During a period of high inflationary pressures and talk of a recession, Starry co-founder and CEO Chet Kanojia figures it’s a pretty good time to be Starry.
“We like our chances going into this period,” he told Fierce last week, noting the company’s strong Q2 performance. People are looking for affordable service plans and “we think we are very well positioned to take share, which is what we’re doing.”
Relatively speaking, Starry is still in its infancy. It was an R&D shop not that long ago and really started rolling out its network in mid- to late 2019, so operationally, it’s a 3-year-old company.
The company went public earlier this year and last month reported serving 80,950 customers, an increase of 69.4% year over year, as of the end of the second quarter. Net additions in the second quarter were 9,703.
That’s not much compared to incumbent wireless providers with a lot more name recognition, like T-Mobile and Verizon, which also cover a lot more of the country. Starry just announced last week that it will launch its seventh market, Las Vegas, later this year. It’s currently in Boston, New York City, Washington, D.C., Denver, Los Angeles and Columbus, Ohio.
Similar to the Columbus market, Starry is building its network in Las Vegas in partnership with Quanta, a specialty contractor with a skilled workforce serving the utility, renewable energy, communications, pipeline and energy industries. “They’re just a great partner,” Kanojia said.
The Las Vegas market deployment is more akin to Columbus than its other markets. Due to sheer density, bigger cities like New York City and Boston are skewed to more multi-dwelling units, but in Columbus and Las Vegas, the housing mix tends to be a lot more single-family homes.
“What we keep doing is developing technology to make sure that our cost structure across different types of housing remains constant,” Kanojia said.
Starry uses 802.11-based technology adapted for licensed frequencies in millimeter wave (mmWave) spectrum, namely 24 GHz and 37 GHz. The way the technology is structured has a lot to do with why Kanojia thinks the company can do so well its these inflationary times, when people are watching their pocketbooks more than ever and might be seeking an alternative to cable.
A lot of fixed wireless using low-band or mid-band frequencies is really nothing more than glorified Wi-Fi, he said. Mobile operators offering fixed wireless are focused on areas where they have excess network capacity, which generally is not in the densest parts of the country, he said. Starry is focused mostly on the urban and denser parts of suburban areas.
In the early days of their fixed wireless access (FWA) offerings, Verizon and T-Mobile liked to remind everyone that they built their networks first for mobile and the revenues they get from FWA service are kind of like gravy on top of that.
What Starry is doing is fixed-only, and because the network is designed to serve fixed targets, it has cost advantages as a result, he said. For one thing, because it’s using mmWave spectrum, it has access to a lot of large channels and a lot of capacity.
The big difference between Starry and entities like Verizon and T-Mobile is “we are centered on capacity and speed, not just speed,” he said. Considering that broadband consumption is growing 30% a year, “you’re going to need capacity where people are.”
During the company’s first quarter conference call, Kanojia highlighted how Starry’s spectrum position puts it in a good position relative to competitors and against potential new entrants.
It’s nearly impossible for a new entrant to replicate Starry’s spectrum position because the FCC has auctioned off most of the mmWave spectrum that was teed up and there isn’t a meaningful secondary market opportunity to acquire spectrum from somebody who already owns it, according to Kanojia.
Starry & 12 GHz
Speaking of spectrum, Starry recently joined the 5G for 12 GHz Coalition, an organization devoted to making 12 GHz spectrum available for terrestrial 5G. The coalition is currently embroiled in a very public fight with SpaceX and its CEO Elon Musk, who insist they need the 12 GHz band all to themselves for the Starlink internet service.
What is Starry’s interest?
If you were to look at what Starry is doing in the 24 and 37 GHz bands and applied the same kind of technological innovations to a band like 12 GHz, where 500 MHz of contiguous spectrum could be available – “you have the option of creating 10s of millions of customers in this country,” he said. If you look at how many can be served by a low Earth orbit satellite system with one investment profile, “the trade-off doesn’t make sense to me,” he said.
Focus on affordability
Back to why Kanojia thinks Starry can prosper when times are tough for a lot of consumers, it’s worth noting the company’s emphasis on affordability from the get-go. The standard Starry plan costs $50 per month, which provides 200 Mbps downlink and 100 Mbps uplink.
But its Starry Connect program, which was launched in 2018, that focuses on lowering barriers to broadband adoption for families living in public and affordable housing – communities that historically have been underserved and under-connected.
Starry Connect broadband plans begin at $15 per month, have no data caps or long-term contracts, and don’t require a credit check or equipment deposit. As of May, the program reached more than 55,000 units of public and affordable housing in markets across California, Colorado, Massachusetts, New Jersey, New York, Ohio, Virginia and Washington, D.C.
Starry is participating in the Rural Digital Opportunity Fund (RDOF) and the Affordable Connectivity Program (ACP), both of which are government supported programs. The company expects to continue to grow its participation in ACP as its overall footprint and the Starry Connect program expand.
In May, Starry announced a partnership with the Jersey City Housing Authority to provide access to its Starry Connect program for residents of two housing communities in Jersey City, New Jersey.
Starry isn’t saying where it’s going to launch next after Vegas. It also needs more capital to continue doing what it’s doing. Kanojia said an update on the capital-raising front will happen during the company’s second quarter conference call, which is scheduled for August 9.