SpaceX recently announced its acquisition of spectrum in the 800 MHz band from Grain Management for approximately $8 billion in cash, a move CEO Elon Musk described as a major milestone in expanding satellite-based cellular connectivity across the United States. However, building a true rival to major U.S. wireless carriers will require a terrestrial network, likely years of additional work and billions of dollars in further investment, according to a Reuters report.
While Starlink has gained traction by serving rural and sparsely populated areas with limited competition and offering easy-to-install home internet packages at competitive prices, mobile telephony presents a much greater challenge. Cities are particularly difficult environments for satellite connectivity, making mobile-to-satellite communications technologically complex.
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SpaceX will need to invest heavily in ground infrastructure, customer service, handset subsidies and promotions. Building a network could cost more than $80 billion, according to TD Cowen. The investment would come as SpaceX is already spending heavily on its Starship rocket program, AI infrastructure and Terafab chip factory.
“It’s just hard to imagine that this is all going to get done within a decade,” said Julie Zhu, a research analyst at MoffettNathanson. “In the decade or so leading up to 2023, the big three spent about $650 billion in capex to build networks that ostensibly were already finished.”
Most phones have small antennas and limited transmitting power, making reliable satellite connections more challenging when satellites orbit hundreds of kilometers above Earth — much farther away than cell towers.
SpaceX has received regulatory authorization for up to 15,000 Starlink Mobile satellites and plans to deploy traditional terrestrial infrastructure, including antennas on towers and rooftops, according to a regulatory filing last week. Under the Starlink Mobile system, satellites could connect directly to mobile phones or relay signals through ground infrastructure.
The approach differs from T-Mobile’s satellite service, in which Starlink provides satellite connectivity to fill coverage gaps where cell towers are unavailable, while T-Mobile provides terrestrial connectivity.
SpaceX could theoretically partner with one of the three major U.S. carriers through a mobile virtual network operator (MVNO) arrangement, which would allow it to use another company’s network. However, Anshel Sag, principal analyst at Moor Insights & Strategy, told Reuters that SpaceX “appear[s] to be going after a more build-your-own approach to a terrestrial network since nobody will offer them wholesale MVNO.”
SpaceX would need several times more spectrum to match the holdings of the three major mobile carriers, although its current spectrum could be sufficient to get started. “It is for a company with zero mobile subscribers, plenty of runway, and a robust device/equipment ecosystem,” TD Cowen said.
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Telecom operators remain skeptical of SpaceX’s ambitions. T-Mobile Chief Technology Officer John Saw said SpaceX’s spectrum would not be enough to match the capacity and performance of established mobile networks. Katie Magnotta, Verizon’s associate vice president of corporate communications, said, “A company can have billions of dollars of spectrum, but if they do not have the network to use it, it’s just empty airwaves.”
Investor Gene Munster said in a post on X that he believes SpaceX will eventually make a phone, despite Musk suggesting otherwise. Munster also said such a device would pose a greater threat to Samsung Electronics than to Apple, whose “device and services tie-in is harder to break.”