FCC Chairman Brendan Carr called the SpaceX deal to acquire $17 billion in EchoStar spectrum “a potential gamechanger for the American consumer,” but not everyone seems sure the transaction will change much beyond giving SpaceX access to more spectrum.
Impact: Nevertheless, the transaction (and a similar AT&T deal two weeks ago) ended the FCC’s twin investigations into EchoStar and jump-started speculation about how SpaceX plans to use the AWS-4 and H-Block licenses. The company has said it will use them to support its next-generation constellation of direct-to-device Starlink satellites but now there’s talk the licenses could eventually turn Starlink into a mobile provider. Fierce Network said that when asked about the possibility that Starlink could become a satellite-based mobile carrier, SpaceX CEO Elon Musk said Starlink doesn’t intend to “put the other carriers out of business” but hinted that eventually customers could end up with a Starlink account that works with their at-home Starlink antenna and with their phone as a comprehensive solution with bandwidth for both home broadband and direct-to-device connectivity.
The speculation about SpaceX stepping into the empty fourth major U.S. wireless carrier slot vacated by EchoStar following its spectrum sales to first AT&T and then SpaceX didn’t appear to faze AT&T CEO John Stankey. LightReading reported on Stankey’s comments on the deal, which indicated he’s not worried that the satellite operator could move forward on a “mobile-first” service powered in part by the new spectrum it acquired from EchoStar. He reasoned that a satellite-based offering likely won’t be able to keep pace with or match the coverage to buildings offered by terrestrial wireless technology. New Street Research analyst Philip Burnett was more blunt, writing in a research note reported on by LightReading that D2D services “will never work indoors, and will likely never work in urban areas,” though he said rural areas could be a different story. Elon Musk acknowledged as much at the All-In Summit, commenting that Starlink’s next-generation D2D will still have difficulty getting through thick metal roofs, though it should have no problem connecting homes with normal roofs. He also said it would take up to two years for equipment vendors to develop phones and chipsets compatible with AWS-4 and H-
Block spectrum and that SpaceX will also have to get next-gen satellites developed and into orbit. In addition, Musk views turning Starlink into a global mobile carrier as an option but not the only option. For now, the focus remains on improving the company’s direct-to-device service, which rolled out commercially with T-Mobile in July.
New Street Research policy analyst Blair Levin doesn’t think the deal is necessarily the “game-changer” Carr has made it out to be, with market reaction muted at this point about the possibility the SpaceX D2D service could pose a “material competitive risk to established wireless service providers.” That’s because in order to really compete as a wireless carrier, SpaceX would need more spectrum and likely an MVNO deal to put it in the same ballpark as the major carriers, per New Street. As for the idea that SpaceX could go out and buy a wireless carrier? While possible, that seems far-fetched at the moment, though analysts at LightShed Partners think SpaceX could decide to chase additional spectrum licenses. Roger Entner of Recon Analytics told LightReading that buying a wireless carrier would be “a heavy lift” for Musk and SpaceX and that it could have bought the still under construction EchoStar 5G network as part of the spectrum deal if it really wanted to get into the wireless carrier business. But without any terrestrial spectrum, a network is of no use to SpaceX at this time. Most analysts, including those at Analysis Mason who spoke to PCMag, expect SpaceX to instead pursue a MVNO agreement down the line if it wants to offer Starlink as a consumer mobile service. But Carr views the deal through a lens focused on U.S. competition with China and wants to make sure space operators have the best regulatory environment in which to grow. Funneling more spectrum to SpaceX as the leading LEO makes sense when looked at in that regard.
