5 ms·

I remain convinced that the main successful business model in the satellite communications industry is to wait for the first incarnation of the satellite compan

I remain convinced that the main successful business model in the satellite communications industry is to wait for the first incarnation of the satellite company to fail / go bankrupt / flounder, and then be part of the 2nd round of financing or ownership that comes in to buy it out and operate it... I don't know why this is the pattern but it seems to have played out several times over the last 2 decades that I've casually watched this syndrome.

SMAAART 6mo ago
Clayton M. Christensen (The innovator's dilemma) would agree.
chiph 6mo ago
If you haven't read Eccentric Orbits: The Iridium Story you should. The system was operational, but Motorola's dysfunction and impossible sales goals leading to disillusionment meant that Dan Colussy & team was able to pick it up for $25 million (development price: $5 billion)
vjvjvjvjghv 6mo ago
Or also owning a rocket company that launches your satellites at low cost.
gangstead 6mo ago
They were about $3 billion in the hole when they went through bankruptcy in 2002 and the new owners bought it for $43 million (from Wikipedia). In 2025 they earned a return of $-8 million on that investment (plus any other money raised since then, such as $1 billion from Apple). So even the second incarnation doesn't seem to be a good business model even with free satellites. The business model that works seems to be spectrum gambling. Do the minimum amount of satellite investment for decades until someone with a real business plan comes along and has to go through you to get it.
Zigurd 6mo ago
Iridium was first. It was a cautionary lesson. Listen to Patrick Boyle regarding Starlink. Not everyone was paying attention in class.
AnimalMuppet 6mo ago
You see the same pattern with railroads from 1860 to 1900.
vitorsr 6mo ago
Or become a major investor on a largely public funded project with commitments set to start at a delayed time in order to benefit from R&D before bearing financial burden. (See [1].) [1] https://www.ft.com/content/8e75ed31-0c72-4160-b406-1ca6aa36a84f https://www.ft.com/content/8e75ed31-0c72-4160-b406-1ca6aa36a...
NitpickLawyer 6mo ago
> to fail / go bankrupt / flounder This is exactly what "the Internet" said about spacex when they announced Starlink. Oh, it never worked. LEO constellations were tried in the 90s, ALL of them failed. Haha, it will never work. 14k satellites, that's insane, dreams, lies, hahaha. ... and yet, they are now at ~10k satellites launched, and are serving 9+mil customers, for some unknown billions/year in revenue (should become clear in a few months when they IPO).
- mandeepj 6mo ago
  > for some unknown billions/year in revenue Read here on HN yday: they’ve $20B in revenue, but xAI is a drag.
readitalready 6mo ago
The only real viable long-term business model for these constellations are for the military or other socialized use. They are completely unprofitable otherwise. Eventually even Starlink will lose money, as more and more rural regions around the world are wired for fiber.
- brandon272 6mo ago
  I find this hard to imagine. There are so many rural customers where it is totally uneconomical to run fiber vs. just paying for Starlink.
  - pstuart 6mo ago
    5G internet seems to be a decent compromise for that -- much simpler infra at least.
    - brandon272 6mo ago
      I might be biased because I live in an area where it is fairly easy to find locations that don't have cellular coverage and won't have cellular coverage anytime soon. Globally, there's a lot of places that are sparsely inhabited but too remote to warrant strong cellular connectivity. There's also a lot of "nooks and crannies" geographically that are not well served by cellular. As an example, I have a property in an area with excellent 5G coverage but my specific property is in a valley removing line of sight between me and the local tower, meaning reception is virtually nil. I can't even make a phone call. Without Starlink my only option would be to rely on a local WISP to set up some kind of repeater system that would have far lower reliability/performance and significantly higher cost.
      - saltcured 6mo ago
        Yes, but the question is what fraction of the population is in these niches and does that provide enough subscription revenue to fund the constellation? If many others find a cheaper and more reliable path, the customer base collapses.
toast0 6mo ago
> I don't know why this is the pattern but it seems to have played out several times over the last 2 decades that I've casually watched this syndrome. This is a pretty common pattern in capital intensive businesses. It's often the case that revenue is inline with operating costs, but revenue can't really ever pay for the start up costs. That dooms the initial business, but after bankruptcy it can be viable. Depending on circumatances, the very visible bankruptcy also helps deter other businesses from joining the market. But if the cost was high due to technology, doing the same business 10-20 years later can work out because the start up costs may be significantly less.
wolvoleo 6mo ago
It is of course what happened to Iridium. But not all of them go bankrupt.

