From mboxrd@z Thu Jan 1 00:00:00 1970 Return-Path: Received: from smtp2.nextlayer.at (smtp2.nextlayer.at [81.16.150.37]) (using TLSv1.2 with cipher AECDH-AES256-SHA (256/256 bits)) (No client certificate requested) by lists.bufferbloat.net (Postfix) with ESMTPS id 87BAC3B29D for ; Fri, 8 Apr 2022 17:04:13 -0400 (EDT) Received: from [127.0.0.1] (d50-117-141-56.yt.northwestel.net [50.117.141.56]) (using TLSv1.2 with cipher ECDHE-RSA-AES128-GCM-SHA256 (128/128 bits)) (No client certificate requested) by smtp.nextlayer.at (Postfix) with ESMTPSA id 0B6558038A1; Fri, 8 Apr 2022 23:04:10 +0200 (CEST) DKIM-Filter: OpenDKIM Filter v2.11.0 smtp.nextlayer.at 0B6558038A1 Date: Fri, 08 Apr 2022 23:04:04 +0200 From: Daniel AJ Sokolov To: David Lang CC: starlink@lists.bufferbloat.net In-Reply-To: References: Message-ID: <168F6AAF-7953-4498-913A-A322D184FF2B@falco.ca> MIME-Version: 1.0 Content-Type: text/plain; charset=utf-8 Content-Transfer-Encoding: quoted-printable Subject: Re: [Starlink] SpaceX ordered to explain pricing strategy X-BeenThere: starlink@lists.bufferbloat.net X-Mailman-Version: 2.1.20 Precedence: list List-Id: "Starlink has bufferbloat. Bad." List-Unsubscribe: , List-Archive: List-Post: List-Help: List-Subscribe: , X-List-Received-Date: Fri, 08 Apr 2022 21:04:13 -0000 To be clear, I am focusing on the consumer product, not the Premium product= , which is not available yet=2E Mr=2E Musk himself said last year that he will have to invest an additiona= l USD 20-30 billion to make Starlink survive=2E After all, he has to build = ground stations and launch some 23,000 satellites by the end of the decade = to meet his FCC license obligations (not counting any satellites lost to un= planned events, such as a solar flare, warfare, or rocket loss)=2E If you can finance at 5% (which is optimistic), debt of 10 billion costs y= ou 500 million a year=2E=20 At the same time, the number of clients paying USD99 is limited=2E The sys= tem has limited bandwidth=2E As the IEEE paper shows, users can expect 25 M= bit/s IF there are no more than 0=2E1 clients per square kilometre, and IF = only 5% of these clients actually use the bandwidth - given a complement of= 5040 operational satellites=2E Currently, 1421 satellites are operational = (according to starlink=2Esx)=2E The global landmass is about 134 million square kilometres, including all = uninhabited areas except Antarctica=2E The number of humans who can afford = USD 100 a month is limited (and don't forget the initial investment, the co= st of Dishy's significant power draw, and taxes)=2E Those who are willing t= o pay all that AND be happy with, say, 30 Mbit/s, is even smaller=2E And th= e additional bandwidth per satellite added diminishes as the network grows= =2E You can't double the bandwidth by doubling the satellites, because the = available spectrum and the spectral efficiency are given=2E At the moment, Starlink revenue is at a runrate of about 25 million dollar= s a month=2E A terribly negative cashflow=2E Yes, there is additional deman= d, but, like everyone else, Starlink suffers from chip shortages, so they c= an't make as many terminals as they would like to=2E And some of the demand= they can't fulfill without massively oversubscribing=2E If there are, say,= 10,000 New York City residents on the waiting list, Starlink can't serve t= hem=2E In the given setup, churn will be high=2E When a client moves, there is no= guarantee they can keep their Starlink account=2E When a taller building g= oes up next door, the connection my be interrupted for good, etc=2E Having clients scattered over dozens of countries comes with massive overh= ead in the legal department=2E Starlink is just being kicked out of France = because their radio license is invalid=2E I believe they can fight their wa= y back in, but still=2E This costs time and money=2E Multiply this with doz= ens of countries with different legal regulatory regimes, consumer protecti= on laws, tax and filtering/surveillance requirements, etc=2E=20 At 99 dollars is not enough - which is why Starlink had to raise the price= =2E And unless they have tremenduous success with Premium subscriptions, or= larger business accounts, they will have to raise prices again=2E The good news for Starlink is: They have a captive audience, who has signi= ficant sunk cost and often little alternative=2E So Starlink will be able t= o raise prices=2E BR Daniel AJ =20 On April 8, 2022 8:15:44 p=2Em=2E GMT+02:00, David Lang = wrote: >Why are you so sure that Starlink's current prices are unsustainable? > >That's an assertion that requires prove, not just assumed=2E > >David Lang > >On Fri, 8 Apr 2022, Daniel AJ Sokolov wrote: > >> Date: Fri, 8 Apr 2022 01:59:21 -0700 >> From: Daniel AJ Sokolov >> To: starlink@lists=2Ebufferbloat=2Enet >> Subject: [Starlink] SpaceX ordered to explain pricing strategy >>=20 >> Hello, >> >> the Canadian regulatory authority CRTC has ordered SpaceX to reveal how= =20 >> its Starlink prices "may change within the next two years"=2E >> >> However, SpaceX will likely file this under seal, meaning it will not= =20 >> become public information=2E >> >> Technically, the order only refers to prices