Elon Musk, the South African entrepreneur and founder of SpaceX, has further solidified his presence in Mexico by securing two contracts in a bid by the Federal Electricity Commission (CFE) to provide satellite internet services through his unit, Starlink. This strategic move aims to address the need for more connectivity in rural areas of Mexico and marks a significant step in Musk’s foray into the telecommunications sector in the country.
Contracts and Challenges
Starlink Satellite Systems in Mexico has secured contracts extending until December 2026, with an estimated value ranging from 887.5 million to 1,775 million pesos. These contracts aim to provide low Earth orbit satellite backhaul connectivity services, along with the supply of necessary equipment to establish telecommunications infrastructure. The initiative falls under the CFE’s public internet and telephone access program, specifically targeting connectivity-deprived rural areas.
Despite being Elon Musk’s second business venture in Mexico, entering the telecommunications sector poses significant challenges. While over 25 million Mexicans lack internet access, satellite connectivity currently represents only 0.6% of connections in the country, according to data from the Federal Telecommunications Institute (IFT) as of March 2023. Competing with established companies such as Hughes, StarGo, and Viasat will not be easy.
Opportunities and Obstacles
The pricing of satellite internet packages will be a crucial factor in the competition. With prices starting from $999 per month, Starlink aims to stand out in a market where optical fiber is the dominant technology, representing 44% of fixed broadband connections in Mexico.
Jorge Bravo, President of the Mexican Association of Right to Information (Amedi), emphasizes the importance of the connection speed offered by Starlink due to its constellation of low Earth orbit satellites. Elon Musk’s presence adds an element, generating interest and attention in the nascent satellite connectivity industry in the country.
Challenges for the Mexican Government
While the entry of Starlink is perceived as a positive development, Bravo warns that the Mexican government must closely monitor the development of this model. He underscores the importance of a connectivity policy that considers the convergence of technologies, emphasizing the speed and efficiency of satellite connectivity, especially in rural areas or emergencies.
Elon Musk, who had previously announced substantial investments in Mexico with the future Tesla factory in Nuevo León, continues to view the country as fertile ground for his businesses. The arrival of Starlink not only highlights the importance of the satellite industry and raises questions about the government’s role in promoting new connectivity models.
Elon Musk and Starlink’s entry into the satellite internet market in Mexico promises renewed competition in the sector and the potential to improve connectivity in currently underserved areas.
