Starlink kickstarts a satellite broadband market that could disrupt telecommunications

The arrival of new space ventures like Starlink and OneWeb is bringing about a disruption of sorts in the telecommunications sector, specifically the broadband internet market. That’s because the International Telecommunication Union estimates that just over half of the world’s total population has access to the internet. Adding to the digital divide is the urban-rural inequality; globally, about 72 percent of households in urban areas had access to the internet in 2019, almost twice as much as in rural areas (37 percent). While one aim is to bridge this gap, it is not the only goal of satellite broadband operators given the heavy CapEx investments involved in building equipment and related infrastructure. For the time being, operators will focus on rapid customer acquisition and cross-selling opportunities, but they will expect benefits arising from their respective space pursuits to trickle down into earnings in the long run. Starlink’s emergence as a dominant player will force rival satellite operators to either merge or join hands with each other. Mergers and partnerships are ways to ensure constant access to capital — one of the key factors for sustaining the operator business model in the satellite broadband industry.

[Arun Menon is Lead Analyst at MTN Consulting, with 13 years of experience in strategy and research.]