AST also seems to be favoring a different strategy, having a smaller number of satellites each capable of serving a larger number of users vs Starlink's thousands of satellites serving a couple of users each. IMHO AST's approach sounds more sensible and manageable (albeit both approaches manage to equally annoy astronomers). Whether they will be able to really serve a large enough number of users or not also depends on the chip science (rather than the rocket one).

I'm not sure I agree with the strategy, though. It seems really challenging and dangerous to put such huge satellites into LEO. They'll require constant maneuvering. NASA seems to think it'll require 4 maneuvers per day, https://space.stackexchange.com/questions/49981/why-do-ast-s...

I will put my money on cheaper, more disposable satellites because they enable rapid iteration cycles with less risk.

So big in fact that a couple of months ago the US space agency NASA, having looked at SpaceMobile's plans, complained the "extremely large satellites when in orbit will engender an unacceptably high risk of a catastrophic debris-producing collision."

I don't know enough about this area to really comment, and they did reach an agreement with NASA the next year, but it still seems like there's something to be said about the size of the object being maneuvered.

You're right though that SpaceX has to deal with a lot more. I guess I just figured that in failure scenarios they'd deorbit a satellite, and shrug it off, where as AST SpaceMobile can't tolerate losses.

This is not true, and there are multitudes of counter-examples: store-brand products sharing shelves with competitors, EVs delivered by ICE vehicles, AOL CDs being sent by mail, etc.

So it's interesting to note that other Satellite Internet companies/startups/etc are already using SpaceX to put their gear into orbit including Amazon (Project Kuiper?) and OneWeb.

But you're probably right in that anyone doing so, should consider the theoretical risk. However, a lot of what SpaceX is trying to achieve revolves around reducing the cost to lift mass into orbit. So theoretically, the more demand there is to put mass into orbit and the more SpaceX does it, the cheaper and easier it becomes.

Then again maybe Google or ATT could avoid this risk by just starting their own LEO freight companies? ;P

But seriously, if it is such a concern, perhaps they should look into funding a potential SpaceX competitor. And there are a few startups trying to be just that.

This reminds me of the steam engine, which likely only became viable because its abysmal initial efficiency was outweighed by the need to pump water out of coal mines.

Netflix takes the world by storm, grows quickly, and becomes reliant on AWS. Amazon enters the video streaming market as a much weaker competitor and builds upon their own tooling.

In this scenario, I presume Amazon is making more money from Netflix using their service than they are from running their own streaming service. Their first goal is to not disrupt the money they make from Netflix and their second goal is to create a competitor. Later, if the math says that hardening their contracts to the detriment of Netflix would allow them to capture such market share as to recoup the investment with their own streaming service, they would do so, but as they're late to the party that is not the case.

In the Starlink scenario, it's the other way around. Starlink is already dominating the market using their own, SpaceX tooling. The incumbent, AST SpaceMobile, is allowed to use SpaceX rockets. It's not hard for SpaceX to disrupt AST SpaceMobile's operations without hurting SpaceX's bottom line as there's a backlog of launch demand to replace AST SpaceMobile. If the math says that AST SpaceMobile is likely to begin encroaching on Starlink then they deny a contract, replace it with the next person in line, and don't bat an eye.

The order in which things occurred between the companies means there aren't these deeply entangled, mutual benefits that allow competitors to coexist.

This is where the Netflix/AWS analogy is a good one.

The critical point is: AWS makes more money from people not-Netflix than Amazon Video makes.

Consequently, AWS screwing with Netflix for the benefit of Amazon Video risks the entire not-Netflix AWS customer base, who would no longer consider Amazon as neutral of a party and thus trim their AWS spend.

And these optics last for decades.

Which is why most companies in these scenarios have serious firewalls between those parts of the conglomerate. No sense killing the golden goose because some VP wants a bonus.

If AST (or Amazon Video in the analogy) can compete with Starlink (or Netflix) on even terms, then more power to them. If not? Then that's their problem: rest of the company isn't going to bail them out.

https://aws.amazon.com/solutions/case-studies/innovators/net...

"Turns out we can't give you our preferred rate because you compete with Amazon Video" would be equally short-term-effective / long-term-suicide.

They talked about taking SpaceX to WTO before. But that's it. Talk. The reality is that they know they would lose horrible if anybody ever analyzed how 'fair' the markets actually are.

> SpaceX is already functionally a monopoly at 92%

That's a questionable look at numbers. A lot of that is SpaceX own launches, not competitive. Different other parts are DoD and NASA that have a 2 provider minimum already.

