Top line
Shares of the three major U.S. wireless carriers slumped in premarket trading early Friday after Elon Musk’s SpaceX announced a deal to acquire nationwide low-band spectrum that he said will “pave the way” for the launch of its “Starlink Mobile” cellular service.
If the deal is approved by regulators, it could be the first major step in SpaceX’s plan to launch its Starlink Mobile wireless service.
NurPhoto via Getty Images
Key facts
EspaceX announcement it agreed to acquire nationwide low-band wireless spectrum from an investment company Cereal managementalthough the deal still requires FCC approval.
The 800 MHz spectrum will allow SpaceX’s Starlink Mobile to offer broader mobile coverage, particularly inside buildings, filling what the company says is “one of the major remaining technical gaps” in its cellular launch plans.
Unlike the higher frequency spectrum used by Starlink, the lower 800 MHz band spectrum can travel further and penetrate walls or structures more effectively.
SpaceX’s announcement indicates that most existing devices already support the 800 MHz band, potentially allowing customers to use Starlink Mobile without purchasing a new phone.
Recent iPhone models also support the 800 MHz band, but it’s unclear whether they will be compatible with Starlink Mobile when it launches.
The two companies did not disclose the financial terms of the deal, but the The Wall Street Journal reported that SpaceX agreed to pay Grain Management $8 billion in cash for the spectrum.
AT&T, Verizon and T-Mobile shares fall after announcement
Shares of the three major U.S. wireless carriers fell sharply in premarket trading Friday following the announcement. AT&T shares fell 6.6% to $23, while Verizon fell 7.23% to $43. T-Mobile stock fell 6.79% to $159.70. After falling 4.19% on Thursday, SpaceX stock rose 3.6% to $166.40 in early trading.
tangent
In its statement, SpaceX noted that the FCC also approved its plan to launch 15,000 new Starlink Mobile “Gen2” satellites that the company says will deliver more than “100 times the bandwidth of our current generation” to “unmodified devices” worldwide. The new satellites will use the 2 GHz spectrum that SpaceX had acquired from EchoStar last year in a $17 billion deal.
contra
Executives from the three major U.S. wireless carriers recently rejected the idea of a cellular service launched by Starlink becoming a major competitor, citing the limitations of its satellite technology and a lack of ground infrastructure like cell towers. AT&T CEO John Stankey spoke at a Goldman Sachs event earlier that month and said direct satellite to cell “solves the other 2 percent, without trying to find a new way to solve the 98 percent,” referring to people living in remote locations. He warned that it would not be effective “to compete with decades of infrastructure that has been put in place.” In a recent call for resultsDan Schulman, CEO of Verizon, also said that simple physics would prevent “satellite from effectively competing with a terrestrial network for mobility or broadband in urban and suburban areas.”
further reading
Musk loses billionaire status as SpaceX and Tesla drop $36 billion (Forbes)
Elon Musk suggests Mukesh Ambani, India’s richest person, prevent Starlink launch (Forbes)
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