Global satellite capacity prices tumble in Starlink’s wake

The price of satellite bandwidth for data services has dropped 77% over five years after SpaceX’s Starlink constellation flooded the market with capacity, according to Euroconsult analysis released Feb. 12.

Euroconsult senior consultant Grace Khanuja said satellite operators were getting an average revenue per user (ARPU) of $260 a month for every megabit per second of capacity in 2023.

The consultancy’s definition of data covers fixed and mobile services across commercial and government markets, including for cellular backhaul and military customers.

The ARPU analysis is derived from Euroconsult’s internal proprietary databases, Khanuja said, using confidential interviews with industry participants.

The research showed the price of satellite capacity for video services declined 16% over the five-year period, reaching an ARPU of $2,760 every month for every megahertz of bandwidth.

Video prices declined slower than data because the supply of capacity to broadcasters has largely stagnated amid a shift toward internet-based streaming services, as well as the prevalence of long-term contracts.

SpaceX has more than 5,400 Starlink broadband satellites in low Earth orbit after kicking off an aggressive launch campaign in 2019. The company recently told regulators it had 2.2 million Starlink customers worldwide, 59% of them in the United States.

Khanuja estimates Starlink added between 25 and 26 terabits per second of satellite capacity to the data market in 2023.

High throughput satellites (HTS) from geostationary operators such as Hughes Network Systems of the United States and France-based Eutelsat are also contributing to the glut in supply, though not to the same extent.

In response to declining capacity prices, the satellite industry is shifting from traditional wholesale leasing businesses to more managed solutions to make more money from their bandwidth. This trend also pushes operators to buy service providers and pursue other vertical integration strategies to get closer to their customers.

Service providers are increasingly opting for pre-made service packages from satellite operators to hand off the complexity of managing capacity, according to Euroconsult, enabling them to focus on providing value-added services such as cyber security, telematics, and cloud computing.

The costs involved in providing capacity have also declined in recent years following satellite manufacturing advances — and greater availability of launches thanks primarily to SpaceX.

The average cost base of supplying HTS capacity in North America has dropped from around $40 a month per megabit per second in 2019 to about $12 in 2023, according to Euroconsult.

However, Euroconsult expects costs to stabilize over the next two to three years in the Americas and Europe, potentially slowing down the decline in capacity prices. Space News