Sjoerd van der Wal/Getty Images; Samantha Lee/Business Insider
- New internet networking technologies have radically changed how the US and similarly developed nations work and live.
- However, planned fleets of thousands of internet-beaming satellites - including Starlink by SpaceX and Project Kuiper by Amazon - could provide the most pervasive high-speed broadband internet service yet.
- Experts say it remains to be seen if such businesses can survive both technical and market challenges and thrive alongside fiber-optic and wireless services.
- Rural communities in the US have the most to gain from low-Earth-orbit internet schemes, given the slow and expensive rollout of fiber networks, though such communities may also dramatically transform to see an influx of remote workers and tech businesses.
- Visit Business Insider's homepage for more stories.
This story is part of Business Insider's "On the Radar" series, a collection of stories, analysis, and interviews revealing how the transportation industry will evolve over the next decade.
Think about the last moment you weren't relying on the internet in some way.
The web's hidden superhighways transport our data at blinding speed - in the ground, through the air, and even from space - and connect us via computers in our hands, cars, offices, and, recently, even toothbrushes and toilets.
To say our relationship with the web has changed radically over the past 10 years would be a gross understatement. Light beaming through fiber-optic glass, and high-frequency wireless signals beaming to and from our phones, has made possible downloading almost anything anywhere in the developing world, and at practically instantaneous speed. Children are growing up getting to know many of their relatives primarily through glowing slabs.
But assuming the web has somehow peaked would be a worse error. The following years could be some of the most transformational yet of the digital age and across countless industries, according to economic, space, and telecommunications experts.
A handful of companies like SpaceX, Amazon, OneWeb, and possibly Apple are poised to accelerate that evolution as they race to collectively launch tens of thousands of internet-beaming satellites that orbit just beyond our planet's atmosphere, or very low-Earth orbit (VLEO).
Should even one of their projects work, it could redefine where and how many of us - in bustling and remote areas alike - live and work.
"They're definitely solving a void and bridging it. So it means we can choose where we want to live and work. Before, you would have to live where your connectivity is, because that's where the work is," Shrihari Pandit, a photonics engineer and CEO of Stealth Communications, which provides internet access to New York City businesses and develops new internet infrastructure technologies, told Business Insider. "We could see Silicon Valley moving into cornfields, essentially."
The new era of satellite internet first has to show it can work, though, both technologically and economically, and avoid the multibillion-dollar pitfalls of the web's past.
'It was a visionary document'
Fiber-optic cabling.
In 2010, just a few years after Apple debuted the first iPhone, the US internet was in a crisis. Mobile carriers were planning on increasing smartphone usage, but infrastructure capable of shuttling that data over a communication standard called long-term evolution, or LTE, was struggling to manage.
"The networks did not have the ability to handle the traffic that suddenly appeared in LTE," Larry Downes, an author on technology and strategy, told Business Insider. "It was just much more popular than anticipated, particularly because of the iPhone's popularity."
Amid that struggle, then-President Barack Obama's administration, led by Federal Communications Commission (FCC) officials, pulled together a team of more than 400 people. The group sought to not only open up the airwaves as soon as possible to make room for the rising tide of smartphones, but also think through the next decade of connectivity. They called their 361-page roadmap, published on March 17, 2010, the National Broadband Plan (NBP).
"It was a visionary document. It was extremely well done - a really sort of first-rate work out of the FCC on this," Downes said, adding that it "made all sorts of predictions:" the rise of telemedicine like robotic surgery, an internet of things, smart-grid technology rollout, remote access to Ivy League-level education, and more.
But at the time, the average US household connection speed hovered just over 4 megabits (Mbps) per second. That's plenty for a user to stream a mid-resolution YouTube clip, yet woefully insufficient to allow more than one person to surf the web, stream high-quality music, download TV shows, video-chat with distant relatives, or watch any high-definition content (as we do today with services like Netflix, Hulu, and Amazon Prime).
That speed certainly also wasn't enough to support an audacious social and economic vision for America, so the federal plan's core goal was to get at least 100 million homes affordable access to download speeds of at least 100 Mbps and upload speeds of at least 50 Mbps by 2020.
