Space X Engine Production Woes Could Screw Up Musk's Starlink Broadband Play
from the trouble-looming dept
We’d already noted how Elon Musk’s Starlink isn’t going to be the broadband disruption play many people had imagined. The service lacks the capacity to really provide broadband to more than 500,000 to 800,000 users during its first few years in operation (for context, somewhere between 20 and 40 million Americans lack access to broadband, and another 83 million live under a broadband monopoly). With a $100 monthly cost and a $500 first month equipment fee, it’s also not doing any favors for the millions of Americans who lack access to affordable broadband.
Eventually, with a fully upgraded fleet of 42,000 low orbit satellites years from now, Wall Street analysts estimate Starlink could potentially reach upwards of 6 million users. But again that’s an optimistic high end guess, and it requires that everything go swimmingly the next few years.
Everything is not going swimmingly. Chip shortages initially delayed Starlink’s exit out of beta. And now a new leaked email suggests that Musk is warning about a potential bankruptcy for Space X if the company can’t sort out production of the company’s Raptor engine:
“Unfortunately, the Raptor production crisis is much worse than it had seemed a few weeks ago. As we have dug into the issues following the exiting of prior senior management, they have unfortunately turned out to be far more severe than was reported. There is no way to sugarcoat this…What it comes down to, is that we face a genuine risk of bankruptcy if we can?t achieve a Starship flight rate of at least once every two weeks next year.”
Will Heltsley, former SpaceX senior vice president of propulsion, recently left Space X due to a lack of progress on the project. In the email, Musk makes it clear that if things don’t improve, Starlink could also be in deep trouble:
“The consequences for SpaceX if we can not get enough reliable Raptors made is that we then can?t fly Starship, which means we then can?t fly Starlink Satellite V2 (Falcon has neither the volume nor the mass to orbit needed for satellite V2). Satellite V1, by itself, is financially weak, while V2 is strong.”
One problem, of course, is that Starlink is poised to receive millions in FCC subsidies to bolster a service that may not be financially viable several years from now. The Trump FCC already faced a scandal after it announced it would be doling out nearly a billion dollars to the planet’s richest man (who professes a performative disdain for government subsidies) to deliver broadband to some traffic medians and parking lots. The Biden administration is scaling back the scope of the hand out after backlash, but Musk’s Starlink is still poised to receive tens if not hundreds of millions of dollars.
Those subsidies are dependent on Starlink meeting certain projected deployment goals Musk’s newly leaked email suggests they won’t be able to actually meet if things don’t turn around quickly:
Admitting that Starlink V1 will never make a profit or have capacity to serve millions of users is quite a statement. Saying V2 is only feasible with Starship contradicts their own August submission to the FCC (and arguments since) which had two alternative launch strategies https://t.co/UucHYVlxBq
— Tim Farrar (@TMFAssociates) November 30, 2021
So again, the question then becomes: why is the FCC continuing to dole out millions in subsidies for a service that may not even exist in a few years? Especially when that money can be used to help fund future-proof and already proven fiber deployments across countless communities? Starlink does have the potential to provide some help to shore up U.S. broadband access, but even before these latest problems its full potential reach was limited. And the world’s richest man, who routinely professes a disdain for subsidies and “freeloading,” has made it abundantly clear he doesn’t want or need government financial help.