SpaceX has agreed to purchase a large block of low-band spectrum as part of its plan to build what the company calls the world's most advanced mobile network, a move that puts it in direct competition with AT&T, T-Mobile and Verizon. The deal follows the Federal Communications Commission's approval of 15,000 next-generation Starlink satellites and SpaceX's earlier agreement to buy close to $20 billion worth of EchoStar spectrum last year. LightShed Partners analyst Walter Piecyk said on The Verge's Decoder podcast that the purchases show SpaceX intends to become the fourth major mobile carrier in the United States and possibly the world.
The spectrum in the latest agreement was originally used by Nextel, the push-to-talk service Sprint had to divest as a condition of its sale to T-Mobile. It was sold to Grain Management, which held it until SpaceX bought it. Piecyk said the asset sat without a buyer for years, and he credited SpaceX with recognizing what it could be used for.
According to Piecyk, satellite coverage alone cannot support phone service, because handsets have less power than dish antennas and signals must reach indoors. He pointed to the conditions attached to the FCC's approval of the EchoStar spectrum, which he said made clear that a terrestrial network was required. The terrestrial buildout is what makes low-band spectrum essential, he said, since those airwaves travel farther and provide better coverage.
Piecyk described SpaceX's approach as incremental, noting that the company bought EchoStar spectrum, gathered investor feedback, then returned to buy more. He said the stock market reaction to the latest purchase reflected that investors now accept that a terrestrial network is coming. He also said the established carriers are unlikely to offer SpaceX wholesale access, leaving it to build coverage itself.
The history of the airwaves dates to the government's decision to require T-Mobile to give up low-band spectrum so that another fourth competitor could exist in the market. Piecyk compared the low-band frequencies to the 700 MHz spectrum Verizon and AT&T bought for 4G. He said SpaceX's move matters because the US mobile business represents a trillion-dollar enterprise value opportunity on its own, and that SpaceX has global ambitions for both Starlink and the mobile service.
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