[supernova87a]

I remain convinced that the main successful business model in the satellite communications industry is to wait for the first incarnation of the satellite company to fail / go bankrupt / flounder, and then be part of the 2nd round of financing or ownership that comes in to buy it out and operate it... I don't know why this is the pattern but it seems to have played out several times over the last 2 decades that I've casually watched this syndrome.

[chiph]

If you haven't read Eccentric Orbits: The Iridium Story you should. The system was operational, but Motorola's dysfunction and impossible sales goals leading to disillusionment meant that Dan Colussy & team was able to pick it up for $25 million (development price: $5 billion)

[gangstead]

They were about $3 billion in the hole when they went through bankruptcy in 2002 and the new owners bought it for $43 million (from Wikipedia). In 2025 they earned a return of $-8 million on that investment (plus any other money raised since then, such as $1 billion from Apple). So even the second incarnation doesn't seem to be a good business model even with free satellites.

The business model that works seems to be spectrum gambling. Do the minimum amount of satellite investment for decades until someone with a real business plan comes along and has to go through you to get it.

[vitorsr]

Or become a major investor on a largely public funded project with commitments set to start at a delayed time in order to benefit from R&D before bearing financial burden. (See [1].)

[1] https://www.ft.com/content/8e75ed31-0c72-4160-b406-1ca6aa36a...

[readitalready]

The only real viable long-term business model for these constellations are for the military or other socialized use.

They are completely unprofitable otherwise. Eventually even Starlink will lose money, as more and more rural regions around the world are wired for fiber.

[testing22321]

>more and more rural regions around the world are wired for fiber.

Ecuador has the highest rate of cell phone ownership in the world, because they never built landlines and just went straight to wireless.

Same with electricity in many African countries -no grid, straight to local solar.

When I see comments like this it’s obvious you’re talking about West Virginia or Nevada as “rural regions around the world”

Go spend time in the Canadian arctic, the Congo, Sudan, Bolivia, Mongolia, Remote Australia and dozens and dozens more if you want to see where starlink shines and is rapidly changing the world.

[readitalready]

ok but that just makes Starlink even more unprofitable, as now you're limited by the number of customers.

The moment these people incorporate into a village, it becomes more profitable to build a fiber connection. Fiber will eventually get to Ecuador.

[testing22321]

Starlink was never supposed to be for anyone that can have fibre.

There are billions of potential customers.

[readitalready]

lol no. There are probably 50-100 million potential customers. The rural farmer in India isn't going to buy Starlink.

[testing22321]

Every analyst ever said cell phones wouldn’t take off across Africa because there isn’t enough money.

They were all completely wrong.

[brandon272]

A limited total addressable market doesn't necessarily have anything to do with profit potential.

[brandon272]

I find this hard to imagine. There are so many rural customers where it is totally uneconomical to run fiber vs. just paying for Starlink.

[readitalready]

There really aren't that many people around the world that would make Starlink profitable in the long run. Only about 1% of the global population are farmers, so that already limits your market. And the moment a village is formed, the economics favor fiber to that village over Starlink.

[pstuart]

5G internet seems to be a decent compromise for that -- much simpler infra at least.

[brandon272]

I might be biased because I live in an area where it is fairly easy to find locations that don't have cellular coverage and won't have cellular coverage anytime soon.

Globally, there's a lot of places that are sparsely inhabited but too remote to warrant strong cellular connectivity. There's also a lot of "nooks and crannies" geographically that are not well served by cellular. As an example, I have a property in an area with excellent 5G coverage but my specific property is in a valley removing line of sight between me and the local tower, meaning reception is virtually nil. I can't even make a phone call. Without Starlink my only option would be to rely on a local WISP to set up some kind of repeater system that would have far lower reliability/performance and significantly higher cost.

[saltcured]

Yes, but the question is what fraction of the population is in these niches and does that provide enough subscription revenue to fund the constellation?

If many others find a cheaper and more reliable path, the customer base collapses.

[brandon272]

Well, my point is that these niches are probably more commonplace than people who live in areas blanketed by multiple 5G providers probably assume. I'm sure there are Starlink customers using it as an option in some interim period while they wait for fiber to be rolled out to their neighbourhood or town, but anecdotally, I don't know any Starlink customers who are in that boat. We exist in locations that will not be served by cheaper, more reliable terrestrial options anytime soon.

Even "cheaper" is quickly becoming a question mark. Starlink is offering 100mbps plans for $50-$70/mo. which in my region makes it cheaper or on par with options from cellular providers (which are capped) or options from cable/fiber providers.

[toast0]

> I don't know why this is the pattern but it seems to have played out several times over the last 2 decades that I've casually watched this syndrome.

This is a pretty common pattern in capital intensive businesses. It's often the case that revenue is inline with operating costs, but revenue can't really ever pay for the start up costs. That dooms the initial business, but after bankruptcy it can be viable.

Depending on circumatances, the very visible bankruptcy also helps deter other businesses from joining the market. But if the cost was high due to technology, doing the same business 10-20 years later can work out because the start up costs may be significantly less.

[AnimalMuppet]

You see the same pattern with railroads from 1860 to 1900.

[Zigurd]

Iridium was first. It was a cautionary lesson. Listen to Patrick Boyle regarding Starlink. Not everyone was paying attention in class.

[NitpickLawyer]

> to fail / go bankrupt / flounder

This is exactly what "the Internet" said about spacex when they announced Starlink. Oh, it never worked. LEO constellations were tried in the 90s, ALL of them failed. Haha, it will never work. 14k satellites, that's insane, dreams, lies, hahaha.

... and yet, they are now at ~10k satellites launched, and are serving 9+mil customers, for some unknown billions/year in revenue (should become clear in a few months when they IPO).

[mandeepj]

> for some unknown billions/year in revenue

Read here on HN yday: they’ve $20B in revenue, but xAI is a drag.

[vjvjvjvjghv]

Or also owning a rocket company that launches your satellites at low cost.

[wolvoleo]

It is of course what happened to Iridium. But not all of them go bankrupt.

[SMAAART]

Clayton M. Christensen (The innovator's dilemma) would agree.