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SpaceX is promising huge upgrades for its cellular Starlink system after reaching a $17 billion deal to acquire radio spectrum from Boost Mobile’s parent company, EchoStar.
On Monday, SpaceX announced that it's acquiring a block of EchoStar’s "S-Band" spectrum in the US and its global spectrum licenses. "We're so pleased to be doing this transaction with EchoStar as it will advance our mission to end mobile dead zones around the world," SpaceX President Gwynne Shotwell says.
In an SEC filing, EchoStar says it’s selling an aggregate of 50MHz in spectrum, ranging from the 1.9 to 2GHz bands, which SpaceX has long sought to access to deliver satellite internet to phones.
Currently, the company’s cellular Starlink system has been harnessing T-Mobile’s 1.91 to 1.995GHz bands to power messaging to phones in dead zones. Through the deal, SpaceX will also gain exclusive use of EchoStar's 2000–2020, 2180–2200, 1915–1920, and 1995– 2000MHz bands.
SpaceX plans to use the spectrum with next-generation Starlink Direct to Cell satellites to increase their throughput by "around 20x," SpaceX wrote in the announcement. This suggests the existing 600+ satellites can’t harness the spectrum. Still, the company is touting it can deliver “an overall capacity increase of more than 100x” once the new satellites are up and through optimized 5G protocols.
The main takeaway: “In most environments, this will enable full 5G cellular connectivity with a comparable experience to current terrestrial LTE service, which will be used in partnership with Mobile Network Operators to augment high capacity terrestrial 5G networks,” SpaceX said.
Currently, the cellular Starlink system is only available through T-Mobile and can let you send text messages, including photos, or reach emergency services if you end up in a cellular dead zone. But the system can suffer some lag since it can take 20 to 30 seconds or even up to two minutes to send a message. Hence, SpaceX’s EchoStar deal might drastically improve the service, which has already started to roll out support for transmitting satellite data to apps. Over time, the company also plans on adding voice and video calling.
(Credit: PCMag/Michael Kan)Satellite industry analyst Lluc Palerm Serra noted the deal means SpaceX doesn’t have to rely on third-party mobile carriers to use their radio spectrum. Instead, SpaceX will have its own spectrum “portfolio,” giving it a “stronger negotiating power against MNOs (mobile network operators) and who knows if they may eventually launch direct to consumers D2D services,” he wrote on LinkedIn.
Analyst Tim Farrar also wonders if the deal might cause Apple to abandon its satellite ambitions. The company is currently using Globalstar to deliver satellite access to iPhones. Tomorrow, Apple is expected to announce new iPhones.
In exchange for the spectrum, EchoStar says it’s receiving up to $8.5 billion in cash and up to $8.5 billion in SpaceX stock. Importantly, the company is also abandoning its plan to build a competitor to the cellular Starlink service. As part of the agreement, EchoStar has canceled a contract to manufacture over 100 satellites with the Canadian company MDA.
Instead, EchoStar says BoostMobile will gain access to the cellular Starlink system. The company also expects the deal to resolve the FCC’s investigation into whether EchoStar was properly using the S-Band 2GHz spectrum. But this comes at the cost of EchoStar liquidating most of its spectrum licenses, according to MoffettNathanson Research.
In a blog post, Farrar added: “SpaceX has not only persuaded EchoStar to give up its D2D plans but has now made it much harder for any competitor to move forward when they can’t possibly compete with SpaceX’s speed in bringing new satellites to market.”