Spectrum deal advances Starlink’s ‘major mobile carrier’ plan

• Elon Musk’s SpaceX has struck a deal to acquire low-band spectrum for its Starlink Mobile operation
• The move takes Starlink one step closer to competing directly with the US market’s major mobile operators
• Musk says the acquisition is the “last critical piece of the spectrum puzzle” for Starlink Mobile

Elon Musk’s plan to turn SpaceX’s low-earth orbit (LEO) Starlink Mobile unit into a major, countrywide mobile network operator in the US is now looking like less of a pipe dream – and more of a threat to AT&T, Verizon and T-Mobile US – following SpaceX’s deal to acquire spectrum in the 800 MHz band, a move that would enable it to offer in-building as well as outdoor coverage. 

The move brings months of plans and speculation sharply into focus.

Musk and the SpaceX management team unveiled the company’s ambition to evolve Starlink Mobile – which currently partners with telcos (including T-Mobile US) to offer direct-to-device (D2D) services from space – into a nationwide US cellular service provider in August when, during SpaceX’s first earnings call as a listed company, they outlined a plan to build an extensive cellular small cell network across the US in order to compete directly with the market’s three major telcos. Musk, who is no stranger to major market disruption, told investors that the resulting network could provide “connectivity that is, we think, probably better and higher bandwidth than what is currently available from cellular providers” – see Musk’s Starlink plots small cell rollout to rival US mobile operators.

Since then, the plan has been dismissed by industry watchers and executives from the major US telcos as unworkable. Last month, Tim Höttges, the CEO of Deutsche Telekom, which is the majority shareholder of T-Mobile US, hit out at the market over speculation that Starlink Mobile could provide a better service than existing mobile operators and surpass terrestrial telecom providers as the main provider of connectivity services, labelling some of the claims as “far-fetched and conceptual”.

And AT&T’s chairman and CEO, John Stankey, recently described the Starlink Mobile small cell rollout plan as “not viable” from an economic or technology perspective. One of the main criticisms levelled at Starlink Mobile’s terrestrial network initiative is that it wouldn’t have the resources to offer in-building services. 

But the three major US mobile operators are clearly worried about the competitive threat of Starlink Mobile for some time, as they have joined forces to form a D2D joint venture with the aim of encouraging alternatives to Starlink Mobile’s D2D partnership model.   

Now they will be even more concerned. 

Late on Thursday, SpaceX announced an agreement to “acquire a nationwide low-band spectrum licence portfolio of up to 14 megahertz of paired spectrum in the 800 MHz band. This prime low-band spectrum addresses one of the key remaining technical gaps that will pave the way for Starlink Mobile to become a major mobile carrier in the US.” No financial details were shared.

You can’t say SpaceX is being vague about its intentions!

It went further in this document, which revealed that the spectrum licences are, pending approval from US regulator the Federal Communications Commission (FCC), being acquired from Grain Management, which itself had acquired them from T-Mobile US earlier this year. It stated in the document: “Acquiring this low-band spectrum is a critical next step in ensuring that Starlink Mobile will bring much-needed innovation to the wireless market by providing quality high-speed service anywhere, including in remote and urban environments as well as in buildings. SpaceX will make use of these licences through a flexible, hybrid architecture that ensures Starlink Mobile is the only network capable of delivering terrestrial broadband, satellite service, or both – connecting to standard consumer devices and closing coverage gaps nationwide. Once approved, SpaceX will deploy rapidly so that American consumers can enjoy the benefits of these long-underused spectrum assets.” 

SpaceX further addressed the in-building coverage issue in its main public announcement. “Once we receive final FCC approval, Starlink Mobile will deploy a flexible architecture combining our satellite-to-mobile constellation in space with an advanced terrestrial deployment that can seamlessly connect devices everywhere. While Starlink Mobile’s global 2 GHz mid-band spectrum” – acquired last year from Echostar – “will provide high-bandwidth capacity in the United States, this new low-band spectrum will provide a coverage layer that ensures Starlink Mobile’s signal penetrates through obstacles, such as walls, and can provide service to customers’ devices even when they are in buildings. Critically, most existing mobile devices already support this underused band.”

SpaceX appears confident of gaining FCC approval, as it is essentially promising to put the 800 MHz spectrum in question “to productive use”, something that hasn’t happened for more than a decade and which has been a source of frustration for the regulator, which wants to see valuable airwaves utilised rather than just hoarded. 

Commenting on X (another of his assets), Musk noted that the deal to acquire the low-band spectrum from Grain Management is “the last critical piece of the spectrum puzzle needed for SpaceX to provide complete phone coverage in America”.

SpaceX believes that the combination of Starlink Mobile’s next-generation (Gen2) LEO constellation – which it presented at MWC26 earlier this year and which will comprise thousands of what it calls its V2 satellites – and the 800 MHz spectrum will enable Starlink Mobile to become “the first network operator to deploy both satellite and terrestrial spectrum. One network that provides Americans with a reliable service indoors, outdoors, in cellular dead zones, and everywhere in between.”

SpaceX also noted that the FCC had given its approval for Starlink Mobile to launch 15,000 V2 satellites for its Gen2 constellation, noting that the V2 satellites will “deliver more than 100 times the bandwidth of our current generation, bringing high-speed service directly to unmodified devices anywhere in the world”.

The SpaceX announcement made the prospect of Starlink Mobile competing directly with the major US telcos for mobile customer subscriptions much more real for investors, as the share prices of AT&T, Verizon and T-Mobile US all slumped by about 6% in post-market trading late on Thursday. 

- Ray Le Maistre, Editorial Director, TelecomTV