For commercial payloads you have other companies coming online soon. Costumes have orders, currently Vulcane, New Glenn, Terran R, Ariane 6, Neutron all have a book of future orders already secured.

They've got a big price advantage, but if they start pulling anti-competitive stuff like disfavoring launches by a competitor, that's going to get them a lot of attention.

It's entirely possible for there to be more money in providing launch services to AST even if it kills off Starlink, IF it grows the market enough.

Because SpaceX is subject to the same antitrust measures as any other company.

As opposed to the alternative of not using SpaceX?

If they aren't using SpaceX to launch their satellites, it's their loss.

If AST SpaceMobile's bet is to try and work out the kinks in their hardware while waiting for an alternative launch provider to come online then OK, I can't fault that mindset.

IMO, if they get anywhere close to being competition then SpaceX will just change the contract terms going forward to neuter their viability.

And why go public so early? AST SpaceMobile has been public for 5 years and is getting destroyed by the market. They just sold off majority ownership of their satellite manufacturing capabilities.

Doesn't their strategy just invite pressure to monetize early at the cost of being able to experiment with R&D?

If they were going to do this then why would they wait?

They don't need to. The launch contract is where the profit is. Starlink is already competing with AT&T's ground network and has to maintain competitive pricing there regardless of whether there is a competing satellite network.

AT&T benefits because they can stop maintaining ground infrastructure in rural locations and still compete for customers who care about it, and expand coverage to other countries, much of which will come at the expense of local carriers in those countries rather than Starlink.

Starlink themselves might lose a few customers to AT&T but not as much as the profit on the launch contract, so why do they want to stop it?

A year ago I would've agreed with you, but Starlink's revenue is up 600% YoY. There's enough money in Starlink for SpaceX to not risk it.

I don't know why they allow it. Perhaps a sign of good faith to keep regulators off their backs?

$10M per launch. By comparison, Starlink has had over 100 launches:

https://en.wikipedia.org/wiki/List_of_Starlink_and_Starshiel...

AT&T doing the same number of launches would generate over $1B in profit.

And again, Starlink is already competing with land-based cellular networks, and so would AT&T. So the bulk of the AT&T satellite customers could come at the expense of other land-based cellular networks rather than Starlink -- Starlink has ~2M users compared to >140M for Verizon Wireless (much less carriers in other countries), so who are they really competing with?

A year ago I would've agreed with you, but Starlink's revenue is up 600% YoY. There's enough money in Starlink for SpaceX to not risk it.

The problem of using a purely profit oriented analysis is that you missed major pieces of the puzzle. Antitrust action would be one reason that you neglected. Another reason is SpaceX's mission, which is the colonization of Mars. To do that, SpaceX need to help bootstrap an entire space economy from scratch to make colonization more than a pipe dream.

1. https://www.cnbc.com/2022/03/23/spacex-raises-prices-for-lau...

This would require AT&T to acquire local spectrum, since they (to my knowledge) don't any global spectrum.

And at that point, it seems to make much more sense for a local carrier to partner with AST instead, since they'd be able to serve almost everybody using their existing terrestrial coverage and would need to use the satellites only to fill in the gaps.

> Starlink themselves might lose a few customers to AT&T but not as much as the profit on the launch contract, so why do they want to stop it?

Theoretically they could try to keep competing satellite operators out of the direct-to-cell market for as long as possible. Being able to set the price for that for all operators in a country as the only seller sounds extremely beneficial in the short term.

But that would inevitably attract both space launch competitors and antitrust regulators around the globe, which might ultimately be worse for SpaceX.

Which is irrelevant to the point that if AST is competing with "Starlink" in those countries, they'll also be competing with (and presumably getting most of their users from) other local carriers.

> Being able to set the price for that for all operators in a country as the only seller sounds extremely beneficial in the short term.

Except that hardly anybody is going to be willing to pay significantly more than that than they could pay to get similar service from a terrestrial local carrier, so there was never really a monopoly rent to be had to begin with.

That's inaccurate. SpaceX developed Starlink to take advantage of their growing launch capabilities.Other companies could launch on SpaceX's rocket, but not to the scale of Starlink.

Doesn't their strategy just invite pressure to monetize early at the cost of being able to experiment with R&D?

You have other competitors who also have a lot of money.

Brave relies on Google. DuckDuckGo relies on other search engines, etc. And they are in the same market.

Orbital launch systems and satellites are not in the same market. SpaceX would do themselves a disservice if they weren't willing to launch anything other than their own satellites.

Although Musk doesn't really always act rationally :p

They're not though, they're using a contracted service from a company that wholly owns a subsidiary that may have some competing business with your system.

