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Why is Starlink so Expensive – Will the Price Drop

Starlink internet service is proving to be hugely popular, especially in rural areas that lack access to traditional broadband internet. The idea of being able to get fast and reliable internet anywhere with a view of the sky is amazing. Whether you are a digital nomad frustrated with data caps on cellular plans, homesteaders that live off the grid, or simply looking for an alternative to your local internet service provider, the concept of broadband from space is really intriguing.

“Update: Some Starlink customers located in Mexico, Netherlands, Germany, and the UK reported that their monthly bill for Starlink Internet Service had dropped. The reports indicated that some people saw their price cut by 50%. Others saw more modest drops such as from $110 per month to $85 per month.”

Satellite Internet

Is Starlink Really That Expensive

Currently Starlink Internet Service costs $110 per month. Starlink also requires you to pay $599 up front for the Starlink dish and other required equipment. The upfront cost is similar to the $450 charged by HughesNet a legacy satellite internet service provider but high when compared to traditional broadband services that often have no up front equipment charge. $110 per month is on the pricy side compared to most cable / DSL / fiber internet options. However when compared to other satellite internet services the price is actually relatively attractive, especially given that there is no data cap with Starlink.

Why is Starlink so Expensive

Starlink is relatively expensive for a few key reasons.

  1. Captive Market
  2. Supply vs Demand for Starlink
  3. Expensive Nature of Space Launches

Captive Market

Starlink is primarily intended for people who lack access to traditional broadband internet. Starlink has stated multiple times that they do not intend to compete with Comcast, Spectrum, and Verizon in urban areas. The Starlink technology is not suitable for having that many people connecting to a single Starlink Service Cell. Starlink is about providing fast and reliable internet to underserved markets. Given that the majority of Starlink’s intended customer base lack access to traditional broadband, many would be delighted to pay $110 per month for fast and reliable internet.

There are millions of people in the United States alone that lack access to traditional broadband service, not to mention many times more people across the world. What someone is willing to pay largely depends on what options are available to them.

Nobody would be willing to pay $5 for a soda or $8 for a popcorn at the supermarket. Take the same soda and popcorn and move it inside a movie theater, suddenly people are willing to buy the soda and popcorn. The same thing can be said about Starlink. If you have access to fast and reliable internet that costs you $50 per month, you would likely not consider switching to Starlink.

If you currently have no options other than traditional satellite internet with its poor performance and low data caps, or a local telco provider that offers 5 Mbps DSL service for $80 per month, Starlink looks pretty attractive at $110 per month. Starlink’s business model is focused around servicing markets that are simply too remote to make wired options cost effective.

Supply vs Demand for Starlink

Starlink currently has a waitlist of over a year to sign up for service. Given that demand is severely outpacing supply for Starlink at the present moment, it would not make financial sense to lower the price any. Economic forces work to find an equilibrium price where demand matches supply. As of January 2022 this equilibrium price is actually much higher that $110 per month. As stated above, millions of people lack access to proper high speed internet. Out of these millions of people a good percentage is willing to pay through the roof if that is what it takes to get fast reliable internet at their home.

Starlink has no financial incentive to lower the price of their internet service at the present moment. That could change over time as supply ramps up and demand starts to get met, or if a competing service was to launch. In all likely hood the price of Starlink will be well below market equilibrium for years and the chance of seeing a price drop is slim.

Expensive Nature of Space Launches

A SpaceX launch has an operational cost of about 28 million dollars, a Falcon 9 rocket can easily cost 60 million dollars, and a single Starlink satellite can cost over $250,000. As of January 22. 2022 SpaceX has launched nearly 2,000 Starlink satellites into low earth orbit (LEO). Given the expensive nature of launching satellites into orbit Starlink estimates that completing the satellite constellation could easily cost 30 billion dollars or more.

There is also costs associated with building the ground stations all over the world required to provide signals up to the satellites. This is another huge costs that is often overlooked when talking about Starlink.

Given the high capital costs associated with the Starlink project, SpaceX need to focus their attention to bringing in as much revenue from the service as possible. Overall $110 per month is an incredible value when you realize what is going into the is project to make service possible.

Falcon 9 Rocket Launch

Is Starlink Worth it

After reading this you may be wondering if you should join the waitlist for Starlink. Here are a few simple questions to ask yourself if you are unsure.

  1. Do I Currently Have Fast and Reliable Internet at Home?
  2. Am I Currently Paying Less Than $110 per Month?
  3. Do I Have Access to Cable or Fiber Internet at Home?

If you answered “no” to any of the above questions you may want to consider joining the waitlist for Starlink Internet Service. If you answered “yes” to all of the questions do not join the waitlist. You have nothing to gain from making the switch. In fact you probably have a lot to lose by switching. Starlink currently experiences brief yet frequent drops. This is not ideal for gaming or for remote working.

If you need to work from home or have other needs demanding the absolute reliability of your internet, Starlink on its own would be difficult to recommend at this time. Starlink experiences drops on a daily basis ranging from seconds to minutes at a time. If you want to get Starlink and need internet free of drops you will need to combine it with another internet service. This could be anything ranging from a DSL connection, to a cellular connection, or even a traditional satellite connection. A dual WAN router will allow you to combine these internet connects for ultimate reliability.

Technically you could combine Starlink with a cable or fiber connection as well. I do not recommend Starlink if you already have cable or fiber internet. Starlink is actually a huge downgrade.

Conclusion

Depending on your situation Starlink may be a great option for you and well worth paying $110 per month for. For many others it is not going to make sense to switch to Starlink at the present time. Traditional broadband services from providers such as Comcast, Verizon, and Spectrum offer a reliable service with speeds several times faster than Starlink, for a lower monthly cost. If you have access to one of these services, or a local provider offering similar services, stay out of the Starlink line, as you will be much better served with a cable or fiber based internet connection.