The Internet Space Race: Starlink vs. Project Kuiper
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The Internet Space Race: Starlink vs. Project Kuiper
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The two richest people in the world are battling it out over a new domain: internet services. This time, the battleground is not Earth’s surface, but in fact, space.
In one corner, we have Elon Musk’s Starlink platform, engineered by the SpaceX team. In the other, we have Jeff Bezos’ Project Kuiper, an Amazon subsidiary. Both projects aim to provide high-speed, low-latency internet services, especially to rural and underserved parts of the world.
The Problem
As of 2019, only about 51% of the world’s population has internet access. Comparatively, in the United States, about 90% of the population has access to the internet.
Individuals using the internet (% of population) from 2000 - 2018
Globally, the areas of the world with the least internet connectivity can be observed in the two charts below, dated 2010 and 2017.
If internet access is a proxy for productivity, efficiency, and quality of education, then we can clearly observe that Asian and African countries have significant opportunities for expansion and adoption of internet services and the positive second-order effects of internet access.
These charts also help to quantify the global opportunity for internet service providers (“ISPs”), in which there are roughly 3.8 billion people without internet access.
An additional problem, which we are very familiar with in America, is advertised vs. actual internet speeds. On average, Americans are only getting 79% of the advertised internet speed that they pay for, with cable and fiber companies grossly overstating internet speeds.
As illustrated, satellite internet services actually provide better than advertised internet speeds, on average, than other major services. However, the average speeds are still very low.
Where are we now?
While Project Kuiper and Starlink are both in their early stages of development, the immediate challenges and tasks at hand involve navigating regulatory hurdles with the FCC and launching the first series of satellites into orbit.
Known for touting very ambitious goals, Elon Musk stated recently that Starlink will reach customers around “most” of the Earth by the end of 2021, and is expected to have complete global coverage “by next year”.
Starlink is also currently running an initial release to limited parts of the country, from which users have reported good results. Delightfully, Musk still expects those results to double in 2021 alone. To date, SpaceX has successfully launched 650 of its version 1.0 satellites into orbit (out of about 12,000 planned satellites total). (8)
As of September 2020, Starlink had seen demand from roughly 700,000 individuals in the U.S. and estimates that once completed, the project could bring in roughly $30 billion per year, more than 10x the revenue of its rocket business (8,10).
As for Project Kuiper, Amazon has yet to announce when its first satellites will launch. However, this competitor to Starlink is estimated to provide faster download speeds of 400 Mbps with similar latency. As per FCC approval for the project, Amazon is required to deploy the first half of its planned 3,200 satellites within six years, or July 2026.
There have been far fewer public comments, in general, regarding Project Kuiper’s progress and level of interest from consumers. However, Amazon SVP of Devices & Services, David Limp, indicated that Project Kuiper will need to rely on the rocket launch capabilities of other companies in order to deploy all of its satellites because Blue Origin rockets do not have enough launch capacity on their own. Conversely, Musk has demonstrated through Tesla and SpaceX that he prefers to own full vertical integration. This provides a clear competitive advantage in manufacturing, reliability, and distributing products to market.
The clear advantage that Amazon retains, post-satellite launch, is the integration with Amazon’s retail and e-commerce groups. With more digitally-active consumers and enterprises, a greater share of retail commercial activity and consumer spending can occur via e-commerce transactions, where Amazon already has a significant market share in America. Consumption represents about two-thirds of America’s GDP, and cloud computing powers trillions of dollars of market cap in software technology; to the extent that Amazon continues to innovate on behalf of the customer through a customer-obsessed culture, Amazon’s future growth is tied to the growth of digital adoption, cloud computing, software companies, and trillions of dollars of global consumption. Expanding internet access expands the GDP of the internet. The ability to bundle and complement the new high-speed internet with a suite of cloud services will allow Amazon to maintain a strong foothold in its main business segments.
Summary
The expansion of global internet connectivity will unlock the next wave of productivity, economic activity, and digital experiences. Delighting consumers with products and services that are better, faster, cheaper, more reliable, and more convenient compared to legacy incumbent providers is a great method of innovating on behalf of consumers. Starlink and Project Kuiper present two exciting innovations in both promoting internet access and narrowing the “digital divide”.
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References:
"Internet/Broadband Fact Sheet - Pew Research Center." https://www.pewresearch.org/internet/fact-sheet/internet-broadband/. Accessed 24 Feb. 2021.
"Broadband adoption is on the rise, but states can do much more." https://www.brookings.edu/blog/the-avenue/2019/10/10/broadband-adoption-is-on-the-rise-but-states-can-do-much-more/. Accessed 24 Feb. 2021.
"Indicators | Data." https://datos.bancomundial.org/indicator. Accessed 24 Feb. 2021.
"Elon Musk: SpaceX will double Starlink internet speed later this year." 22 Feb. 2021, https://www.cnbc.com/2021/02/22/elon-musk-spacex-will-double-starlink-internet-speed-later-this-year.html. Accessed 24 Feb. 2021.
"Internet - Our World in Data." https://ourworldindata.org/internet. Accessed 24 Feb. 2021.
"Advertised vs. Actual Internet Speeds | 45 Million ... - Allconnect.com." 16 Feb. 2021, https://www.allconnect.com/blog/advertised-vs-actual-internet-speeds. Accessed 24 Feb. 2021.
"Anthony Iemole on Twitter: "THREAD Today I finally received my ...." 22 Feb. 2021, Accessed 24 Feb. 2021.
"SpaceX Starlink satellite internet network early tests show fast speeds." 3 Sep. 2020, https://www.cnbc.com/2020/09/03/spacex-starlink-satellite-internet-network-early-tests-show-fast-speeds.html. Accessed 24 Feb. 2021.
"Amazon marks breakthrough in Project Kuiper ... - About Amazon." 16 Dec. 2020, https://www.aboutamazon.com/news/innovation-at-amazon/amazon-marks-breakthrough-in-project-kuiper-development. Accessed 24 Feb. 2021.
"Amazon's Kuiper responds to Elon Musk's SpaceX on FCC request." 5 Feb. 2021, https://www.cnbc.com/2021/02/05/amazons-kuiper-responds-to-elon-musks-spacex-on-fcc-request.html. Accessed 24 Feb. 2021.
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