Study: Starlink broadband could undercut rivals by 40%
September 24, 2020
A study into global broadband retail prices from New BroadbandNow finds that Elon Musk’s Starlink highly-disruptive broadband-by-satellite system could see significantly lower broadband prices for consumers.
The US-focused report suggests that Musk’s prices could undercut many rivals by as much as 20 per cent where the satellite system is competing with three or more rival suppliers, and by around 40 per cent when there are 9 or 10 rival players.
“Today’s internet industry poses a problem – lack of access – for more than 40 million Americans,” said Tyler Cooper, editor-in-chief of BroadbandNow. “LEO (Low Earth Orbit) internet, from the likes of Starlink and others, represents the first tangible alternative for broadband nationwide, spurring competition.”
Cooper and BroadbandNow’s research found that – if successful – Starlink (and low-Earth orbit internet as a whole) represents the first tangible alternative for broadband for millions of Americans.
- Competition from Starlink is likely to reduce prices for Americans. Average broadband pricing is around 15 per cent lower for those living in an area with at least three providers to choose from compared to those with only one. And, 40 per cent less in cities with the most competition.
- Customers with access to at least one broadband provider could expect the addition of an entirely new competitor to drop the average lowest price in their zip code by around $2.41 per month – a conservative estimate.
- Introducing a new category of broadband would have more dramatic effects on the wider industry – to the tune of $3.7 billion yearly in household savings based on 2019 typical rates for US homes.
The study says that even if consumers do not sign up to Starlink, its mere presence as a viable competitor in markets with only one or two options at current, the service could have the knock-on effect of spurring incumbent providers to improve their offerings to keep their advantage. This would be a positive move for consumers everywhere.
However, there’s a caveat: Cooper says: “Even if Starlink brings broadband to every single American home, the digital divide won’t be closed. Though no pricing information has been announced for the nascent platform, it is inevitable that it will not be affordable for a segment of the population. How we respond to that issue will be the next evolution of America’s digital divide.”