They can switch to any other capable provider at any time and once the satellites are in orbit, there's no continuing business relationship with the launch company required to operate them.

Outside of the US and EU governments this has not been a large market. The fact that another launch client is entering the space should suggest what the overall trajectory here is going to be.

Finally, with a lifetime of 5 to 10 years for each launched satellite, and SpaceX not being required for operation of the satellites, I'd suggest they're not nearly as dependent on a "competitor" as the OP implies.

The 6502 was one of the two dominant 8-bit computer CPUs ... and was manufactured by Commodore, which was happy to sell CPUs to Apple, Atari, Acorn, and anyone else.

Specifically in telecom, in the US there are many MVNOs that resell mobile phone service from the big three carriers. Somehow both the MVNOs and the national carriers make money.

The history of MVNOs seems to indicate otherwise. Not a lot of them survive as independent entities; I think because there's not a lot of profit to be had, and most MVNOs are setup where the business is captive to a given operator. You'd need to reissue SIM cards to each customer in order to switch to a new operator, and that's expensive; not to mention some customers have operator locked phones that wouldn't be able to switch, so you've got to develop a plan for them as well.

They're competing with Starlink not in the launch market. How the satellite gets into LEO is a different thing - and its own global market.

[edit] There's many ways into space. [1]

[1] https://en.wikipedia.org/wiki/List_of_launch_service_provide...

If you only consider US-allied launches, SpaceX represents a staggering 92% of market share. There are lots of space companies. They are not price competitive. At all.

It costs $2720/kg to launch payload with Falcon 9. The next closest, US-allied launch vehicle costs $9,167/kg. Falcon Heavy will extend the lead to $1500/kg.

You're not going to compete in building a constellation of satellites using launches that cost 3.5-6.1x the price (depending on when they get to launching vs readiness of Heavy)

The AST SpaceMobile BlueWalker 3 weighs 1500kg. They want to launch 243 satellites. The price difference between using Falcon 9 and Ariane 5G is $2.4B. AST SpaceMobile's market cap is $675M.

The Starlink terminal is great for grid-tied residential/RV/ship-sized home internet. It runs in the Ku and Ka bands at something like 65 watts. It's astonishing that they can get some functionality with their T-mobile partnership, but for the most part, it's not optimized for that.

What fraction of Starlink (or, hypothetically, AST SpaceMobile) expenditures is satellite launch cost per kg? The ATT market cap is $120B, if they can partner with/aquihire a $675M satellite company to stay competitive then even a $2.4B extra expense is not a huge deal. Sure, Starlink could do the same, but ATT has a lot of inertia. SpaceX won't knock them out of the market just by flying another set of satellites a little higher with some lower-bandwidth antennas.

If I could get voice and text anywhere on the planet (namely, in the woods in northern Michigan, population density ~1 person per square mile, or offshore on Lake Michigan, population density ~0 per square mile), that would be a game changer. Specifically, everyone knows that the cell networks lie about their coverage maps, this would let them genuinely say they have coverage everywhere. I'm currently using Garmin InReach for off-grid connectivity, not sure I'd dump that hardware and network for an esoteric feature that runs on my less-reliable glass slab, but a lot more people have glass slabs than InReach.

Depends on the elasticity of demand. Maybe if they doubled the price the demand would more than halve, resulting in a lower revenue. It’s hard to tell.

If costs were higher, competitors would probably not launch on SpaceX rockets. They were also not a “safe” choice until recently. They’ve also been able to capture the market and put enormous pressure on their competitors. I’m certain there are other reasons.

I’d love to hear an actual business person weigh in on this.

It's pretty well known nobody pays anywhere close to list price for airplanes from Boeing and Airbus. I've heard discounts as much as 40-50% for planes but the actual numbers are pretty closely guarded. Wouldn't surprise me in the least if this were happening in the launch business.

I'm probably not an "actual business person" though, for whatever definition you're using :)

Sign... this is just not how the space industry works. Europe, China, India and Dod/NASA simply won't let this happen.

They want to grow the industry as a whole. Remember their real ultimate goal is going to Mars and they don't want to be the only space company in existence to want to do that.

Just like the "Paypal Mafia" of old there's starting to be a "SpaceX Mafia" of former SpaceXers rich off of SpaceX stock starting their own space companies and teaming up with SpaceX to move things forward.

It's worth pointing out that it may not even be feasible for AT&T/Google to pursue this venture _without SpaceX_, which means they're making money that they probably wouldn't otherwise make regardless.

Why would the stock price for a pre-revenue company with massive capex needs and high execution risk do great in a challenging macro environment?