SpaceX spectrum deal hits AT&T, Verizon and T-Mobile shares
The Grain Management licenses still need FCC approval, and analysts and carriers say towers would still be required for true nationwide phone coverage.
By
Gabriel Cruz
SpaceX announced on Thursday an agreement to buy a nationwide spectrum portfolio, a move that pushes its Starlink service deeper into the U.S. telecommunications market. On Friday, shares of AT&T, Verizon and T-Mobile all fell sharply, according to NBC News and CNBC. The deal still needs approval from the Federal Communications Commission, and several analysts and carriers argue that spectrum alone does not make a nationwide mobile network.
In brief
- On Friday, shares of AT&T, Verizon and T-Mobile all fell sharply, according to NBC News and CNBC .
- Starlink is the only profitable part of SpaceX’s business, according to the company’s latest earnings report.
- Final FCC approval is required, and the company has said it would then deploy an architecture combining its satellite constellation with a terrestrial deployment.
What SpaceX is buying
The licenses come from Grain Management, a firm that specializes in digital infrastructure. SpaceX says the package holds as much as 14 megahertz of paired spectrum, all in the 800 MHz band. In its statement, the company said this low-band spectrum closes one of the main technical gaps that stand between Starlink Mobile and a place among the major U.S. mobile carriers.
SpaceX also announced that the FCC had approved the launch of 15,000 additional satellites under Starlink Mobile, a subsidiary of SpaceX, according to NBC News. Elon Musk called the agreement a “very big deal” in a post on X. CNBC reports that SpaceX did not immediately say when new services might come online if regulators clear the purchase. If they do, the added spectrum would help the company combine satellite and ground-based coverage once it builds a network of towers.
How the market reacted
NBC News reports that the three largest U.S. wireless carriers lost more than $50 billion in market value before lunch on Friday. The individual moves were:
- AT&T: down 9.8%.
- Verizon: down 8.7%, its worst one-day drop since 2002.
- T-Mobile US: down 13.3%, its worst day since 2011.
Charter and Comcast, the parent company of NBC News, also fell. Both sell wireless services under their own brands over Verizon’s infrastructure.
Why Starlink draws attention
Starlink is the only profitable part of SpaceX’s business, according to the company’s latest earnings report. CNBC says the service reaches 205 countries and counted 12 million subscribers on June 30. In the second quarter, the connectivity business generated $1.66 billion in operating income on $4.29 billion in revenue, and Starlink operates more than 11,000 satellites in orbit. In a report this week, Deutsche Bank analysts put the worldwide subscriber base at 13.5 million by the end of September, 4.1 million of them in the United States.
The relationship between the carriers and Starlink looks tense. Last week, the three carriers set up a joint venture to expand coverage in underserved areas through satellite and direct-to-device services, and Starlink was notably absent. T-Mobile has also removed mentions of Starlink from its T-Satellite promotions.
Why towers still matter
The skeptical reactions focus on the gap between owning spectrum and operating a network.
- Verizon said in a statement to NBC News that acquiring spectrum alone does not provide the network or infrastructure needed for true nationwide coverage.
- Analysts at JPMorgan Chase wrote that, lacking a deal with an existing carrier, SpaceX would probably have to build a ground network of large towers. They also saw limited near-term risk for the incumbents.
- John Saw, T-Mobile’s president of technology, wrote on LinkedIn that a company can buy spectrum in a single transaction but cannot buy a nationwide, high-performing network overnight.
- Tim Farrar of TMF Associates told CNBC that the deal adds fuel to the fire between SpaceX and the operators, but that it is still a very limited amount of spectrum, and that reliable coverage inside buildings in urban areas would require towers on the ground.
NBC News adds that AT&T did not respond when asked for comment.
Regulators and the next steps
FCC chairman Brendan Carr said on CNBC on Friday morning that the developments would be good news for American consumers, according to NBC News. A day before SpaceX’s announcement, the FCC said it would vote on auctioning 25 megahertz of spectrum to support direct-to-device services from satellites to smartphones. It also plans to vote on October 29 on taking public comment on making an additional 482 MHz available for supplemental coverage from space. CNBC notes that these proposals could benefit SpaceX as well as Amazon, which is also building a service with satellite networks.
For now, the spectrum purchase is an agreement, not a finished network. Final FCC approval is required, and the company has said it would then deploy an architecture combining its satellite constellation with a terrestrial deployment.
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