would require one million tons of cargo to set up for success.
- It could cost $100,000 to send a ton of cargo to Mars with the Starship.
If Musk wanted to get the money together for his Mars city, he needs at least $100 billion in 30 years’ time. That’s around $3.33 billion per year.
And that is where Starlink comes in.
How SpaceX will pay for the Mars city — SpaceX’s internal projections in 2017, as shared by the Wall Street Journal, suggest Starlink will be key to getting the money for a city on Mars together.
The rocket launch industry as a whole only brought in around $4.5 billion in revenue that year, which means SpaceX’s day-to-day work does not bring in enough money to pay for a Mars city. The internet connectivity industry, Musk told reporters in May 2019, brings in about $1 trillion in revenue per year globally.
At the time, Musk suggested Starlink could access around three to five percent of that total annual revenue. That means Starlink could bring in around $50 billion per year.
This chimes with SpaceX’s rosy internal projections from 2017. Back then, the company projected it could reach annual revenue of more than $35 billion by 2025, around $30 billion of which would come from Starlink. Better yet, it could reach an operating income of over $20 billion that same year — that’s revenue minus regular expenses.
If every person that has ordered Starlink right now actually finishes their order, SpaceX will be receiving $99 per month from half a million people — $49.9 million, in other words. That equates to pre-expenses revenue of $594 million per year.
SpaceX would need around 2.5 million Starlink subscribers to receive the minimum we calculated above — $3.3 billion — in revenue every year. That’s before operating expenses, which means in practice SpaceX would need more subscribers to cover Starlink’s running costs.
That number of subscribers is no small feat — competitor HughesNet claimed in April 2020 that it was the world’s first satellite provider to surpass one million subscribers. SpaceX would need to beat HughesNet and then some. It would also need to keep those subscribers on board and paying up for 30 years.
Perhaps disgruntled HughesNet users will make the switch to SpaceX. Perhaps Starlink will add more subscribers of its own.
But based on post-expenses operating income, Musk’s goal looks achievable. If the company’s projections come to fruition and SpaceX really does bring in $20 billion operating income by 2025, it could reach the low-end funding benchmark for a Mars city in just five years’ time.
The problem is if it actually costs more like $10 trillion to build the Mars city. At $20 billion operating income per year, it would take SpaceX about 500 years to get the money together.
The Inverse analysis — Is a Mars city worth it? Musk seems to think so. During a 2018 appearance, Musk claimed it would cost between half a percent and one percent of the world’s annual gross domestic product to reach multi-planetary status. He reasoned that it would be worth every penny, as expanding our footprint to other planets could be humanity’s only shot at avoiding extinction from an event that ends life on Earth as we know it.
“Put another way, this is the first time in the four-and-a-half-billion-year history of the Earth that it’s been possible to extend life beyond Earth,” Musk said. “Before this, it was not possible. How long will this window be open?”
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