Friday, August 05, 2022

SpaceX Starlink's variable pricing pilot in France is good business and good karma.

An idle satellite over Africa is neither generating revenue for SpaceX nor serving the population.

Starlink is available in 37 nations and the price for best effort service was the same everywhere until August 3 when variable pricing with throttling became available in France. I predicted they would eventually shift from uniform to affordable pricing some time ago, but why did they do it now?

Starlink first became available in the U.S. and Canada and sales are beginning to outrun the available capacity. At oversubscribed locations, the best effort is unacceptable, median performance is slipping overall, and the recent announcement of new, non-residential services will exacerbate the problem. Launching new satellites will ease today's congestion and capacity will increase rapidly when version 2 satellites are launched, but demand will always be uneven and capacity limited,

Under the pilot program in France, the monthly service fee drops from €99 to €50/month. A Fair Use policy will begin in October. Users who consume 250 GB/month or less will be prioritized. Those who exceed 250 GB/month will still have access to unlimited data but may experience slower speeds during times of network congestion. They can also choose to purchase additional data to reclaim priority status for €10/100GB.

This is a pilot program, and it will be carefully studied and tweaked. For example, they will be able to vary the congestion threshold criteria, the performance goals of prioritized and limited service, and the frequency of checking a cell to determine whether prioritization is required. SpaceX may have selected France for the pilot study because it is demographically similar the U.S. and Canada.

It is not surprising to see Starlink begin to transition to variable pricing. When I was a child, phone call charges were reduced on Sundays and during the evening and mobile phone companies offer variable price plans today. 

Starlink service is currently available in thirty-seven nations, four of which are in Latin America. None are in Africa or Asia and an idle satellite over Africa is neither generating revenue for SpaceX nor serving the population. Ideally, the full capacity of the satellite constellation would be utilized at every location and time because the marginal cost of serving a new customer when and where there is excess capacity is near zero. (SpaceX does not offer residential installation or support). That optimal goal is unreachable, but I would be surprised if, eventually, we do not see pricing for affordability -- different service plans and terminal prices in different countries. 

(For a related discussion see this post).

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