SpaceX Buys $8 Billion in Wireless Spectrum to Take On Phone Companies
SpaceX bought $8 billion in cash for cellular spectrum from investment firm Grain Management. Spectrum is the range of radio frequencies that carry cell phone signals. Wall Street reports said the deal covers 100% of Grain's 800 MHz spectrum portfolio nationwide and is working to get approval from the Federal Communications Commission.
SpaceX wants to use the spectrum for Starlink Mobile, a service that connects satellites directly to cell phones. The new acquisition should help the signal pass through walls and reach phones indoors. Most phones already support this frequency, so it wouldn't change consumer usage. It could also provide the last critical piece of the spectrum puzzle for nationwide phone coverage.
After the acquisition, two decisions were made in SpaceX's favor this week. The FCC approved SpaceX's plan to launch 15,000 more satellites and ruled that SpaceX doesn't need agreements with existing phone companies to offer the service.
However, big phone companies were hit hard. Shares of AT&T, Verizon, and T-Mobile fell by more than 6% just after the news. Together, the three carriers lost about $39 billion in value.
The three carriers also formed a joint venture last week to share spectrum for satellite-to-phone service to counter SpaceX's acquisition. What SpaceX does next is unclear. Bernstein, a research firm, said SpaceX could build its own ground network, changing the future of the telecom industry.
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