Elon Musk made headlines in 2018 when he launched his old car toward Mars aboard one of his Space Exploration Technologies Corp. rockets. He got less attention in May for his first step toward a potentially far more lucrative venture, when SpaceX launched the first 60 of a planned 12,000 satellites into low-Earth orbit (LEO). And Musk isn’t the only one pouring money into the sector: Amazon.com Inc. Chief Executive Officer Jeff Bezos is one of several competitors with plans to send thousands of their own devices into the space just above our atmosphere. Nonetheless, doubts remain over whether these new satellite constellations will provide returns on their substantial initial investments -- and even whether there’s space in our sky for so many new devices.

1. What’s Musk’s plan?

In Musk’s vision, SpaceX’s Starlink satellites will form a network providing high-speed internet service to places where laying fiber-optic cables is not economically viable, such as emerging markets in Africa and Central Asia, along with remote spots in the U.S. They’d also provide specialized services for high-end business customers. Musk says Starlink, not the SpaceX cargo runs, are how the company will bankroll his ultimate goal of sending humans to Mars.

2. Why low Earth orbit?

LEO satellites operate at between 500 kilometers (310 miles) and 2,000 kilometers above the Earth’s surface. That’s far less than is typical for the 36,000 km (22,000 miles) height of so-called geostationary satellites, the traditional home of communications satellites. The main advantage of the lower orbit is lower latency.

3. What’s latency?

Latency is the delay, usually measured in milliseconds, that occurs in a round-trip data transmission. Geostationary satellite systems have a median latency of nearly 600 milliseconds, making them an unsuitable replacement for cable or fiber systems. The lower orbits of LEO satellites, however, should result in latencies that are much closer to landline quality. OneWeb, a global communications company based in London that’s in the process of creating a network of about 650 LEO satellites, recorded an average latency of 32 milliseconds in July. Speeds like that have made satellites of interest to financial trading firms and other companies that rely on having the fastest connections to trading exchanges.

4. Are LEO satellites new?

No. In fact, most of the Earth’s approximately 2,000 active satellites are already in LEO. Iridium Communications Inc.’s network -- which allows voice and data communication from hand-held satellite phones through LEO satellites -- has been active since 1998 and currently has 66 satellites in operation. What’s new is the sheer scale of recent proposals, with the big firms planning to launch satellites in the thousands. This ambition has been driven by technological developments in smaller satellites and reusable rockets, which have brought down costs and aroused investor interest.

5. Why do they need so many?

At higher altitudes, satellites can settle into a geostationary orbit, moving at a speed that matches the Earth’s rotation and appearing to hover over a fixed spot. LEO satellites whiz around the planet at around 8 kilometers per second, completing a full circuit in between 90 and 120 minutes. That means they are only visible for a small part of their orbit to receivers on the ground. Thus, multiple satellites are necessary to establish a permanent internet connection, with one satellite passing duties to the next as it approaches the horizon. Musk has said sending as many as 800 satellites would ensure “moderate” coverage, though many more are needed for a truly global high-speed connection.

6. Who are the other big players?

While SpaceX has had plans for nearly 12,000 satellites approved by the Federal Communications Commission (FCC), so far the company has only done a single launch of 60 satellites back in May. Meanwhile, in early July Amazon asked for permission to launch 3,236 satellites through what it’s calling Project Kuiper, creating a high-stakes battle between two of the world’s most famous billionaires. OneWeb, meanwhile, hopes to start monthly rocket launches carrying 30 satellites each by the end of the year to build an initial network of 648 units. It plans to provide full global commercial coverage by 2021 and partial service from as early as 2020. So far, it has launched six satellites. Other companies, such as traditional operators Inmarsat Plc and Eutelsat SA, are at a similarly early stage. And in China, the Hongyun Project is proposing a 156-satellite constellation by 2022.

7. What hurdles do these efforts face?

The issue of space debris is causing a lot of headaches. The so-called Kessler Effect -- named after NASA scientist Donald Kessler -- refers to the possibility that if LEO becomes too crowded, there will be collisions that create more debris, creating more collisions, until eventually huge tracts of space are no-go zones for spacecraft. SpaceX says 95% of its Starlink satellites will burn up in the Earth’s atmosphere once they reach the end of their life cycle. In the mean time, the U.S. Air Force’s ‘Space Fence’ -- a monitoring system designed to track satellites and debris -- is expected to go into operation in the fourth quarter of 2019.

8. Who regulates LEO?

In a sense, no one. But satellite operators have to get approval for their launch and orbit plans from their national communications regulator, and anyone planning to sell services to the U.S. needs to go before the FCC. The International Telecommunication Union coordinates the allocation of frequencies for communications.

9. Will the satellites be visible from Earth?

Potentially. Shortly after SpaceX launched its 60 satellites, astronomers said that some telescopes were picking up streaks of reflected sunlight, obscuring their view of the wider cosmos. Since around 13,000 low-Earth orbit satellites have been approved, a number that dwarfs the approximately 1,600 stars visible to the unaided human eye, astronomers voiced concern. In response, Musk has tweeted that “Starlink won’t be seen by anyone unless looking very carefully” and that “we need to move telelscopes [sic] to orbit anyway”. He also said he had sent a note to his team about “albedo reduction,” or cutting the proportion of light reflected from the spacecraft.

10. Are they going to make money?

Traditionally, satellites have been a big drain on capital and many projects never make any money. SpaceX has said completing their Starlink network may cost over $10 billion, though Musk says it could bring in $30 to $50 billion per year once operational. Investors are right to be skeptical of promises of radically increased internet coverage and a transformed telecom market -- especially given the early stages of testing. Industry observers will be analyzing results from trial launches to gauge whether the big players are capable of delivering on their promises. Meanwhile, it’s important to remember that despite all the fanfare LEO is far from the only show in town. Traditional operators like ViaSat Inc. and Eutelsat Communications SA are continuing to invest in more powerful geostationary satellites, collaborating with companies such as Facebook Inc. and Deutsche Telekom AG to beam broadband to rural areas and airplanes.

(An earlier version of this story corrected number of Iridium satellites currently in orbit in fourth answer.)

To contact the reporter on this story: Greg Ritchie in London at gritchie10@bloomberg.net

To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, John O’Neil

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