SMAAART 6mo ago

Clayton M. Christensen (The innovator's dilemma) would agree.

chiph 6mo ago

If you haven't read Eccentric Orbits: The Iridium Story you should. The system was operational, but Motorola's dysfunction and impossible sales goals leading to disillusionment meant that Dan Colussy & team was able to pick it up for $25 million (development price: $5 billion)

vjvjvjvjghv 6mo ago

Or also owning a rocket company that launches your satellites at low cost.

gangstead 6mo ago

They were about $3 billion in the hole when they went through bankruptcy in 2002 and the new owners bought it for $43 million (from Wikipedia). In 2025 they earned a return of $-8 million on that investment (plus any other money raised since then, such as $1 billion from Apple). So even the second incarnation doesn't seem to be a good business model even with free satellites. The business model that works seems to be spectrum gambling. Do the minimum amount of satellite investment for decades until someone with a real business plan comes along and has to go through you to get it.

Zigurd 6mo ago

Iridium was first. It was a cautionary lesson. Listen to Patrick Boyle regarding Starlink. Not everyone was paying attention in class.

AnimalMuppet 6mo ago

You see the same pattern with railroads from 1860 to 1900.

vitorsr 6mo ago

Or become a major investor on a largely public funded project with commitments set to start at a delayed time in order to benefit from R&D before bearing financial burden. (See [1].) [1] https://www.ft.com/content/8e75ed31-0c72-4160-b406-1ca6aa36a84f https://www.ft.com/content/8e75ed31-0c72-4160-b406-1ca6aa36a...

NitpickLawyer 6mo ago

> to fail / go bankrupt / flounder This is exactly what "the Internet" said about spacex when they announced Starlink. Oh, it never worked. LEO constellations were tried in the 90s, ALL of them failed. Haha, it will never work. 14k satellites, that's insane, dreams, lies, hahaha. ... and yet, they are now at ~10k satellites launched, and are serving 9+mil customers, for some unknown billions/year in revenue (should become clear in a few months when they IPO).

mandeepj 6mo ago
> for some unknown billions/year in revenue Read here on HN yday: they’ve $20B in revenue, but xAI is a drag.

readitalready 6mo ago

The only real viable long-term business model for these constellations are for the military or other socialized use. They are completely unprofitable otherwise. Eventually even Starlink will lose money, as more and more rural regions around the world are wired for fiber.

brandon272 6mo ago
I find this hard to imagine. There are so many rural customers where it is totally uneconomical to run fiber vs. just paying for Starlink.
- pstuart 6mo ago
  5G internet seems to be a decent compromise for that -- much simpler infra at least.
  - brandon272 6mo ago
    I might be biased because I live in an area where it is fairly easy to find locations that don't have cellular coverage and won't have cellular coverage anytime soon. Globally, there's a lot of places that are sparsely inhabited but too remote to warrant strong cellular connectivity. There's also a lot of "nooks and crannies" geographically that are not well served by cellular. As an example, I have a property in an area with excellent 5G coverage but my specific property is in a valley removing line of sight between me and the local tower, meaning reception is virtually nil. I can't even make a phone call. Without Starlink my only option would be to rely on a local WISP to set up some kind of repeater system that would have far lower reliability/performance and significantly higher cost.
    - saltcured 6mo ago
      Yes, but the question is what fraction of the population is in these niches and does that provide enough subscription revenue to fund the constellation? If many others find a cheaper and more reliable path, the customer base collapses.

toast0 6mo ago

> I don't know why this is the pattern but it seems to have played out several times over the last 2 decades that I've casually watched this syndrome. This is a pretty common pattern in capital intensive businesses. It's often the case that revenue is inline with operating costs, but revenue can't really ever pay for the start up costs. That dooms the initial business, but after bankruptcy it can be viable. Depending on circumatances, the very visible bankruptcy also helps deter other businesses from joining the market. But if the cost was high due to technology, doing the same business 10-20 years later can work out because the start up costs may be significantly less.

wolvoleo 6mo ago

It is of course what happened to Iridium. But not all of them go bankrupt.