Elon Musk: Starlink could become a global mobile carrier; 2 year timeframe for new smartphones
Yesterday, during a segment of the All-in Podcast dedicated to the SpaceX-EchoStar spectrum sales agreement [1.], Space X/Starlink boss Elon Musk was asked if this sets the industry down a path where Starlink’s end goal is to emerge as a global carrier that, effectively, would limit the role of regional carriers. “That would be one of the options,” Musk responded. Musk downplayed any threat against AT&T, Verizon and T-Mobile. The podcast section dedicated to the EchoStar agreement starts around the 16:50 mark. You can start watching at that point via this YouTube link.
Note 1. SpaceX’s $17 billion agreement with EchoStar includes $8.5 billion in stock, plus $2 billion of cash interest payments payable on EchoStar debt. Separately, AT&T’s is paying $23 billion – all in cash – for its acquisition of EchoStar’s spectrum.
Regarding the EchoStar spectrum deal, Musk said, “This is kind of a long term thing. It will allow SpaceX to deliver high bandwidth connectivity directly from the satellites to the phones.”
Musk said that deal would not seriously challenge the big three U.S. mobile carriers. He said:
“To be clear, we’re not going to put the other carriers out of business. They’re still going to be around because they own a lot of spectrum. But, yes, you should be able to have a Starlink, like you have an AT&T or T-Mobile or Verizon, or whatever. You can have an account with Starlink that works with your Starlink [satellite] antenna at home with … Wi-Fi, as well as on your phone. We’d be a comprehensive solution for high bandwidth at home and high bandwidth for direct-to-cell.”
“Could you buy Verizon?” Musk was asked. “Not out of the question. I suppose that may happen,” Musk said with a chuckle.
That idea at least “highlights the possibility that SpaceX could pursue additional spectrum,” LightShed Partners analysts Walter Piecyk and Joe Galone explained in this blog post. “We highly doubt SpaceX has any interest in the people or infrastructure of a telco, there are plenty of compelling spectrum assets in and outside of those carriers to consider.”
Getting smartphones equipped with chips to support those new frequency bands will take some time. Musk estimated that’s “probably a two-year timeframe.” LightShed Partners analysts agreed, “On devices, Elon’s two-year timeline for a Starlink phone isn’t surprising given spectrum banding, chip development, and satellite integration. He’s mused before that if phone manufacturers continued to hinder his technology that he “would make a phone as a forcing function to compete with them.”
Some analysts view MVNO agreements as Starlink’s best route to becoming a full scale mobile carrier of satellite and terrestrial wireless services.
“The most plausible business model is that Starlink partners with MNOs for them to resell the service or embed the service as part of their plans,” Lluc Palerm Serra, research director at Analysys Mason, told PCMag.
LightShed Partners agreed. Musk’s point that SpaceX isn’t out to displace the incumbent carriers “reinforced our view that securing an MVNO deal will be essential if SpaceX wants to deliver a Starlink phone directly to consumers,” LightShed’s Walter Piecyk and Joe Galone explained in this blog post.
“In parallel, we’re working on the satellites and working with the handset makers to add these frequencies to the phones,” Musk said. “And the phones will then handshake well to achieve high-bandwidth connectivity. The net effect is that you should be able to watch videos anywhere on your phone.”
AT&T CEO John Stankey addressed Starlink’s “mobile-first” possibility earlier this week at an investor conference. Starlink’s current access to spectrum, including what is coming way of EchoStar, isn’t enough to create a “robust terrestrial replacement,” he said. But he acknowledged that, with the right type of commitments, perhaps it could happen someday.
“EchoStar still owns the highly lucrative 700 and AWS-3 spectrum, in which we note that all three wireless carriers have a robust ecosystem,” TD Cowen analyst Gregory Williams wrote in a note earlier this week. “Whether EchoStar sells more [spectrum] in short order remains to be seen,” TD Cowen’s Williams wrote Monday, explaining that, with the FCC dispute resolved, it may hold onto its portfolio longer. “EchoStar is not a forced seller, now has an excellent balance sheet and liquidity, and may desire to hold onto the spectrum as long as possible for higher sale valuations at a later date,” he added.
References:
https://www.lightreading.com/5g/turning-starlink-into-a-global-carrier-one-of-the-options-musk-says
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