SpaceX spectrum deal rattles Verizon, AT&T and T-Mobile
SpaceX agreed to buy a nationwide spectrum portfolio from Grain Management, setting up Starlink to expand into mobile service. Verizon shares fell 8.75%, their…
For US wireless carriers, SpaceX’s move into mobile service carries a direct competitive threat. Space x said it would acquire a nationwide spectrum portfolio from Grain Management, and Verizon, T-Mobile and AT&T shares fell sharply on Friday.
The agreement could help Starlink expand beyond satellite internet and compete for mobile customers. Verizon closed down 8.75%, its worst day since July 2002. T-Mobile fell 13.27% and AT&T dropped 9.81%, each marking their worst day since 2013 and 2000, respectively. SpaceX stock rose around 1%.
The sell-off reflects concern that Starlink could become a direct rival to established wireless operators, rather than remain primarily a rural broadband service. That shift could put pressure on carriers’ enterprise, emergency service and rural subscriber businesses, as well as international roaming revenue, according to the reporting.
What SpaceX is buying
SpaceX announced the agreement late Thursday. The portfolio comes from Grain Management and includes what SpaceX described as a “license portfolio of up to 14 megahertz of paired spectrum in the 800 MHz band.” The deal requires oversight from the Federal Communications Commission, which will consider its approval.
SpaceX’s spectrum purchase builds on its existing satellite capabilities and direct-to-cell service. The company is positioning Starlink to offer mobile service across the United States, though the sources do not provide a launch date or describe the service’s planned coverage and pricing.
The stakes reach beyond stock prices. If Starlink develops into a mobile competitor, consumers could face a new provider in markets served by established carriers, while businesses and rural customers may see changes in the options available to them. The immediate market reaction shows investors are weighing that possibility, not that a nationwide cellular network is already operating.
FCC Chair Brendan Carr said increased competition in the spectrum market was “really good news for the American consumers” in an interview with CNBC. His agency will oversee approval of the agreement.
Carriers see both competition and cooperation
Carr said the spectrum market could see substantial activity. “We're probably going to bring over $100 billion of spectrum into the market over the next two years, so we're seeing a lot of competition,” he told CNBC’s “Squawk on the Street.” He added that regulators would not choose winners and losers.
AT&T Chief Executive John Stankey has acknowledged areas where Starlink could offer a strong service, including in-flight broadband, rural locations and some connections for vehicles. Speaking to Yahoo Finance at the Goldman Sachs Communacopia conference in September, he also described a possible complementary relationship between satellite companies and existing carriers.
“there's also going to be the complementary dynamic of us being able to solve that other 2% of the use cases I talked about and bring our customers to those satellite operators, whether it be Amazon or SpaceX,” Stankey said. He said carriers could aggregate traffic and bring it into the wholesale market.
Analysts cited by CNBC said the deal gives Starlink Mobile’s longer-term opportunity more credibility, while warning that established US wireless companies face limited near-term risk because a competitive terrestrial network takes time, infrastructure and capital to build.
Verizon’s Friday decline was 8.75%.
Source: finance.yahoo.com
