The recent outage started on October 24 and was described by one person briefed on the situation as a “huge problem” for Ukraine’s military. The terminals had been disconnected, this person said, due to a lack of funding.
The outage affected a block of 1,300 terminals that Ukraine purchased from a British company in March and were used for combat-related operations.
SpaceX was charging Ukraine’s military $2,500 a month to keep each of the 1,300 units connected, pushing the total cost to almost $20 million by September, the person briefed on the matter said. Eventually, they could no longer afford to pay, the person said.
Earlier this month, Musk said that of the more than 25,000 terminals now in Ukraine, fewer than 11,000 were paying for the service, which can run as high as $4,500 per month.
Alex Marquardt & Sean Lyngaas
Interesting background information about the Starlink terminals used by Ukraine’s military – to no-one's surprise, Elon Musk didn’t actually donate the terminals, nor was he supporting the monthly operating fees.
Negotiations between SpaceX and the Defense Department continue despite Musk’s claim that SpaceX withdrew its request, according to a senior defense official.
Negotiations are very much underway. Everyone in our building knows we’re going to pay them, the senior Pentagon official told CNN, adding that the department is eager to have commitments in writingbecause we worry he’ll change his mind.
The bit that caught my attention most was the cited monthly price, in the range $2,500 to $4,500. Considering that commercially available Starlink subscriptions cost around $100 a month, the gap is certainly intriguing. Many have attributed this to how most government contractors blatantly overcharge for their products and services. But it occurs to me that there could be another explanation for it, namely that real operational costs of a terminal are much closer to this figure of a couple thousand dollars a month! This would also explain the price of Starlink Maritime, which at $5,000 per month would be above breaking even per customer.
The implications for the long-term viability of Starlink – and by extension SpaceX, which projected a couple of years ago that the majority of its revenues would come from satellite internet – are stark. It implies the company is currently selling terminals and subscriptions at a massive discount, which is unsustainable on the long run. Probably they are counting on massive scale effects to drive down operating costs – but those costs include numerous launches, which are not cheap, despite reusable rockets; even after the constellation will be fully deployed, the launches will continue regularly to replace failing satellites. As for attracting a larger customer base, that prospect looks rather shaky as well: the inherent limitations of satellite connectivity largely exclude urban populations, which are the fastest growing category on the planet, and many countries are not exactly rushing to let Starlink operate as a broadband provider. Coupled with the current economic environment, perhaps this folly of mega-constellations will be cut short sooner rather than later.
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