The Case for Nationalizing Starlink...

Elon Musk’s technical leadership is about to unleash a new technology and delivery system that will leapfrog existing systems and change the way information is transmitted.  Over the next few years, his Starlink organization will place between 12,000 and 42,000 small satellites in low Earth orbit to transmit broadband globally at much higher speeds than are typical at costs competitive with current technologies.  While this all sounds like the miracle of free-market innovation there are compelling security and economic reasons to contemplate making this a publicly-owned utility.

Starlink is currently affiliated with Musk’s SpaceX organization, providing economies in launch costs.  At this time competitors are far behind although Amazon is engaged in early steps to provide the same services.  Starlink will provide speeds of up to a gigabit per second - the average US Internet download speed is 93 Mbps as of June 2018 with the global average speed of 46 Mbps.  Costs are anticipated to be somewhere between $60 and $80 per month which will be competitive with average US broadband costs of $80 per month –  a better service at a competitive cost.

​Required would be an antenna about the size of a pizza box.  Unfortunately, it appears mobile phones will not likely have the ability to access this signal, but that could change in the future.  Bandwidth in urban areas may also be limited although to what degree is unclear.

​Starlink has positioned itself as a do-good organization to provide Internet access to underserved areas like most of Africa and Australia, but it also offers a much faster method of transmitting data.  This speed is strategic for certain industries – trading for instance, where organizations have built stand-alone fiber optic cables to improve incremental speed.  Electromagnetic waves transmit much faster in space than through fiber optic cables.  One can presume this precious resource, provided it was technically dependable to the financial end-users, would be coveted and command premium prices.

There are strong hints Musk intends to spin this unit off as an IPO which sounds great in practice but offers some potential issues for consideration:  

• The US Defense Department has awarded contracts with Starlink that appear to be preparations for a future sole-source award for Internet services for combat purposes.  Should Starlink be an investor-owned organization that could provide a wider backdoor for hacking and other asymmetric warfare. 
• Investor-owned organizations are about shareholder return.  Providing free or reduced-cost broadband access to poor populations has been tossed about for 30 years but according to US Census data from 2015, 35% of lower-income households with school-age children do not have a broadband internet connection at home.  There is no precedent for providing widespread cheap Internet access for poor populations and no expectation profit-driven organizations will change that in the future.
• One can presume shareholder return would also include outsourcing jobs to lower-wage countries as cable and telecommunications companies currently do.  Wealth increase would then be primarily to shareholders – new middle-class jobs would be minimal.  In other words, already rich investors would become wealthier.

​Conversely, management of a satellite Internet system would provide strategic advantages:

• Harvesting profits from overseas users for return for US citizens could fund enhanced access for education – this is particularly significant viewed through the coronavirus lens.
• Keeping high-tech and service jobs in the US rather than outsourcing to lower-wage countries would build middle-class wealth and improve social stability.
• Keeping the system within the US would enhance security and provide a backbone against asymmetric hacking strategies by adversaries such as Russia and China.
• A publicly-owned Internet satellite utility would be governed by elected officials, and, if properly managed, could help achieve strategic long-term benefit for the population of the country by an organization untethered from the need to maximize shareholder return.
• The World Economic Forum’s Global Competitiveness Report in 2016 ranked the United States 10th in the world in a broad measure of infrastructure quality—down from fifth place in 2002.  While Internet connectivity is not a bridge or a road, it is critical to productivity and could be considered infrastructure similar to high-power transmission lines, natural gas distribution systems, roads, rail, water utilities, and sewerage, many of which are publicly-owned.  Infrastructure investment is widely discussed in soaring speeches by political candidates, such initiatives have not been forthcoming.  US public purchase of Starlink would be an investment in economic development.

​Information on Starlink technology and speeds obtained from https://www.starlink.com/ and https://www.zdnet.com/article/spacex-starlink-internet-prepares-for-beta-users/#:~:text=According%20to%20SpaceX%2C%20Starlink%20will,upload%20speeds%20up%20to%203Mbps.  Data on broadband speed provided by https://www.ncta.com/whats-new/average-us-internet-speeds-more-double-global-average#:~:text=According%20to%20Ookla%2C%20the%20forerunner,average%20speed%20of%2046.25%20Mbps.  Broadband pricing attributed to https://www.telecompetitor.com/report-u-s-median-broadband-price-is-80-monthly/.  Information on a possible Starlink IPO came from https://www.fool.com/investing/2020/03/01/is-this-elon-musks-next-ipo.aspx.  Information on Internet access by income obtained from https://www.pewresearch.org/fact-tank/2019/05/07/digital-divide-persists-even-as-lower-income-americans-make-gains-in-tech-adoption/.