Investment bank analysts at Morgan Stanley believe that the news that Elon Musk has asked the FCC for permission to expand its Starlink broadband-by-satellite system to moving vehicles (trucks/RVs, aircraft and ships) has not only major implications for the auto industry, but the “topic appears to be moving even faster than we had anticipated”.

Last week Musk cautioned against too much over-excitement as regards to cars, and in particular his Tesla output, saying that his dish wasn’t designed for conventional cars. It is also a fact that the cellular telephone industry is doing fairly well in directly connecting with cars (as is SiriusXM radio).

Nevertheless, the bank says that the overlap between cars and communications is obvious and, in its opinion, about to become highly relevant. “It’s interesting that our phones (ASP <$1k) have advanced communication/OTA features while our cars (ASP approx. $40k) tend to be sold ‘untethered’ to any robust comms network. We estimate that this year we will reach 1.3 billion light vehicles in use on earth. Including aircraft, ships and commercial vehicles (from Class 8 trucks to tractors, earth-moving equipment) may materially exceed 1.5 billion ‘moving vehicles’ in use today,” says Morgan Stanley.

“The development of wireless communications and cars is extremely nascent. Of the more than 250 million vehicles on the road in the US, we estimate that no more than 20 per cent to 25 per cent have anything better than basic GPS/sat-nav. We estimate substantially less than 1 per cent of vehicles on the road in the US today are capable of OTA updates of firmware.”

Then there’s the whole question of so-called ‘Autonomous’. The bank says: “These cars may require sat comms for enhanced capability. We expect autonomous/electric cars to eventually resemble a utility/public good where the marginal cost of transport per mile travelled approaches zero and upon which a substantial portion of the any nation’s GDP is highly dependent. Additionally, autonomous networks may require sat comms for ‘triple-redundant’ safety and security not unlike today’s aircraft and air traffic control systems.”

The bank suggests a little ‘thought exercise’, saying: “Imagine how Apple might potentially go about developing a car and deploying an internet-of-cars (IoC) transportation network. The next time you get behind the wheel of your car, consider how little has changed in terms of connectivity since your first car. In our opinion, the connectivity of the average car is a ‘nostalgic’ experience that is ripe for major disruption over the next engineering cycle.”

Morgan Stanley then returns to Musk’s Starlink: “We’d expect to see early introduction of Starlink into the commercial/logistics market. According to an article by Michael Sheetz at CNBC, citing company job postings, SpaceX is planning to build a new Starlink equipment factory in Austin, TX. (The company did not comment on the article.) We believe such a potential location near Tesla’s Austin giga-factory (where it would make the Cybertruck, Semi and, we believe, other fleet oriented products) would make a lot of sense.”

“Autonomous car networks can create and consume massive amounts of wireless data. Our collaborative work with the Morgan Stanley Global Telecom team suggests that autonomous cars can produce as much as 40 TB of data/hour, which is equivalent to 1 to 3 thousand years of iPhone data usage. Of this amount, we estimate the wireless data that exist/enters the car to be on the order of 50 to 500 GB/month. Our simulation of total wireless data transmission from AVs approached 5,000 EB (exabytes) annually… or many hundreds of times higher than the total amount of global wireless data transmission (all devices) today,” says the bank.

“Starlink’s current beta system is focused on the home broadband market, where data pricing has compressed significantly over time due to robust terrestrial offerings and customer limitations. However, mobility markets like maritime and in-flight connectivity have no fixed-line competitors and can therefore offer significantly higher yields for Starlink’s capacity. For example, we estimate that per gig pricing under the $99/month beta program is well below $1 assuming normal usage patterns, while current business jet data plans are priced well in excess of 100x that. Additionally, expensive user terminals become less of a hurdle in markets where customers are already spending $10s or $100s of thousands for connectivity equipment.”

“We would not be surprised to see more auto OEMs and mobility players explore collaboration/pilot programs in the area of LEO satellite communication in the near to medium term. There are many players rolling out large and sophisticated internet of cars AI/ML fleets (i.e. Tesla has a fleet of roughly 1.3 million vehicles in service today, rising to 30mm to 40mm by 2030e) which could potentially serve as an important ‘captive customer’ for a LEO player. At the same time, various LEO operators can provide a redundant, resilient cybersecure transportation ‘moat’ for the ever expanding global mobility network,” concludes the Morgan Stanley report.

Other posts by Chris Forrester:

1. Virgin Galactic in stock split
2. Thuraya-3 suffers major problem
3. AST SpaceMobile hit by Class Action
4. Optimism under threat at SES
5. Rivada visits Terran Orbital’s manufacturing HQ
6. Avanti wins spectrum debt obligation case
7. SpaceX breaks records for re-use launchers
8. IRIS2 already in trouble?
9. Intelsat contemplates next steps

Categories: Blogs, Broadband, Inside Satellite, Policy, Satellite

Tags: apple, elon musk, FCC, LEO, Morgan Stanley, spacex, starlink