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Sky-high cost of SpaceX Starlink won’t fly with broadband consumers

The highly anticipated Starlink satellite broadband service from Elon Musk’s SpaceX is now operational with its first public test (wryly titled the "Better than Nothing" beta), but according to a new survey conducted by Broadband Genie, the astronomical cost puts it out of reach for many.

Satellite broadband is not a new technology, however, Starlink promises to vastly improve the experience of using satellite internet thanks to much lower latency. Its constellation of satellites is placed in Low Earth Orbit (LEO) to significantly reduce the time it takes to send and receive data.

Typically, satellite broadband has a latency in the region of 700ms, which is extremely high compared to even the cheapest fixed-line home broadband connection. But with Starlink, latency is estimated to be between 20ms-40ms, roughly on a par with a standard broadband service. Speeds are reasonable too, with an estimated download rate of between 50Mb-150Mb.

But it doesn’t come cheap, at least at this early stage of the program. Beta testers in the US are being asked to hand over $99 (~£75) per month, plus a hefty $499 (~£370) setup fee for the equipment required to communicate with the SpaceX sats.

In a survey of 1,202 people, we asked how many would be willing to pay those kinds of prices. Unsurprisingly, the vast majority of broadband customers would not be signing up for Starlink right now. Although 15% said they’d stomach the cost if there was no other alternative.

Of course, one of the key selling points of any satellite broadband service is its ability to offer connectivity to any location within the coverage footprint without a phone or any other kind of line, potentially a big deal for rural households where broadband access is limited. But even for rural users, it’s not enough to overcome that price tag.

But could a government subsidy persuade some to change their mind? Our survey suggests that may well be the case.

Of those who said they would not sign up for Starlink or only use it if there was no alternative, 37% would be interested if the setup cost was fully subsidised by the government. 

Between 2015-2019 there was a subsidy scheme for broadband which paid up to £350 toward the setup cost for homes which could not get at least 2Mb broadband. It is possible a similar program could emerge again in the future, though at present the major goal is to expand full fibre broadband coverage, while the 10Mb Universal Service Obligation (USO) means that many rural homes are guaranteed at least some kind of broadband service.

Satellite broadband still has a niche role to provide access to the most remote homes and businesses, especially those that otherwise are being asked to pay thousands of pounds to gain access to fixed-line broadband. But if Starlink has any ambitions to be a major player in this space then both the running costs and initial setup fee must be significantly lower.

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