charged in the Far North o= f=20 >> Canada (The Yukon, the Northwest Territories, Nunavut, Northern=20 >> British-Columbia and one community in Alberta)=2E But as long as=20 >> Starlink's prices are global, this geographical restriction in the orde= r=20 >> is meaningless=2E >> >> The order is part of CRTC proceeding 8646-N1-202108175, and SpaceX'=20 >> answer is due today, April 8=2E >> Docket at=20 >> https://services=2Ecrtc=2Egc=2Eca/pub/instances-proceedings/Default-Def= aut=2Easpx?S=3DC&PA=3DT&PT=3DPT1&PST=3DA >> (incomplete due to various 404 errors) >> >> The order to SpaceX has came about after I filed a procedural request i= n=20 >> this proceeding=2E >> >> Here is the background: >> >> In most of Canada's Far North, a company named Northwestel has a=20 >> monopoly on landline internet=2E Also, Northwestel owns the backbone to= =20 >> large parts of the area=2E Northwestel is actually Bell Canada, but wit= h=20 >> much higher rates=2E It's only been a bit over year that Northerners ca= n=20 >> even buy unlimited internet access, and it is not cheap=2E (Northwestel= =20 >> also has a resale agreement with OneWeb=2E) >> >> In some areas, one small competitor is trying to hold on: SSi Micro=2E >> >> They and a few others would want to buy wholesale data transfer from=20 >> Northwestel at regulated prices, so they can mount some competition=2E >> >> Because Northwestel has a monopoly, they are not allowed to sell=20 >> internet access below cost, and they have to obtain permission from the= =20 >> CRTC to change rates=2E Rates must be "just and reasonable" under the l= aw,=20 >> for whatever that means=2E The CRTC proceedings to permit rate changes = are=20 >> unreasonably slow - a real problem for Northwestel=2E >> >> However, Northwestel would also love to sell below cost, so they can=20 >> extinguish the little competition they have, and make sure no new=20 >> investor even thinks about entering the market=2E Northwestel runs a ve= ry=20 >> profitable cable TV operation, and they charge business users more than= =20 >> double the residential rate for internet access - so they have plenty o= f=20 >> revenue to cross-subsidize internet, if they would be allowed to do so= =2E >> >> In January, Northwestel applied to the CRTC for permission to change=20 >> this regime=2E Explicitly, Northwestel wants to be allowed to sell=20 >> residential internet access below cost (cross subsidized from cable TV)= ,=20 >> and to reduce rates or increase data allowances or increase bandwidth a= t=20 >> any time without another CRTC proceeding=2E >> >> This, Northwestel argues, is necessary, otherwise Starlink will eat=20 >> Northwestel's lunch=2E Because Starlink is awesome and cheaper=2E >> >> Such permission, of course, would be great for consumers in the shortru= n=20 >> and awful in the long run=2E Because it would kill competition=2E >> >> Most participants in the consultation to Northwestel's application fail= =20 >> to understand that=2E They are jubilant for potentially lower internet = rates=2E >> >> In my filing in February, I asked the CRTC to deny Northwestel's=20 >> application=2E It is bad policy in the long run=2E >> >> Also, Northwestel has many options to fight against the (perceived)=20 >> competitive threat from Starlink=2E Currently, the cheapest unlimited u= se=20 >> access is a 100 MBit/s down and 12=2E5 MBit/s up line=2E They offer pla= ns=20 >> with less bandwidth, but all of those have a usage cap=2E And overages = are=20 >> crazy expensive=2E It's a topsy-turvy world, where the rich users with = fat=20 >> pipes, who can put huge stress on the network, get a free-for-all,=20 >> whereas less affluent users with thin pipes get charged extra per GByte= =2E >> >> In addition, I argued that Starlink does not have the capacity to be a= =20 >> real competitor to Northwestel's fat pipes - unless one takes the=20 >> Premium version=2E Now Starlink Premium is geared at businesses and gov= s,=20 >> for which Northwestel does NOT ask for permission to lower rates=2E >> >> Plus other arguments=2E If you are so inclined, you can find my submiss= ion=20 >> in the aforementioned docket under "Interventions"=2E >> >> There, I also pointed out that Starlink's current price point is=20 >> unsustainable, and that they will have to raise prices=2E >> >> Low and behold, while everyone was waiting for the CRTC's decision on= =20 >> Northwestel's application, Starlink increased prices=2E >> >> So I filed a procedural request to obtain permission to add that=20 >> information to the docket (after the official deadline to add=20 >> Interventions do the docket)=2E >> >> The CRTC has granted my request, added Starlink's price increase to the= =20 >> docket, and has ordered SpaceX to explain their pricing plans for the= =20 >> next two years by today=2E Other parties will have until April 18 to=20 >> comment on SpaceX' submission - which may be difficult, because I expec= t=20 >> all interesting bits to be filed under seal=2E >> >> Cheers >> Daniel >> _______________________________________________ >> Starlink mailing list >> Starlink@lists=2Ebufferbloat=2Enet >> https://lists=2Ebufferbloat=2Enet/listinfo/starlink >> >