"This will create the world's most attractive market for broadband applications, devices and infrastructure," the report's authors wrote.
A map of long-haul fiber-optic cabling in the US circa 2016.
Ten years later, that goal has largely been realized: The average US household connection today is more than 96 Mbps. Downes said that goal, as well as secondary ones of building out a world-class mobile network, are owed to the plan making a case to fund billions' worth of laying fiber-optic cables: technology that can transmit data as light through glass and accommodate far, far more bandwidth than traditional copper wiring.
Downes also credits the Google Fiber project, which brought 1,000 Mbps (1 gigabit per second) speeds to consumers' homes in locales with attractive bids - yet ultimately "paused" deployments in 2016 - as "high-speed internet's most successful failure" in that the ambitious project showed how to thread the needle of federal, state, and local bureaucracies to connect Americans.
"Google taught us was we have to paint a picture of what's possible, that's not possible today, if you let us - indeed, if you help us, not with money, but with process improvements," Downs said.
Though 5G (for "fifth-generation") will help reach more consumers with higher speeds, bathing the nation in reliable signal will require perhaps millions of cell towers or sites, according to The New York Times and Cellular Telecommunications Industry Association data. And those towers will inextricably rely on fiber-optic backhaul to shuttle their data.
A technician services a cell tower.
"It's really explicit in the 5G architecture: You get out of the air as fast as you can and into fiber as quickly as possible," Downes said. "It can't possibly function without it."The struggle of laying that fiber, as well as problems endemic to rural and underserved communities, has led to a gap that many in the industry refer to as "the last 10%:" people who have yet to see the internet revolution enjoyed by their neighbors in more populous areas.
"Where there's more money to be made, the private sector will put that connection in first," Gary Bosworth, a geographer who studies rural businesses and economies at the University of Lincoln in England, told Business Insider.
Key to making that money is accounting for the crushing cost of resolving right-of-way issues, hiring workers to dig trenches and lay fiber, and then maintain all those new miles of vital internet infrastructure.
"We're talking about billions of dollars just to add a few hundred thousand more connections to homes and businesses," Downes said. "That's the real high potential of satellite, particularly of low-orbit satellite: it can get us that last 10% much more cost effectively than trying to lay fiber out across the Rocky Mountains."
Pandit holds a similar view to Downes.
"Space is probably more efficient and a faster way of delivering wireless, fiber-like performance in the middle of nowhere," Pandit said. "Eventually we'll get fiber, put it in everywhere in the middle of America, but 5G requires that fiber to be very close to the user."
The great gamble of satellite internet
An animation of SpaceX's Starlink satellite constellation providing internet coverage to the Americas.
Cautionary tales abound in the tech industry, but few stand out more than Iridium: a constellation of 66 car-sized space satellites that'd serve as a global wireless network for telephone and pager data.
Motorola fueled the company in the 1990s with roughly $5 billion in investments ($6 billion when adjusted for inflation). But shortly after it deployed around Earth, new subscriptions flatlined due to the steep price of the service.
"With a $3,000 price for an Iridium phone, plus international calling rates of up to $7 a minute, the company brought in only 15,000 customers before going bust," The Chicago Tribune reported in October 2000. The project was ultimately sold for $25 million ($37 million adjusted), or about 0.5% of its cost.
Carissa Christensen, now the CEO of Bryce Space Technologies, an aerospace analytics, engineering, and consulting firm, saw the project's problems coming before many others.
"I did a bunch of underlying demand modeling that suggested that there was dramatically insufficient demand for the capacity that was being proposed. And it turned out to be right," Christensen told Business Insider. "I'm really a big believer in stepping back and doing the analysis, because the community can get very excited about technology as opposed to looking at the market side."
SpaceX plans to surround Earth with up to 12,000 or possibly 42,000 internet-beaming satellites by around 2027, though possibly bring its service online before 2021 arrives. Meanwhile, Amazon's Project Kuiper aims to deploy perhaps 3,200 spacecraft. About any of these concepts, Christensen speaks with a healthy tinge of bearishness.
