The Starlink Eyes Eyes Eyes Prize of $ 6.9 billion

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Earlier this month the UK government unveiled a new £ 5 billion ($ 6.9 billion) initiative called Project Gigabit, an infrastructure project designed to bring gigabit broadband to historically underserved rural areas. For areas that are particularly difficult to reach with traditional infrastructure, the UK believes that satellite internet could be a compelling option.

This is where Elon Musk and his rocket company SpaceX come in.

Source: Getty Images

According to Sky News and CNBC, SpaceX has engaged the UK in negotiations to participate in the Gigabit project. SpaceX has been using its reusable rocket technology for over three years to regularly launch Starlink satellites as it constantly deploys a constellation of satellites in low earth orbit (LEO) that the internet can beam back onto the planet.

SpaceX has launched over 1,200 satellites for the network to date, while Musk plans to increase that number to 42,000 in the years and decades to come.

Starlink is already available as a beta program to customers in selected regions. According to the company, users can expect download speeds of 50 to 150 Mbps initially, which is comparable to the broadband speeds of many people in the cable industry.

Data speed and performance will improve over time as SpaceX continues to build infrastructures such as ground stations while developing its network software.

According to Sky News, Starlink could be the most promising way to bring broadband to rural areas in the UK, according to Culture Secretary Oliver Dowden. However, other alternatives such as balloons or autonomous airplanes are also being considered.

SpaceX faces competition from OneWeb

alphabet (NASDAQ: toget) (NASDAQ: togetL) had been researching the idea for years to provide high-speed broadband from balloons as part of its Loon subsidiary. However, the search giant recently decided to close the division due to concerns about economic viability. Loon had received few trade contracts in the course of its history.

Satellite Internet has struggled to gain ground for decades, in part due to the high cost historically associated with launching the devices into space on rockets. Thanks to SpaceX’s ability to reuse its rockets, the cost of accessing space has dropped dramatically, potentially sparking a new wave of innovation.

The UK government last year acquired a stake in OneWeb, a LEO satellite internet company that was going through tough times and filed for bankruptcy.

The acquisition and reorganization provided OneWeb with fresh capital and OneWeb resumed its satellites in December. The UK could potentially choose to use Starlink or OneWeb from SpaceX, or a combination of the two.

A few years ago the Wall Street Journal received SpaceX’s financial data, including a forecast that Starlink could gain 40 million subscribers and $ 30 billion in revenue by 2025.

Musk has also suggested that Starlink could go public as a standalone public company in “several years” after it can produce consistent financial results.

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