Seeking Alpha by Vincent Ventures 11/23/2021
Summary
• Musk, Shotwell, & Johnsen take on Dankberg, Harkenrider, & Duffy in this final frontier showdown. Space ain't big enough for the two of 'em.
• Viasat is making desperate pleas for government intervention while SpaceX prepares to launch Starship, which will have the capacity to launch 400 Starlink satellites on a single mission.
• We debunk the talking points from Viasat management and rhetoric from Viasat shareholders, who have pivoted from arguing SpaceX won't succeed to arguing SpaceX isn't a threat.
• In Viasat's own words, it faces "competitive injury" from Starlink's disruptive potential. Viasat has historically burned cash as its operations do not cover its capital expenditures.
Introduction: The SpaceX / Viasat FeudA year ago, we published a controversial article discussing Viasat (NASDAQ:VSAT) as a short opportunity. The article argued that SpaceX's (SPACE) scale and LEO (low earth orbit) technology would be fundamentally disruptive to current satellite operators. SpaceX, until only recently, was unduly dismissed by the industry as a pipe dream amusement. At the time of writing (December 2020), our inquiries to industry analysts had been met dismissively, or with outright apathy to the idea that SpaceX could successfully launch Starlink internet service.
Just short of a year later, SpaceX has successfully completed beta testing of its Starlink internet service, and is moving to commercialization. One Seeking Alpha user commented that he cancelled his Viasat service an hour after receiving his Starlink terminal. SpaceX's Starlink constellation now boasts 1,693 satellites and internet speeds that average 140 Mbps in the US and 176 Mbps in Europe.
SpaceX's Starlink internet service, which costs $499 + $99/month, is sold out until late 2022 to early 2023 on low chip supply. SpaceX CEO Elon Musk believes he can get speeds to 300 Mbps in the near future. At this time, use is unlimited and Starlink users have no data cap. There are no pricing tiers.
Compare this to Viasat, which offers plans that range from $100/month for 12Mbps to $300/month for 100Mbps, after initial 3-month teaser rates. Equipment can be purchased for $299 or rented for $13/month. Use is capped at 40GB to 150GB. With the base plan, you would only be able to watch 27 minutes of Netflix in HD per day. With the latency of Viasat's technology, Zoom calls are difficult and online gaming is infeasible.
SpaceX's advantages stem from the fact that Starlink's has many small satellites located in much lower orbit. In plain English, the signal does not need to travel as far. SpaceX plans to eventually have 42,000 satellites in total. On the other hand, Viasat operates 4 satellites that orbit in a geostationary position, located far enough to cover a wide geography simultaneously. Viasat's recently announced $7.3B acquisition of Inmarsat will add an additional 14 satellites.
Many thought it would be impossible for Starlink to cost effectively launch so many satellites. Many thought it would be impossible for Starlink to coordinate and synchronize the process of constantly shifting connections from satellite to satellite as they fly overhead. SpaceX has done just that, and the company is now valued at $100B.
More:
https://seekingalpha.com/article/4471482-viasat-vs-spacex-space-cowboy-showdown