"The problems that kill space businesses are hardly ever technology problems. They're price problems, they're market problems, they're demand problems," Christensen said. "If you could offer that service that had some limitations or some areas of risk compared to terrestrial service, but it was cheaper, I think you'd find a market for that."
That's not to say these and other unprecedented new networks couldn't be as transformational as Iridium was for global calling despite being a failure, says Christensen, or LTE networks on the terrestrial (and eminently more successful) side.
"For investors, Iridium was a terrible, terrible outcome. They lost billions. But for the broader populous, Iridium has been great. Iridium deployed a new kind of capability," Christensen said. "These new satellite systems, they're not going to disappear."
NASA's Scientific Visualization Studio; Business Insider
An illustration of two different geostationary satellites, which orbit about 22,300 miles above Earth's surface.
What Starlink, Kuiper, OneWeb, and others are trying to deliver is high-speed web access practically anywhere on Earth. Next-generation satellite constellations also promise to slash the dreaded problem of latency, or lag, found with geostationary internet satellites, which orbit Earth from 22,236 miles away. By being about 75 times closer to Earth and, at some point, using lasers to backhaul data from one spacecraft to another, Starlink satellites may be capable of beating by half the internet's current average lag, according to research by computer scientist Mark Handley at the University of College London.That pervasiveness, low lag, and bandwidth - perhaps 10 Gbps (10,000 Mbps) per satellite - could benefit high-frequency financial traders, businesses that need an "always on" backup or speed-augmenting solution, remote digital workers in satellite offices or at home, cars, ships, planes, rural areas starved for high-speed broadband access, and more.
In spite of an ability to mass-produce satellites and launch 60 at a time on mostly reusable rockets, however, SpaceX may need to clear perhaps tens of billions of dollars in capital investments to seize and maintain ownership of the marketplace. How the company might recoup that cost and achieve what founder Elon Musk said could be $10-$30 billion in annual revenue remains to be seen.
"What does anybody pay for broadband, and what is that going to look like as 5G rolls out?" Christensen said. "That's a hugely dynamic market itself, but it is tens of dollars per month. It's not hundreds of dollars per month, and it's sure not thousands of dollars per month."
She added that internet subscriber's experience with hardware costs - electronics such as modems, routers, and cables - is also now "essentially zero." Meanwhile, Musk has suggested Starlink may require a flat, medium-pizza-box-size antenna that costs $100 to $300 per unit (though possibly much more).
"One of the ways Tesla has successfully disrupted the auto market - not the only way, by any means - is the glamour, the narrative that goes with it. SpaceX has obviously the idea of going to Mars, the idea of transformational human experience," Christensen said. "What's the glamour associated with a broadband service? Maybe there is a visionary glamour that will help that marketing pathway. Certainly if anyone can find it, Elon Musk can find it, but it's not clear to me what that would be."
An illustration of SpaceX's Starlink satellite internet constellation in orbit around Earth.
If Christensen had to choose a future provider to go with, she said it'd be Amazon's Project Kuiper, even though SpaceX looks to be a couple years and, currently, 300 satellites ahead. For her it comes down to the cash and customer connections required to "enter a new market and maybe create new demand."
"That's a different challenge than being a better, cheaper provider in an existing market," Christensen said, referring to SpaceX's disruption of the rocket-launch industry. "So I do think Starlink is more speculative in that regard, and I think that creates more financial uncertainty for SpaceX as a venture."
She added: "The system that has a potential built-in advantage is Kuiper because of Amazon's position with consumers, and Amazon's ability to sustain that period of market development and market growth for a very long time. Amazon has access to consumers that doesn't compare with anybody else in this space."
Gwynne Shotwell, SpaceX's president and COO, said during a conference in February that Starlink service would be "less than what you are paying now for about five to 10 times the speed you are getting," according to Bloomberg. (Shotwell also announced the orbiting network may soon be spun off as its own entity in an initial public offering.)
If Christensen is bearish on VLEO satellite-internet fleets, Blair Levin - a telecommunications policy analyst, nonresident fellow at the Brookings Institution, former chief of staff at the FCC, and coauthor of the NBP - is apathetic to the idea, at least stateside, due to billions of ongoing US government investment in laying fiber.
