The big picture: Shares of AT&T, Verizon and T-Mobile plunged Friday after SpaceX announced a deal to acquire a nationwide swath of low-band spectrum from a private investment firm.
- Purchasing these licenses allows Starlink to begin reaching areas that satellite currently struggles to reach, such as inside buildings, Axios Pro’s Lucinda Shen reports.
Reality check: EspaceX It will take much more than spectrum to begin offering viable cell phone services in most major U.S. cities via landline connections.
- Spectrum is essentially the waves that carry wireless signals.
- But you still need physical infrastructure to transmit and receive these signals to provide wireless coverage.
Flashback: AT&T CEO John Stankey told Axios last week that SpaceX’s plan to avoid the huge costs of building cell towers by installing small cellular base stations alongside Starlink satellite dishes in homes and businesses wouldn’t be enough to become a serious competitor.
- Costs and regulatory barriers make it “an unsustainable strategy,” Stankey said.
Zoom out: Other major telecommunications companies have also downplayed the threat from Starlink.
- “Satellite complements traditional terrestrial networks,” Verizon spokeswoman Katie Magnotta said in a statement Friday. “Spectrum acquisition alone does not provide the network or infrastructure needed to provide true national coverage or to compete with cell phone providers.”
- John Saw, T-Mobile’s chief technology officer, said on LinkedIn that he has “tremendous respect for what SpaceX has accomplished in space” but noted that more than 70 percent of mobile traffic occurs indoors.
- “This is where terrestrial networks have a fundamental advantage,” Saw wrote. “Direct-to-Cell technology can extend connectivity to outdoor locations that traditional networks don’t reach, but delivering a consistent indoor mobile experience is a very different challenge.
What they say: “Purchasing spectrum does not constitute a commitment to build a nationwide network,” Bernstein analyst Madison Rezaei wrote Friday. “But this is the spectrum we thought SpaceX needed to make this option more credible and less expensive.”
SpaceX executives say they are confident in their ability to capture market share from well-established players.
- “I expect we will be able to acquire a good number of their customers because I think our service will be better,” SpaceX President Gwynne Shotwell said in August during SpaceX’s first earnings conference call after its IPO.
The impact: Shares of AT&T, Verizon and T-Mobile closed down 9.8%, 8.8% and 13.3%, respectively, on Friday, the first trading day after the spectrum acquisition.
What’s next: SpaceX officials have said they plan to launch their mobile phone services business in late 2027.
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