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AT&T, T-Mobile, and Verizon are forming an unlikely alliance to shape the emerging satellite-to-phone market, possibly to prevent SpaceX’s Starlink Mobile from dominating the space.
The joint venture (JV) is designed to support satellite-based phone service in cellular dead zones, enabling customers to remain connected in rural and remote areas. The JV will “pool” the carriers’ spectrum to support the satellite services, which require radio frequencies to deliver the data. Another key goal is to provide consumers with “greater choice.”
“By collaborating on this JV, the partners will be able to enhance convenience for their customers, enable competition, and foster innovation and growth within the industry,” the companies added.
The funding and naming for the joint venture remain unclear. But the companies noted that “through combined investment by the three JV partners, provider options will expand, and, as a first step, D2D [direct-to-device] access will improve. This will enhance competition as consumer choices grow in satellite service. Emerging communications technologies can be more easily and quickly developed and launched to enhance customer experience.”
The deal is a bit surprising; T-Mobile has already partnered with SpaceX to offer Starlink Mobile to customers since last year, while AT&T and Verizon have been investing in rival AST SpaceMobile, which aims to launch services by year's end.
But in the announcement, T-Mobile CEO Srini Gopalan noted that “multiple space-based operators” are emerging. “This JV will use expanded capacity and improved performance to deliver the best possible service to customers. This partnership will also make it easier for satellite operators to deliver a broader range of direct-to-device experiences and help accelerate innovation across the wireless and satellite industries.”
Verizon CEO Dan Schulman added, “This partnership gives customers more options, continues to strengthen America's infrastructure and increases competition for satellite providers."
The announcement doesn't name any specific satellite communications vendor. But industry analyst Tim Farrar tweeted that the joint venture is “clearly designed to present a united front in any negotiation” with SpaceX’s Starlink Mobile, which is planning major upgrades for next year.
(Credit: SpaceX/Starlink)Will Townsend, another analyst at LoneStar Advisory, added: “I also view this alliance as a defensive move to mitigate the impact of any NTN [non-terrestrial network] service provider that might wish to more directly compete with mobile network operators.”
Even SpaceX's President Gwynne Shotwell seems to view the joint venture as a counter to Starlink Mobile. In a tweet, she wrote: Weeeelllll, I guess Starlink Mobile is doing something right! It’s David and Goliath (X3) all over again — I’m bettin’ on David :)."
SpaceX's VP for Satellite Policy David Goldman also questioned if the joint venture might face antitrust scrutiny by referencing comments from a research firm analyzing the deal. "The bigger question is whether the DOJ (Justice Department) even allows it...Three high-margin competitors moving in parallel just as a new rival prepares to enter is the kind of pattern that raises real collusion concerns," he tweeted.
Starlink Mobile can currently offer speeds of around 4Mbps in cellular dead zones. But in September, SpaceX made waves by reaching a deal to acquire valuable radio spectrum from Boost Mobile’s parent, EchoStar, to upgrade Starlink Mobile with 5G speeds that could reach 150Mbps in download rates per user.
Elon Musk's company emphasizes that Starlink Mobile is meant to be “complementary to terrestrial networks,” but the acquisition has still raised questions about whether SpaceX will try to dominate the satellite-to-phone market or even compete with traditional carriers over the long term. For now, Starlink Mobile has been reaching deals with a growing number of carriers worldwide. But the licensing terms for using SpaceX’s satellite-to-phone service could change once the upgraded network starts coming online next year.
In the meantime, AST SpaceMobile applauded the deal, viewing the joint venture as a way to accelerate development of satellite-to-phone services. “We plan to be a key enabler of this transformation as we continue to grow our global network in low Earth orbit and expand available spectrum to our network,” says CEO Abel Avellan.
However, Farrar says it’s clear that AT&T and Verizon also want more alternatives, after AST suffered a satellite loss and has faced delays in launching its own network. The other major player is Amazon, which is acquiring Globalstar, the satellite service provider for Apple iPhones.
FCC Chair Brendan Carr said this month that he also wants “at least three facilities-based providers” in the satellite-to-phone market.
Verizon's partner on satellite services, Skylo, also chimed in on the joint venture, saying: "The future of direct-to-device will not be won by space infrastructure alone. It will be won by making satellite connectivity work in a carrier-grade, standards-based and interoperable way across devices, networks and geographies." Skylo has been using satellites from providers including Viasat, Ligado Networks, and EchoStar to power its own satellite-to-phone service for texting.