Justin Fauntleroy is a government contractor responsible for writing future concepts and doctrine for the U.S. military, specifically the Joint Staff and Naval Warfare Development Center. He earned a bachelor’s degree in aerospace engineering from the U.S. Naval Academy and a master’s degree in national policy and strategic studies from the U.S. Naval War College, where he completed a master’s thesis on Space Deterrence for U.S. Strategic Command.
With little fanfare, SpaceX has unveiled its plan to completely revolutionize the space industry, and the world has collectively shrugged.
In early December 2022, SpaceX introduced its Starshield concept, a satellite program offering satellite-based secure communications and optional sensing payloads to government customers. However, despite its subdued announcement, Starshield is, in fact, a Trojan horse that will enable SpaceX to further dominate the space domain and dictate policy to businesses and national governments alike. With the new Starshield program, SpaceX is on the verge of transforming its dominance into a monopoly. Governments and businesses must act now to counter any attempts to monopolize the space industry in order to preserve consumer choice and to ensure national policy remains in the hands of elected governments.
SpaceX’s current dominance of the commercial space market is starkly illustrated by the fact that OneWeb, the nearest competitor to SpaceX’s Starlink, was forced to select SpaceX as its launch provider. SpaceX, a private company, can already control its competitors’ access to space and force its policies on national governments. There is simply no other company that can compete with SpaceX’s cost and responsiveness. And the peril of one company being able to dominate the space industry is currently being demonstrated on the battleground of Russia’s war in Ukraine. In October 2022, SpaceX is suspected of restricting the use of Starlink for advancing Ukrainian forces to comply with CEO Elon Musk’s belief that Ukrainian attempts to reclaim their territory were needlessly escalatory and should be stopped. Later, in February 2023, SpaceX explicitly forbade the use of Starlink for “offensive or defensive operations” but retained for itself the final authority on what defined offensive or defensive operations.
To fully understand the significance of the Starshield announcement, it is useful to compare it to the rise of the Apple iPhone. On the surface, it appears – and SpaceX’s marketing reinforces – that Starshield is just a logical extension of its consumer/business Starlink program. But Starshield is much more than how it is being marketed. What is not readily apparent is that with Starshield, SpaceX has essentially built the satellite equivalent of the iPhone, and this platform will enable SpaceX to dominate the space industry in a manner similar to Apple’s domination of the mobile smartphone market.
There’s an app for that
Perhaps the greatest impact of the Apple iPhone was that it greatly expanded the ability of small programmers to create applications (apps). This spurred an explosion of innovation that has led to everything from Instagram to secure mobile banking. The key development that allowed this app innovation was that Apple took care of all the extraneous tasks. Any developer that wanted to build an app, as long as they followed Apple’s protocols, had access to the iPhone’s Wi-Fi network, cellular service, camera, gyroscopes, touch interface, and display.
Additionally, Apple was responsible for developing and updating the core operating system (iOS) and cybersecurity, freeing designers from these necessary but time and capital-intensive tasks. Apple made app design easier, and app designers flocked to the iPhone platform. Since the iPhone had all the apps consumers wanted, they sold in droves, and their ubiquity created a self-reinforcing feedback loop. Designers who wanted market penetration made iPhone apps. Consumers bought iPhones to ensure they had access to all the newest apps, which meant that the next app designer was incentivized to publish for iPhone. Even though iPhone only held just over 24% of the global smartphone market as of January 2023, apps are often published or updated for iOS before Android and other competitors. Apple’s early market dominance allowed them to set the standard and maintain a dominant influence on the market.
For the space industry, the satellite payload is the equivalent of the iPhone app. The two main parts of a satellite are the bus and the payload. The bus provides support to the payload in the form of structure, power, thermal management, communications, control, etc. The payload is the part that performs a specific purpose beneficial to the operator. Thus, the payload is the most important segment to the satellite builder, because it is the payload that provides a service for which customers are willing to pay.
Unfortunately, it is currently difficult to drive innovation in satellite payloads (outside of national government programs). For example, even if an optics company perfects a new satellite sensor that could revolutionize remote sensing, it would still have to fulfill many other requirements before getting that sensor into orbit. These requirements include designing a specialized satellite bus containing a solar panel and power subsystem, a unique telemetry system for command and control, a space and terrestrial communications network to receive information from the sensor, and multiple other engineering-intensive and expensive tasks. In addition to paying for an expensive custom-built satellite, the optics company would need to pay for a launch provider, insurance, and recurring costs for satellite control and cybersecurity. If a multiple satellite constellation were required, these costs would grow considerably. The expense and complexity of satellite design create barriers to “app” development.
SpaceX’s Starshield has the potential to remove many of these barriers to “app” development. For companies that pay for Starshield, SpaceX will provide satellite command and control, constellation maintenance, cybersecurity, encrypted processing of data, and integration and launch services. Most importantly, SpaceX will provide a modular bus with all the payload requirements and a plug-and-play operating system. In the example above, the optics company could simply build a sensor that complied with SpaceX’s requirements and then sit back and monetize the data it receives from SpaceX’s service. If the satellite payload equivalent is the app, then SpaceX has just built not only the iPhone, but also the entire mobile network as well. This is equivalent to Apple owning the iPhone, AT&T, Verizon, and T-Mobile.
