Bruce Andrews and Connor Bernard from mid-market aviation and defence M&A specialists Alderman & Company, advises company owners to embrace the space race
With the world growing ever more interconnected on a daily basis, satellite internet has quickly emerged from being a niche technology into being a global communication, defence, and business mainstay.
As data multiplies and efforts are made to bridge the divide between the offline and online population, players like SpaceX’s Starlink and Blue Origin’s Project Kuiper have emerged as the primary players in the field.
But as the reliance on satellite-based connectivity grows, it is more and more clear that a single controlling force could stifle innovation, raise prices, and even threaten national security.
This article explores the situation now, highlights Starlink’s controlling position and Blue Origin’s status and argues for why robust competition needs to be maintained in order to safeguard the future of satellite internet.
In order for direct-to-consumer high speed/high quality internet to be deployed worldwide there are two significant challenges.
The first challenge is the design and manufacture of thousands of small affordable technically sophisticated satellites combined with ground-based sender/receiver routers (so-called “Dishy” by Starlink) to permit direct to consumer internet reception.
The second challenge is to deploy the thousands of satellites into their respective orbits to create the satellite constellation. Clearly, Starlink has had the advantage in deployment thanks to the incredible success of SpaceX and the Falcon series of rockets.
Starlink has quickly become a synonym for satellite internet innovation. The company’s aggressive deployment plan has resulted in a constellation of over 7,000 satellites in low Earth orbit and expansion plans for worldwide internet access with 42,000 satellites.
This large network already has offered real-world service to rural and underserved areas, revolutionising access to high-speed internet where the traditional infrastructure is not present.
Starlink’s success extends past consumer markets; its technology has attracted significant government interest. Especially noteworthy are the Department of Defense contracts valued at approximately $733 million.
These highlights not only refer to first to market advantage but also to iterative improvements that have positioned Starlink as the industry standard-bearer.
The company’s commitment to bringing people closer together all over the world is also reflected in its continuing innovation and swift growth, keeping even the remotest part of the world connected.
While Starlink has been going at an enormous speed, Project Kuiper of Blue Origin has encountered a succession of setbacks that have kept it from deployable success.
Delays in securing reliable launch vehicles, including United Launch Alliance’s Vulcan Centaur and Blue Origin’s own New Glenn rocket, have significantly pushed back its deployment schedule.
Additionally, the project has faced manufacturing and regulatory challenges, compressing the timeline to meet FCC requirements that mandate at least half of its planned 3,236-satellite constellation be deployed by mid-2026.
These logistical hurdles have further postponed Project Kuiper’s ability to begin providing commercial service, creating a widening gap between it and Starlink.
While Blue Origin remains committed to the initiative, the disparity in execution underscores how difficult it is to compete with Starlink’s first-mover advantage and aggressive rollout strategy.
Project Kuiper’s plans to manufacture satellites were initially envisioned for the first half of 2024 at a rate of five satellites per day but start-up issues delayed rate production to the end of 2024. Beta trials with paying users are envisioned in 2025.
Delays are indicative of the historic-sized issues with satellite mass production, management of complex supply chains, and transition from development to operation on a large scale.
As opposed to Starlink, with its enormous real-world experience, Project Kuiper is just starting to demonstrate viability at commercial levels.
That delay in practical experience not only postpones Blue Origin’s market entry but also weakens its position in a rapidly evolving industry.
Competing against an established leader like Starlink, which continuously refines its technology and expands its reach, makes catching up increasingly difficult.
A future where Starlink dominates satellite internet poses risks, as a single company controlling such critical infrastructure could dictate pricing, limit service availability, and slow innovation.
Additionally, governments and industries relying on satellite connectivity may become overly dependent on one provider, creating economic and security vulnerabilities.
There is, however, significant good news and major progress achieved by Project Kuiper in recent months. Project Kuiper’s new satellite manufacturing facility in Kirkland, Washington has been completed and is successfully producing higher satellite volumes.
Project Kuiper is also near completion of a satellite support facility on site at Cape Canaveral.
This facility is designed to complete system integration, perform satellite maintenance, and store completed satellites in preparation for charging its launch vehicles.
Significantly, Project Kuiper has also secured 83 launch reservations from its own Blue Origin rockets, United Launch Alliance, Arianespace, and from SpaceX, its direct competitor.
Thus, Project Kuiper is on the cusp of success having overcome the two key challenges of volume manufacturing and launch capacity.
Project Kuiper should be in the competitively challenging position of its goal of creating its own satellite constellation of 3,236 satellites in three orbital planes by the 2026/2027 timeframe.
With new entrants such as Amazon’s Project Kuiper and other potential start-ups, a more dynamic and resilient market awaits.
These companies may well offer alternative technologies, new service models, and diverse approaches to global connectivity.
In a multi-firm market, consumers benefit from competitive pricing, improved service quality, and accelerated innovation.
A diversified industry also reduces reliance on a single provider, enhancing security and reliability.
While SpaceX’s Starlink leads with services in over 100 countries, competition drives advancements and prevents monopolistic control over critical infrastructure.
The satellite internet industry is at a crossroads—though Starlink’s success is significant, long-term sustainability depends on creating and maintaining a competitive market.
Having multiple competitors will lead to innovation and lower prices while also assuring that the network is more resistant to attacks from single points of failure.
With global demand for connectivity increasing relentlessly, it is not merely a question of economic efficiency to level the playing field for all contestants—it is a matter of strategy.
Opening ourselves to competition now is a gateway to a healthier, more dynamic, and safer satellite internet world tomorrow.
As specialists in the selling of middle market aerospace and defense companies, we believe that it is advisable for company owners to ensure they participate in those companies and technologies that support the growing space sector.
The sector is not only rapidly expanding but contains many areas in which to participate from launch vehicles to payloads to Space Infrastructure projects (e.g., debris detection and removal, ground support equipment, communication equipment, etc.).
We strongly encourage embracing the space sector for future growth and success.
Weekly news, offers, incentives and more straight to your inbox.
Select the publications you would like to subscribe to:
© Real Response Media 2023
TERMS PRIVACY
