Latest / The Emerging Markets Podcast with Fexingo: Developing Economies, Growth, and Investment / How Orbital Data Centers Could Reshape Emerging Markets
Transcript
- Lucas: So there's this headline from yesterday — SpaceX is racing toward orbital data centers. And I think most people read that and go, 'cool, Elon stuff,' but the emerging markets angle here is genuinely underappreciated. Luna: Orbital data centers — like, actual computing power in space, not just satellites for communication? Lucas: Exactly. We're talking about server racks in low Earth orbit, connected by laser links. And the implications for a country like Nigeria or India — places where fiber infrastructure is patchy and latency is a real bottleneck — could be huge. Luna: It's funny you mention that. I was just reading about how students in rural India still struggle with video conferencing because of lag. If you can put compute closer to them via satellite, that changes the equation. Lucas: Right. And look, today the show is free and independent, and if walking through the economy with us has made something click for you, honestly, if today was worth a coffee to you, that's the link — buy me a coffee dot com slash fexingo. Tiny thing, keeps the lights on. Luna: Yeah, it's just a nice way to say 'this is useful' without any pressure. Lucas: Exactly. So back to space. The key insight is that emerging markets have always struggled with the last mile of connectivity. Fiber takes years to lay, costs billions, and doesn't always reach rural areas. Satellite broadband — Starlink already has over a million users globally — but orbital data centers take it a step further. Luna: Instead of just beaming internet down, you're beaming computing power. So a farmer in Kenya could run an AI crop model without needing a local server farm. Lucas: Precisely. And the numbers are starting to get real. The satellite broadband market is projected to hit one point two trillion dollars by 2030. That's a compound annual growth rate of about seventeen percent. And a chunk of that is coming from emerging markets where mobile penetration is high but fixed broadband is low. Luna: One point two trillion — that's bigger than the entire cloud computing market today, almost. Lucas: It's comparable. And what SpaceX is doing — they've launched a few test pods already, and they're talking about full-scale orbital data centers within the next three to five years. The latency advantage is enormous: geostationary satellites have a round trip of about 600 milliseconds. Low Earth orbit can get that down to 20 milliseconds — comparable to terrestrial fiber. Luna: So for a trader in Lagos trying to execute a high-frequency trade, or a student in Jakarta on a Zoom class, that's the difference between usable and unusable. Lucas: Exactly. And there's a geopolitical angle too. Right now, a huge amount of emerging market data flows through data centers in the US or Europe. Orbital data centers could allow countries to keep their compute in orbit — which is international waters, effectively — and bypass some of the sovereignty concerns. Luna: That's a double-edged sword though. If your data is in space, who controls it? The country that launched the satellite? The company that owns it? Lucas: Great question. And it's not resolved. But the potential for leapfrogging is real. We saw it with mobile phones — Africa skipped landlines and went straight to mobile. Similarly, countries with poor fiber could skip terrestrial data centers and go straight to orbital compute. Luna: What about the cost? Launching servers into space is still incredibly expensive. Lucas: It is, but the cost per kilogram to orbit has dropped dramatically — from about sixty-five thousand dollars in the early 2000s to around fifteen hundred dollars with Starship. That changes the math entirely. And SpaceX is planning to launch thousands of these nodes. Luna: So what's the catch? Why isn't every emerging market government already signing up? Lucas: A few reasons. First, the technology is still unproven at scale. Radiation in space can fry electronics. Cooling is a challenge — you can't just run an AC unit. And the business model is unclear: do you lease space on a satellite, or buy your own pod? Luna: Plus, there's the digital divide issue. If orbital data centers are controlled by US companies, does it really empower local economies, or just create new dependencies? Lucas: That's the critical question. But there are already startups working on open-source orbital computing platforms. And some countries — I'm thinking of India, Brazil, and Nigeria — have active space programs. They could potentially partner or build their own. Luna: Nigeria has a space agency, right? They launched satellites before. Lucas: Yes, NASRDA — the National Space Research and Development Agency. They've launched several satellites for communications and earth observation. An orbital data center project would be a huge leap, but the foundation is there. Luna: What about the macroeconomic angle? If emerging markets can suddenly access low-latency compute, how does that show up in GDP numbers? Lucas: It's hard to quantify, but we can look at proxies. A World Bank study from 2020 found that a ten percent increase in broadband penetration boosts GDP growth by about one point two percent in developing countries. Orbital data centers could accelerate that by making broadband more usable for compute-intensive tasks. Luna: So it's not just about faster Netflix. It's about enabling AI, remote surgery, precision agriculture — the kinds of things that actually drive productivity. Lucas: Exactly. And there's a specific example from India. The government's Digital India initiative has put fiber in hundreds of thousands of villages, but the last mile still lags. Satellite computing could fill that gap without more trenching. Luna: I've also heard that some African countries are looking at orbital data centers as a way to bypass the high cost of electricity for terrestrial data centers. Running a server farm in Lagos is incredibly expensive because of diesel generators. Lucas: That's a great point. In space, you can use solar panels directly — no grid needed. And the cooling is free, essentially, since space is cold. The main power draw is the computing itself and the communication lasers. Luna: So the operating costs could actually be lower than in some emerging market cities. Lucas: Potentially. Though you have to factor in launch costs and maintenance. But if the technology matures, it could be a genuine alternative. Luna: What about the risk of space debris? More satellites mean more junk. Lucas: It's a real concern. Orbital data centers would be large structures — harder to dodge debris. But SpaceX and others are working on debris removal and collision avoidance. It's a solvable problem, but it adds cost. Luna: So where does this leave the average investor in emerging markets? Is there a way to play this? Lucas: Right now, it's mostly through SpaceX, which is private. But there are publicly traded satellite companies like Iridium and Globalstar that could benefit. And some emerging market telcos that partner with Starlink — like Jio in India or MTN in Africa — could see upside. Luna: But it's early. A speculative bet, not a core holding. Lucas: Absolutely. The timeline is three to five years for the first commercial orbital data centers. But the direction is clear. And for emerging markets, it represents one of the most interesting infrastructure leaps since the mobile phone. Luna: So to circle back — if you're a policymaker in an emerging economy, should you be investing in terrestrial fiber, or betting on space? Lucas: I think the smart answer is both. Fiber for high-density urban cores, orbital for rural and remote areas. But the balance is shifting. The cost of space is dropping faster than the cost of digging trenches. Luna: That's a pretty compelling argument for taking space seriously. Lucas: It is. And the next few years are going to tell us whether orbital data centers are the future or just a fascinating experiment.