Amazon is finally taking the fight to Starlink
Every monopoly looks permanent right up until it isn't. Standard Oil looked untouchable. AT&T (T) owned the telephone for most of a century. In markets, dominance is usually a lease rather than a deed, and the rent comes due the moment a competitor with deeper pockets decides the prize is worth ...
Overview
Every monopoly looks permanent right up until it isn't.
Standard Oil looked untouchable. AT&T (T) owned the telephone for most of a century. In markets, dominance is usually a lease rather than a deed, and the rent comes due the moment a competitor with deeper pockets decides the prize is worth the pain.
For the past decade, satellite internet has belonged to one company. SpaceX (SPCX) built Starlink into the default choice for anyone living beyond the reach of cable or fiber, stacked up more than 10,000 satellites, and rode that dominance into the largest initial public offering in history last month.
Wall Street has mostly treated the business as a one-horse race, and my analysis of the sector's coverage suggests most retail investors have priced it exactly that way.
That assumption just got shakier. In the early hours of July 2, a rocket lifted off from Cape Canaveral carrying 29 satellites belonging to the other trillion-dollar company in this fight.
Amazon (AMZN) says its Leo constellation now has enough hardware in orbit to switch on commercial internet service later this year.
Why Starlink has owned satellite internet
Starlink launched in 2015 and spent its first decade running essentially unopposed. SpaceX used its own reusable rockets to put satellites up at a cost no rival could touch, and the service became the default for rural households, airlines, ships, and militaries.
The moat is structural. SpaceX rides its own reusable rockets to orbit, while Amazon buys rides at market rates.
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Amazon is "held hostage by third-party vendors charging between $2,600 and $7,000 per kilogram," Sebastian Barros, an independent telecom analyst who previously worked with Google and Ericsson, wrote in a piece cited by RCR Wireless.
The scale is hard to overstate. Starlink's connectivity business generated $11.39 billion in revenue and $4.42 billion in operating income in 2025, making it the only profitable division inside SpaceX, according to CNBC's review of the IPO prospectus.
Subscribers reached 10.3 million in the first quarter, and June's offering valued the company near $1.77 trillion, reported The Next Web.
Amazon Leo crosses its most important threshold
A United Launch Alliance Atlas V rocket lifted off from Cape Canaveral Space Force Station at 12:30 a.m. EST on July 2, carrying 29 Leo satellites and pushing Amazon's constellation past 390 spacecraft, according to CNBC.
Details
That total is "enough to support continuous service across initial latitudes," Chris Weber, Amazon Leo's vice president of business and product, wrote on X (the former Twitter), as quoted by CNBC.
Related: SpaceX investors may be ignoring troubling trend
All 29 satellites deployed successfully about 70 minutes after liftoff, reported Space.com.
Amazon plans to open commercial service later this year, with coverage limited to certain regions until more satellites come online. The company has been running an enterprise preview for select business customers since November, when it also rebranded the project from Kuiper to Leo.
This was the Atlas V's final flight for the program after carrying 224 Leo satellites across its missions, and the next batch rides on ULA's larger Vulcan rocket, reported Engadget.
The numbers behind Amazon's space gamble
Getting here took longer and cost more than Amazon expected. The milestones tell the story:
- 2015: SpaceX launches Starlink, giving it a four-year head start on Amazon's program, CNBC confirmed.
- November 2025: Amazon rebrands Project Kuiper as Amazon Leo and opens its enterprise preview, according to CNBC.
- July 2, 2026: The constellation passes 390 satellites, enough for initial commercial service, CNBC reported.
- 2028: Leo begins powering Apple's (AAPL) iPhone satellite features under a deal tied to Amazon's Globalstar acquisition, GeekWire noted.
- Mid-2029: The full 3,232-satellite first-generation network is due for completion, according to GeekWire.
The bill is enormous. Amazon initially committed more than $10 billion to the project, and analysts now estimate first-generation spending will land between $16 billion and $20 billion, reported The Next Web. The Globalstar deal alone added $11.57 billion for spectrum and direct-to-device capability, according to the same outlet.
The customer pipeline is already forming. Beta partnerships are in place with Verizon (VZ), Vodafone, JetBlue (JBLU), and NASA, giving Leo enterprise revenue before a single consumer signs up, The Next Web also reported.
Amazon claims Leo will deliver download speeds up to one gigabit per second, roughly double Starlink's typical throughput. That figure is the company's own marketing number and hasn't been tested at scale, The Next Web noted.
What the Leo milestone means for your money
If you live somewhere the cable companies never bothered to reach, this is the best news in years.
Monopolies rarely cut prices. Starlink raised consumer plans by $5 to $10 per month in May, timing that suggests the company is extracting revenue from existing subscribers before competition arrives, reported The Next Web. A funded second option changes that calculus fast.
For Amazon shareholders, the picture is less comfortable in the short run. I compared the estimated $16 billion to $20 billion first-generation budget against the market leader's results, and Amazon is spending more to build this network than Starlink collected in revenue during all of 2025. Leo stays a drag on free cash flow through at least 2027.
The prize explains the patience. Starlink converted its 2025 revenue into nearly 40 cents of operating income per dollar, proof that space internet is a real business and not a billionaire vanity project. Amazon didn't have to guess whether the model works. It watched a rival publish the answer.
3 things Amazon shareholders should watch between now and January
- Pricing, because Amazon hasn't announced consumer rates.
- Launch cadence, because Vulcan and Blue Origin's New Glenn have to fly on schedule for Amazon to complete the constellation by the Federal Communications Commission's (FCC) 2029 deadline, and New Glenn's launchpad suffered an explosion during a May hotfire test that delayed every mission counting on the rocket, according to Engadget.
- AnyLeo line item on Amazon's earnings calls, because the day this business gets its own disclosure is the day Wall Street starts assigning it a value.
Starlink built an empire in an empty sky. As of this week, the sky has company.
Related: Starlink just notched a win U.S. investors should watch
Source
Originally published at www.thestreet.com.
