The area of the earth is 4,000^2xpi square miles, so even with 4,000 satellites there is one for every 12,000 square miles. OK, perhaps the very high latitudes don't need to be covered, and you can get that down to 10,000 square miles. For the United States, the average population density means that on average, you'd have 500,000 people covered by one satellite. Europe, Japan, China, Indonesia, and many other countries or regions have significantly higher population density. For cities, this is just a non-starter.
Now, Musk is not a stupid guy, but I just can't see how this works.