Advanced Television

Analyst: Project Kuiper still a good idea?

September 8, 2023

Analysts at MoffettNathanson Research (MN), in a deep dive into prospects for Amazon’s Project Kuiper broadband mega-constellation, are asking some tough questions.

They point out that as well as being head-to-head with Elon Musk’s Starlink, along with other would-be players in the orbital broadband space, Amazon is also facing considerable criticism from its own shareholders over the project with predictions of a $10 billion cost implication – at least.

“Amazon investors have expressed bewilderment at best, and frustration, or even anger, at worst. Cable investors have expressed nervousness and frustration of their own. Still, Amazon is steaming ahead with its plan to dot the sky with 3,236 satellites to connect communities unserved or underserved by terrestrial networks,” says MN.

“The dynamics here are complicated. Amazon is arguably late to the game; SpaceX has already launched thousands of satellites and already provides at least a nascent service. Other countries, most notably China, will build their own networks, further narrowing the global opportunity. And in the US, huge government subsidies will bring wired broadband to rural areas that might once have been targeted for satellite broadband. Sizing the opportunity is devilishly difficult,” the report suggests.

MN believes that by the time Kuiper’s first operational satellites are in orbit it is probable that Starlink will be well-advanced on its second-generation craft. MN is not optimistic, saying that Kuiper is – in wessence – a “moon shot” project, and it is reasonable to ask whether Amazon can ever realistically expect to earn a return of the enormous investment required.

“To cut to the chase, we believe the LEO satellite broadband opportunity remains limited to rural markets and to use-cases not traditionally served by terrestrial broadband providers. LEO constellations, even in aggregate, simply don’t have sufficient usable capacity to serve as a replacement for terrestrial alternatives. For Amazon, despite Kuiper’s immense scale, it pales in comparison to Amazon’s expansive reach, and we’re hard pressed to see the strategic benefits to the company’s core businesses,” MN states bluntly.

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