"Satellite is not going to have much impact in the United States because it's never going to be competitive with already existing fiber [...] and even 5G in a lot of places," Levin said. "It will be competitive in the more rural areas, but the government is actually subsidizing satellite's competitors, which makes it more difficult to compete."
Though, as Musk sometimes says, there is plenty of room in space for tens of thousands of internet satellites to hug close to Earth, Levin said demand may only permit a dearth of providers - which raises the stakes to deploy satellites and build a customer base quickly.
"As a Wall Street person, I would assume that one will succeed and the others will fail," Levin said. "It's going to be very difficult to have two succeed and nearly impossible to have three. I could be wrong, but you have huge fixed costs, zero incremental cost, and it just sounds like the kind of thing where some of them work great, but if one gets a lead, it's over."
A potential panacea and peril for rural communities
Jerry Holt/Star Tribune via Getty Images
A South Dakota cattle rancher wearing a western hat talks on his mobile phone.
If and when a satellite provider or two demonstrates their network is viable, internet networks will grow that much more robust and capable of maintaining an always-on connection. Such connectivity could enable safer and more reliable drone delivery, autonomous vehicles, smart-grid technologies, and more.
Yet it is indisputably those who live in rural areas who stand to benefit the most from globe-covering, space-based internet.
For more than a decade, profit-driven business cycles of traditional telecom companies have left many rural communities in a lurch, with connection performance that's a fraction as fast as it is in most urban or suburban areas. Pandit said there's been too much talk of bringing broadband to remote US areas.
"I think they've sat on it for too long, and it's opened up a huge opportunity for these satellite constellations to come in and start cherry-picking that entire market out," he said. "It may take another five years, hypothetically, or 10 years for a land-based 5G service to get available everywhere what satellite could deliver today. These satellite constellations will be the 5G internet that they've been waiting for, and they can probably get it sooner compared to the land-based 5G systems."
Levin also says, beyond the US, new satellite networks could dramatically improve emergency response and other aid to the developing world.
"That is going to be life-changing for literally millions of people. But in the United States, I don't think that'll be true," he said."
However, access to high-speed broadband practically anywhere will tempt some businesses that typically operate in urban areas, and primarily because of connectivity, to move to locations where there's a lower cost of living.
"If it's going to cost you, let's say hypothetically $2, 3, $4 million for a parcel of land in New York City, you could move 200 to 300 miles away in a more rural area and spend significantly less," Pandit said.
Pandit says he's already seeing this in the rural area in which he now lives, near Pensacola, Florida. As soon as fiber was dug from the highway out to his office, he said small tech firms that build software apps started setting up shop nearby.
"We're right on the Gulf, with beautiful beaches and it's still very rural. But if it wasn't for the fiber, these businesses wouldn't be here," Pandit said. "A lot of people are starting to move into this area just because the businesses are here and they're here because the connectivity's here."
For businesses that can't pack up and leave due to a need for physical social connections, pervasive broadband may fuel a reverse migration of the workers in cities to more affordable yet distant areas.
"With this may come greater home-working and flexible working," Bosworth said. "Instead of one day of home-working, it might be one day of office working, where the office is actually set up for a day when people are in so that you still get that social interaction."
But with that influx of the affluent comes its own set of challenges, says Bosworth.
"Suddenly we're probably going to get a lot of very high-skilled, very high-wealth individuals moving into relatively rural places," Bosworth said. "The trick for the rural is then to capture that skill and capture that wealth so that those small towns, those rural areas can see the benefit for everyone."
Preserving businesses that make rural communities unique might be difficult for the most remote regions, though, since they have the least exposure to, and greatest susceptibility to, web-fueled disruption.
"If Amazon cracks the drone delivery, those types of technologies - ubiquitous internet would allow more reliable and safer drone flights of small products, potentially - could hit local pharmacies if you're going to deliver, say, drugs to older people who are not so mobile," Bosworth said. "You start to see that type of competition filtering in as being a potential threat to traditional rural business."
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