The last years have been exciting for Telco’s: 5G is the “next big thing” in communications. It promises us ultra-high speed with low latency. Our internet speed will never be the same again. I’ve been working in the telco business until recently but I would say that the good times of telco’s will soon be gone. Elon Musk will destroy this industry and will entirely shake it up.
Why will Elon Musk disrupt the Telco industry?
Before we get to this answer, let’s first have a look what one of his companies is currently “building”. You might have heard of SpaceX. Yes – these are the folks being capable of shooting rockets to the orbit and landing them again. This significantly reduces the cost per launch. Even Nasa is relying on SpaceX. And it doesn’t stop here: Elon Musk is telling us how to get to the moon (again) and even bring first people to the Mars. This is really visionary, isn’t it?
However, with all this Moon and Mars things, there is one thing we tend to oversee: SpaceX is bringing a lot of satellites to the orbit. Some of them are for other companies, but a significant number are for SpaceX itself. They shot some 1,700 satellites to the orbit and are already the largest operator of satellites. But what are these satellites for? Well – you might already guess it: for providing satellite-powered internet. In a first statement, the satellite network was considered for areas with large coverage. However, recently the company (named “StarLink“) announced that they now offer a global coverage.
One global network …
Wait, did I just write “a global coverage”? That’s “insane”. One company can provide internet for each and every person on the planet, regardless of where they are. All 7,9 billion people on the world. That is a huge market to address! However, what is more impressive is the cost at what they can built this network. Right now, they have something like 1,700 satellites out there. Each Falcon 9 rocket (which they own!) can transport around 40 of these satellites. All together, the per-satellite cost for SpaceX would be around 300,000$. According to Morgan Stanley, SpaceX might need well below 60 billion dollars to built a satellite internet of around 30,000 satellites. This is a way higher number than the 1,700 already up there. However, think about speed and latency – right now, with 1,700 satellites already out, StarLink is offering around 300 Mbits with 20ms latency. This is already great as compared to 4G, where you merely get up to 150 Mbits. Curious what’s in if all 30k are out? I would expect that we get some 1Gbit and a very low latency. Then it would be a strong competitor to 5G.
Again, the cost …
Morgan Stanley estimated the cost for this network to be around 60 billion USD. This is quite a lot of money StarLink has to gather. This sounds like a lot, but it isn’t. Let’s compare it again to 5G. Accenture estimates that the 5G network for the United States will cost some 275 billion alone! One market. compare the 60 billion of Starlink – a global market addressing 7.9 billion people – with the U.S., where you can address 328 million people. It is 20 times the market, by a fraction of the cost! Good night, 5G.
Internet of things via satellites rather than 5G
Building up 5G might not succeed in the race for the future of IoT applications. Just think about autonomous cars: one key issue there is a steady connectivity. 5G might not be everywhere or connectivity might be bad in a lot of regions that have a smaller population. It simply doesn’t pay out for TelCos to built 5G everywhere. But in contrast – StarLink will be everywhere. So large IoT applications will rather go for Starlink. Imagine Ford or Mercedes having one partner to negotiate rather than 50 different Telco providers around the globe for their setup. It makes things easier from a technical and commercial point of view.
Are Telcos doomed?
I would say: not yet. Starlink is at a very early stage and still in Beta. There might be some issues coming up. However, Telcos should definitely be afraid. I was in the business until recently, and most Telco executives are not much thinking about Starlink. If they do, they laugh at them. But remember what happend with the automotive industry? Yep, we are all now going electric. Automotive executives were laughing at Tesla. A low-volume, niche player they said. What is it now? Tesla being more valuable than any other automotive company in the world, producing cars in the masses.
However: one thing is different; automotive companies could easily attach to the new normal. Building a car is not just about about the engine. It is also a lot about the process, the assembly lines and alike. All major car manufacturers now offer electric cars and can built them in a competitive manner with Tesla. As of Starlink vs. 5G, this will be different: Telco companies can’t built rockets. Elon Musk will disrupt another industry – again!
This post is an off-topic post from my Big Data tutorials
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