He said fixed fiber-optic cables are still the better option for most people at home because of cost and reliability, but off the beaten path, Starlink may be the cheaper option or the only fast option for the foreseeable future, he said.
“I wouldn’t be surprised if there were 1 million households that Starlink would be a good solution for, and it might be higher,” he said, not including households outside the U.S. or nonresidential customers.
Starlink avoids the need for fixed fiber infrastructure by using satellites to provide wireless internet. While it’s not the first company to offer such a service, it has quickly become one of the leaders in the industry, with about 3,000 satellites now in orbit and plans for as many as 12,000 total. It has also drawn plaudits for its work to bring internet service to Ukrainians during its ongoing efforts to repel a Russian invasion.
Starlink has had its challenges. The company suffered a blow last month when federal regulators canceled a plan to put nearly $900 million into the service.
Schools with money to spend have been a bright spot. In southwestern Virginia, about 400 households with 640 students spread across several counties are using Starlink through their local school systems, according to the Appalachian Council for Innovation, a local group supporting the tech industry and education.
They generally didn’t have reliable access to broadband internet previously or couldn’t afford it, and the coronavirus pandemic underscored the need.
“We needed a solution that would serve students and serve them now. We didn’t have time to wait for terrestrial fiber to be laid down,” said Scott Kiser, the school technology director in Wise County, Virginia.
Virginia’s state government contributed $500,000 to offset the cost. Local counties contributed, too, but it’s not clear how long either the state or the counties will continue to do so.
“As it stands right now, the grant purchased equipment and a two-year subscription, so there’s another year or so before this runs out,” said Donald Purdie, former president of the Appalachian Council for Innovation and the program manager of its Starlink project.
After that, either each resident will be responsible for their own monthly fees to Starlink or local officials will come up with another source of money. “There is no answer at this point,” he said.
There’s some hope that while Starlink provides a stopgap, fixed broadband infrastructure will continue to expand with $42 billion in new capital spending. In the most optimistic scenario, rural internet customers including school districts finally get more choices for how to spend their broadband money, whether it’s on satellite internet or fiber-optic cable.
“Who’s got the better mousetrap?” Purdie said. “The market will determine that.”
Amazon’s Kuiper internet service is a potential competitor to Starlink. It has said it plans to launch its first satellites by the end of this year.
Starlink’s entry into rural school districts nationwide has received scant attention. The company has mentioned it in passing in online videos, and local news outlets have reported on individual projects.
Bianca Reinhardt, a Starlink sales manager, told NBC News in an interview that school districts and counties have been a priority for the service since it launched early in the Covid-19 pandemic.
“Schools were actually closed, so having internet at home became a necessity in order to actually participate in school,” Reinhardt said. “So we focus really hard on working with school districts to get the students connected at home.”
Some school districts, she said, have no option to connect their students’ homes to the internet other than to use government funds on Starlink.
Lauren Dreyer, senior director of business operpations for Starlink, added that the company could reduce the price of the service in the future.
“I think we as a company have a track record of constantly trying to drive costs down,” she said. “And we will continue, I think, to look at what are we able to offer to customers that help them get connected.”
Musk, the world’s wealthiest person according to Bloomberg News, has received government subsidies and contracts for some of his other enterprises, including Tesla and the rocket business of SpaceX.
Starlink, while still in its infancy, has made strides in two years. It began a public test in 2020 with the motto “better than nothing” and entered broader release last year, though because the company is still working to launch satellites, not all areas of the planet have access.
The company said in May that it had more than 400,000 subscribers worldwide, and some investors believe the Starlink service could eventually generate more money for SpaceX than its rocket business does.
The sea and air seem to be next. Royal Caribbean Cruises said Tuesday it would begin offering Starlink internet onboard all its cruise ships, with installation scheduled to be completed early next year. Hawaiian Airlines has announced plans to offer free internet via Starlink as early as next year. The company also has a $1.9 million contract with the U.S. Air Force to assist bases in Europe and Africa.
“For satellite internet, you have to pull together a bunch of niche markets in order to make it a paying service,” said Harold Feld, senior vice president at Public Knowledge, an advocacy group in Washington that pushes for broadband expansion and subsidies.
“For SpaceX, particularly at this stage, the fact that they can go after a number of these hard-to-serve markets is a big advantage for their technology,” he added.
On the other hand, Feld said he’s concerned whether Starlink will stay committed to rural school districts in the long term.
“It’s all well and good for these guys to serve airlines and cruise lines and RVs, but they got a lot of regulatory favors to service rural America, and that ought to remain their main business,” he said.
The first school district to use Starlink was the Ector County Independent School District in West Texas, where the philanthropic arms of local oil-and-gas businesses paid in 2020 to bring the service to students’ homes. Now 130 families are using it, said Scott Muri, the superintendent, and a nearby district in Pecos has followed suit.
Muri said the school district isn’t sure if local industry will pay the cost indefinitely, and he’s looking to other sources of money including the Federal Communications Commission.
“We have hope that our state and federal governments will work to provide this to families that don’t have the resources,” he said.
The FCC was the agency that last month halted a Trump-era plan to give SpaceX $886 million to build out Starlink in 35 states. The commission cited data showing that upload speeds on Starlink had been declining.
“We cannot afford to subsidize ventures that are not delivering the promised speeds or are not likely to meet program requirements,” FCC Chair Jessica Rosenworcel said in a statement at the time.
At least some of Starlink’s users are satisfied with the speeds, especially compared with other options — and as long as the price is competitive.
“It’s been life-changing for us,” said Brandon Honaker, a community college instructor who got Starlink in October 2021 with two kids in school in rural Tazewell County, Virginia.
“If fiber were to come and expand in our area, I would consider switching to fiber depending on the price,” he said, “but honestly, Starlink does everything we need it to do.”
David Ingram reported from San Francisco. Kailani Koenig and Cal Perry reported from Cuba, New Mexico, and Hawthorne, California.