While Starshield is currently marketed to national governments, presumably partly due to the cost, costs are expected to decrease rapidly. SpaceX has already proven it can build and launch satellites at scales not seen before in the space industry. As of January 2023, SpaceX owned nearly half of all active satellites in orbit, which is even more impressive if one realizes that their first Starlink satellite launch did not occur until 2019. Their manufacturing capacity, combined with the lowest kilogram-to-orbit launch costs in the industry and unmatched launch cadence — SpaceX accounted for over one-third of all global space launches in 2022 — will enable SpaceX to provide the modular bus and all the other satellite services at costs low enough to attract new customers to the space industry. It will not be long before regional, county, and municipal governments can afford custom payloads. Once SpaceX’s new heavy-lift rocket becomes operational, the cost of the Starshield program will only get cheaper.
As more customers join the Starshield program, their unique and varied needs will spur even more companies to enter the aerospace industry. Starshield’s modular platform and SpaceX’s launch cadence will allow small companies to rapidly and cheaply design, iterate, integrate, and launch new satellite components. And once these components are evaluated and deemed “space-rated,” then Starshield’s proliferation will enable these small companies to market their component to every other user of the Starshield platform. This market opportunity will drive more excitement, innovation, and investment into the Starshield program, creating more market opportunities; thus creating a similar feedback loop Apple created with its iPhone and app store.
In the absence of any competitor, the Starshield platform and its network will become the industry standard. Any company that wants to enter the space market will choose to make its product compatible with the Starshield architecture. Not only because it is easier but also because that is what their potential customers are using. Even other satellite manufacturers will be forced to license patents from SpaceX, as all the cutting-edge components will be designed to interface with the Starshield bus, operate with the Starshield software, and communicate with the Starshield network. It is not unforeseeable that in the near future, the majority of new satellites in orbit will either utilize or license Starshield technologies and that most orbit-to-Earth communications — both commercial and government — will flow through SpaceX networks. This revenue stream will allow SpaceX to continually develop its Starshield program, enhancing its lead over its competitors and extending its market reach.
Toward Starshield alternatives
The Starshield program holds serious implications for both businesses and governments planning on operating in space in the future. Any company intending to compete in low Earth orbit must start developing viable alternatives to Starshield today. SpaceX has achieved a remarkable level of vertical integration, making it difficult for any one company to compete with the whole gamut of services that SpaceX can provide with Starshield. However, companies should start focusing on offering alternatives to specific portions of the Starshield platform. One idea would be to build an alternative ground-to-orbit communications network. That way, customers who choose to utilize SpaceX-licensed hardware due to market factors will not be forced to use SpaceX’s data network. An alternate communication path would ensure companies other than SpaceX maintain access to the potentially lucrative data, enabling a host of other business opportunities, including data analytics, consulting, and Artificial Intelligence/ Machine Learning (AI/ML) modeling and application.
For governments, national security concerns should spur actions to limit SpaceX’s budding monopoly. SpaceX has been a fantastic partner to the United States and other democratic governments. However, it is against national security interests that one company effectively controls access to space, space infrastructure standards, and the information flow from space. That is not to say that governments should penalize SpaceX by restricting their ability to innovate. SpaceX had the vision and took considerable financial risks to develop the Starshield platform. Governments should applaud and encourage such efforts. However, governments should also be wary of entrusting so much national security to one corporate entity or one individual.
SpaceX unilaterally restricted how Ukraine could use Starlink in its defense, and the realization that a non-public company controlled by the whims of one man could determine a country’s military operations, or even set national policy, should have sent shivers down every democratic government’s spine.
It is imperative that democratic governments start taking steps today to ensure that events similar to what happened in Ukraine can never happen again. Governments should prioritize enabling competition by setting policies that encourage — or force —SpaceX to develop open, license-free protocols and universal non-proprietary device interfaces. That way, potential competitors could build alternatives to the Starshield bus that can still interface with the new burgeoning satellite component industry.
To use the smartphone analogy, this step would ensure that an “Android-like” competitor would maintain access to all the same “apps” as Starshield. This will increase the number of players in the marketplace, helping to ensure that governments continue to have access to alternative providers, reducing taxpayer costs and freeing governments to act in their best interest.
When Steve Jobs unveiled the first iPhone in 2007, most technology reporters realized it would revolutionize the industry. It is arguable, though, that not even Jobs realized that it would not be the actual iPhone but the app market it enabled, which would become the driving market force.
SpaceX is developing an ecosystem that will upend the space industry as much as the iPhone ecosystem upended mobile telecommunications. The importance of Starshield is not in the actual satellites being built today. Rather, the true significance is the new space marketplace that Starshield will create.
The real danger is that businesses and governments alike could soon find themselves held hostage by the ideology of a non-elected entity.
Commercial companies need to develop capabilities and programs to ensure they remain relevant in this new marketplace.
And governments need to partner with companies to develop laws and standards that encourage space development while ensuring this new marketplace remains competitive.
If governments and the commercial sector do not act now, SpaceX’s head start will become an insurmountable lead, allowing SpaceX to dominate the space sector for decades to come.
This article originally appeared in the June 2023 issue of SpaceNews magazine.