Why SpaceX made a $17B bet on the direct-to-cell market | TechCrunch

SpaceX just fired, one of the biggest shots in Spectrum Wars, agreeing to pay $17 billion A large amount of radio waves taken over from Echostar to the battery service directly to the battery.

The deal is the most radical signal SpaceX wants to dominate the satellite-passing market.

The meaning of sales is that SpaceX paid $8.5 billion in cash and $8.5 billion in SpaceX stock, centered on limited resources: Spectrum. Spectrum refers to the radio frequency range that carries wireless signals, from telephone to text, GPS and satellite communications.

Through the Federal Communications Commission, the U.S. government divides the spectrum into “bands.” There are only so many frequencies available that users must coordinate to avoid interference. To raise the ante, only some ranges are good for cell phones and satellites, which reduces the pool of available bands further and creates a fierce competition.

FCC Auction offers long-term licenses to private companies at a high price. The main cellular belts are mainly accumulated by wireless carriers in countries such as AT&T and Verizon, while existing satellite operators such as Iridium and Globalstar have separate bands.

In 2024, the FCC approved a new regulatory framework called “supplement coverage,” which paves the way for satellites to expand their networks of operators. SCS enables satellite operators to work with land operators to use the operator’s existing telephone spectrum to fill wireless coverage as a secondary service. Later that year, SpaceX officially began providing direct battery service to T-Mobile users as a premium add-on.

This framework paves the way for SpaceX’s deal with Echostar. It creates a structure that allows satellite operators to leverage the ground network. Now, with Echostar Deal, SpaceX does not need to work with Spectrum’s ground licensees. SpaceX does not rely on relationships with other companies, but becomes a licensee.

Of course, SpaceX is the business of building rockets and satellites, not mobile phones, so it still depends on hardware manufacturers and operators to attract hundreds of millions of consumers. But SpaceX CEO Elon Musk came up with the idea of ​​building a phone under his other business X, Merge with Xai Earlier this year. Mush specifically targets Apple’s ongoing collaboration with Openai. August, X and Xai File a lawsuit Oppose the two companies, accusing anti-competitive practices.

Apple satellite features such as emergency SOS are through a partnership with Canadian company Globalstar, which has committed more than CAD$1.5 billion to further expand its iPhone services that support satellites. but Some analysts Wondering whether SpaceX’s move was a leverage to convince Apple to work with SpaceX instead of Globalstar.

This is not SpaceX’s first muscle building in the spectrum war.

The company spent years successfully fighting the 12 GHz band SpaceX wanted for Starlink. It also joins DISH/ECHOSTAR lacks the use of AWS-4 bands, one of the spectrum licenses it finally received.

In addition, SpaceX and Kuiper are also trapped in FCC files due to interference with rules, and how competitive satellite large structures should share spectrum.

They are also the main force that prompted the FCC to revisit the satellite spectrum sharing rules. Earlier this year, the Commission opened a formal rulemaking to postmodern satellite sharing restrictions on SpaceX’s petition, supported by Kuiper and others.