Editor’s Note: The market is closed today in observance of Memorial Day, but Ian’s post-Super Bowl issue is more relevant than ever. Make sure you read to the end to find out how you could indirectly invest in Elon Musk’s biggest space venture.
On Sunday night, I joined 126 million people across the globe to watch the Philadelphia Eagles clobber the Kansas City Chiefs in the Super Bowl.
As a beleaguered Giants fan, I didn’t have a dog in that fight. I was just hoping for a Philly loss.
I was also hoping to see some entertaining commercials. And — for the most part — I did.
But to me, the most striking commercial I watched on Sunday night didn’t have any animated singing animals or big-budget movie actors.
It was a T-Mobile ad touting the company’s partnership with Starlink.
The copy of the ad sets the stakes:
“There are over 500,000 miles in the U.S. unreachable by any cell phone tower. Places where emergency texts never send. Where emotional messages are not received, and countless memories are left unshared.”
From there it describes T-Mobile’s partnership with Starlink — launching hundreds of satellites to create the only space-based network — and ends with a free trial offer for anyone with a cellphone to beta test the product.
The commercial wasn’t flashy. Why did I find it so impressive?
Because it offers us a roadmap for how space will change the way we communicate, while also hinting at potential investment opportunities.
Here’s what I mean…
The Satellite Cellular Revolution
Elon Musk founded the Space Exploration Technologies Corporation, or SpaceX, in 2002.
The company was initially started to decrease the costs of space launches, with the goal of eventually building a sustainable colony on Mars.
That path did not prove to be profitable.
However, the company’s subsidiary Starlink offered a much clearer path to profitability.
Starlink’s first operational satellite came online in 2019, and soon its internet satellite constellation generated the bulk of SpaceX’s income.
But Sunday night’s commercial hints at an even brighter future for Starlink and SpaceX.
According to the company’s 2024 Progress Report, its current V2 Mini satellites deliver 96 Gigabits per second (Gbps) of downlink speed.
But its new V3 satellites launching later this year will deliver 1 Terabit per second (Tbps) of downlink speed.
That’s 10X the downlink speed of the current V2 Minis.
The V3s also offer 24X the user uplink bandwidth (160 Gbps vs 6.7 Gbps for the V2 Minis.)
And the company has been developing a larger launch vehicle called Starship to send these new V3 satellites into orbit.
Starship can carry twice the satellites per launch as their current system, which means each V3 launch should add 60 Tbps to the network, or over 20X a V2 Mini launch.
That’s an incredible increase in satellite bandwidth capacity.
And thanks to Wright’s Law, satellite bandwidth is also becoming much cheaper.
Similar to Moore’s Law, which predicts the number of transistors on a chip will double every two years….
Wright’s Law forecasts that satellite bandwidth costs should roughly get cut in half for every cumulative doubling in Gbps in orbit.
According to Ark Research: “Since 2004, the cost of satellite bandwidth has dropped 7,500-fold, from $300,000,000 to $40,000/Gigabits per second (Gbps). Thanks to Starship, costs could fall another 40-fold to ~$1,000/Gbps by 2028.”
Source: ARK Investment Management
This massive decrease in bandwidth cost should quickly enable SpaceX to recoup its investment in its Starship technology.
Ark Research suggests that the cost of bandwidth has decreased so much that the company could recoup this investment with a one-time charge of only $5 per customer.
And that’s going to make it difficult for competitors to catch up.
Here’s My Take
Sunday night’s T-Mobile ad outlined the use case for satellite cellular.
The FCC recently announced that over a third of Americans have only one provider of high-speed broadband or lack access altogether.
That means there is a vast market here in the U.S. for this service, and we can expect a huge amount of growth in this sector.
Globally, the mobile satellite services market is expected to nearly double over the next decade, from $6.1 billion today to $11.5 billion in 2034.
Based on Sunday night’s ad, we also have a better understanding of how much telecoms think subscribers will pay, namely $10 – $15 a month.
What’s more, according to Reuters: “T-Mobile has been working closely with Apple (AAPL) and Alphabet’s (GOOG) Google to ‘ensure that this experience is integrated directly into their OS (operating system), and this will be the default satellite system across both of those phones.’”
That tells us T-Mobile potentially has a big first-mover advantage here.
But I believe the opportunity is much greater than T-Mobile.
The space race is heating up.
And I recently filmed a video about how it’s possible for you to indirectly invest in Elon Musk’s privately owned Starlink venture.
Click here for all the details.
Regards,
Ian KingChief Strategist, Banyan Hill Publishing
