ISLAMABAD, July 7 — The economics of satellite internet are shifting beneath the feet of the industry’s biggest players, and early findings suggest a planned cycle of satellite decommissioning and replacement is becoming a standard—if costly—part of doing business in low-Earth orbit. SpaceX’s Starlink service, which launched commercially in November 2020, had grown to over 2.6 million subscribers globally as of May 2024, generating an estimated $4.2 billion in annual revenue. But the hardware behind that growth comes with a significant price tag.
Each Starlink satellite costs approximately $250,000 to build, and the 260 deorbited satellites represent a $65 million loss in hardware alone. The deorbit and replacement cycle is a planned operational expense.
SpaceX has invested over $10 billion in Starlink development and deployment. The company has framed the process as akin to a cellular network upgrading its base stations. The newer v2.0 Mini satellites offer four times the bandwidth capacity, which means SpaceX can serve more customers per satellite and improve profitability over time.
Regulatory costs and the FCC’s proposed exemption
SpaceX is not the only company facing these costs. Competitors like Amazon’s Project Kuiper, which plans to launch 3,236 satellites starting in 2024, and OneWeb, which already has 648 satellites in orbit, face similar deorbit and environmental review issues. The Federal Communications Commission’s proposed National Environmental Policy Act exemption could reduce regulatory costs for future satellite launches, potentially accelerating deployment across the industry.
The satellite internet market is projected to grow from $6.2 billion in 2023 to $18.9 billion by 2030, according to a 2023 report by Grand View Research.
The cost of doing business in space
For SpaceX, the $65 million loss on deorbited satellites is real money, but it is also a predictable line item in a capital-intensive business. The company has spent over a decade and more than $10 billion building out the Starlink constellation. The decision to deorbit older, less capable satellites and replace them with higher-capacity v2.0 Mini units is a calculated bet that the improved economics of the newer hardware will more than offset the write-down.
The satellite internet business is not for the faint of wallet. The upfront investment is enormous, and the returns depend on continuous technological upgrades and regulatory efficiency.
The FCC’s proposed NEPA exemption could help, but it is not a cure-all. The industry is behaving rationally: companies are planning for obsolescence and investing in next-generation hardware. That is a sign of a maturing market, not a speculative bubble.
The satellite internet market is projected to grow significantly, but that growth will depend on companies’ ability to manage the expense of constant hardware turnover.
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