Almost any decision will have unintended consequences. The $1.2 trillion infrastructure bill passed by the U.S. Senate may make SpaceX, which is at the helm of Tesla CEO Elon Musk, suffer.
Barron’s reported that about 65 billion US dollars of the infrastructure project is expected to be used to build a rural broadband network. This is undoubtedly a good thing for people’s livelihood, because in the modern world, the public needs high-speed Internet for work, study, and enjoy streaming movies. Entertainment such as Netflix (NFLX-US).
The bill will help companies such as AT&T (T-US) and Charter Communications (CHTR-US) provide network coverage to rural areas. AT&T CEO John Stankey described the potential infrastructure project as “icing on the cake” in April this year, but AT&T may not need this support. “I think we can move on without this policy and provide customers with what we promised.”
In the end, funding for broadband technology may actually damage the next generation of high-speed network technology, or raise the difficulty of high-tech competition, and SpaceX will bear the brunt.
SpaceX hopes to provide a popular high-speed, space network, and has so far launched hundreds of small Starlink satellites into low orbit (LEO).
According to Musk, Starlink can theoretically provide Internet anywhere, but it performs better in rural areas. Now Starlink may usher in a more robust competitor-the current broadband industry with a subsidy of $65 billion. .
However, subsidies may not completely change the competitive position, because the economics of space-based network products are not yet a foregone conclusion. Jonas believes that the monthly fee for Starlink’s high-speed network service may fall in the range of US$25 to US$50, but this is an early estimate and has not yet taken into account regional differences and the ability of global customers to pay.
Of course, broadband companies also have profitable existing businesses, and their profits can be used to subsidize any rural projects. Business is complex, and the government’s decision sometimes adds complexity. It nominally subsidizes an industry, but its impact may be more far-reaching, and one has to be cautious.