Europe is proposing to fund a homegrown alternative to Elon Musk’s Starlink following US threats to switch off the satellite company’s broadband services in Ukraine.
Last week, the European Commission’s defense white paper called for Brussels to fund Ukrainian military access to services provided by EU-based commercial providers, a move aimed at boosting the region’s own satellite capabilities.
The defense white paper stated that Brussels “should… fund Ukrainian [military] access to services provided by EU-based commercial providers.”
Miguel Ángel Panduro, chief executive of Spain’s Hispasat, told the Financial Times that his company, Eutelsat, and SES were asked for an “inventory” of services for Ukraine.
Starlink now operates 40,000 terminals in Ukraine. It serves consumers, government agencies, and military units on the front line. Troops have attached Starlink’s compact terminals to drones to transmit live video to help direct attacks.
Experts say no single European network can match this range. A reliable European solution would likely be a patchwork of satellites in different orbits, each with varying performance and requiring different terminals.
“Today, there is no substitute for Starlink,” said Panduro. A senior executive at a rival operator remarked, “Starlink is so disruptive, so cheap, so pervasive, and so excellent.” Starlink’s dense satellite network and low-cost launches have pressured legacy operators worldwide.
In five years, Starlink has launched 7,000 satellites into LEO, making it the world’s biggest operator. These satellites fly at roughly 550 km. In comparison, GEO satellites orbiting around the globe are at a distance of 36000 km.
This lower altitude allows Starlink to offer lower latency and higher-speed connectivity. Since beta trials began in 2020, Starlink has gained 4.5 million subscribers and secured contracts with airlines, shipping groups, and governments, including a win over Air France last autumn.
Starlink’s LEO network got the attention of shipping and airlines
Legacy operators like SES and Eutelsat had hoped that sectors such as airlines and shipping would sustain interest in their GEO satellites.
However, Starlink’s LEO network quickly attracted key customers. In response to that, Eutelsat made an announcement in 2022 that it would acquire OneWeb, which operates at 1,200 kilometers. While SES expanded into medium Earth orbit (MEO) with its O3b mPower network and acquired GEO operator Intelsat.
Both companies have taken on significant debt for these multi-orbit strategies. Yet initial expectations have not been met.
OneWeb has struggled with slower ground station rollouts, and analysts worry that Eutelsat may not fund a new generation of OneWeb satellites.
Europe’s flagship €10 billion Iris² project, aimed at securing government communications from 2030, is critical for unlocking further funding for the satellite industry.
The development of a European alternative to Starlink could serve as a test run for Iris², with proposals likely to include a mix of LEO, MEO, and GEO satellites.
SES chief executive Adel Al-Saleh told the Financial Times, “It is impossible to replace Starlink in a day.”
He added that a single orbit network is not resilient enough and that a multi-orbit approach is needed for resilience, backup, and flexible traffic management. Despite Starlink’s dominance, both SES and Eutelsat remain confident that the market will eventually adopt their strategies.
European policymakers now see the patchwork of satellite networks as vital to the bloc’s sovereign defense infrastructure.
Aleksander Peterc, head of small- and mid-caps research at Bernstein, said the new landscape repositions Eutelsat and SES as key components of defense capabilities. Any proposal for Ukraine is expected to include a mix of LEO, MEO, and GEO satellites, a concept that also aligns with plans for Iris².
A main part of any Ukrainian solution and Iris² will be Eutelsat’s OneWeb. However, OneWeb’s capacity is limited by its 630 satellites. At higher altitudes, OneWeb has higher latency and needs more power, making its antennas and spacecraft larger and more expensive.
Its terminals, designed for business and government, are bulkier, more complex to configure, and cost between $5,000 and $10,000 each. James Trevelyan of Speedcast said, “The brutal reality is that the terminals remain a big blocker for a European alternative.”
Short sellers reportedly lost about $150 million on the recent surge in Eutelsat and SES shares. Analysts are divided on the rally’s sustainability.
Nicholas Kordowski, head of fixed income research at Aberdeen, said, “Starlink has deep pockets and a vertical integration advantage. All that hasn’t really gone away.”
Rapid advances in satellite technology and fierce competition mean legacy operators face a long road if they hope to match Starlink.
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