More IPO Fluffing: Musk’s Starlink Hints At Becoming Full Wireless Phone Company

from the pie-in-the-sky dept

Last month, SpaceX began making lobbying filings in support of phone unlocking rules making it easier to switch your phone between wireless providers. You might recall that the Biden FCC was on the cusp of installing such rules before the Trump administration, hand in hand with giant telecoms, dismantled them (Trump’s FCC will have to decide whether they love Verizon/AT&T/T-Mobile or Elon Musk more).

SpaceX’s push now makes a little more sense with the company saying it is “considering” launching a Starlink retail product and could eventually build its own terrestrial US mobile network:

“The company’s president and chief operating officer, Gwynne Shotwell, told investors during a recent IPO roadshow that the group was considering launching a Starlink retail product and could build its own terrestrial US mobile network, according to four people familiar with the matter.”

To be clear, I think a lot of this is simply more bullshit to justify the insane SpaceX IPO valuation. But the fact SpaceX has lobbied for phone unlocking rules suggests there is at least some kernel of real curiosity about an actual plan.

One major problem for SpaceX and Starlink is that Starlink is already too congested to handle the traffic they currently deal with. They’re already struggling under the load of 10 million low-Earth orbit (LEO) satellite users; the idea, as proposed in their IPO prospectus, that they’ll very quickly surge to more than 300 million subscribers was already the stuff of fantasy.

But when it comes to building out a cellular network to reach that goal, they simply don’t have the spectrum for this kind of thing:

“New Street Research estimates that the three US mobile network operators have a total of about 1,020MHz of spectrum, while SpaceX has just 65MHz.”

Building out telecom networks is a massive, costly, and expensive chore. Even when you own a government. Directly threatening AT&T and Verizon — some of the most politically powerful companies in the country — wouldn’t be a cake walk, even for Musk. And while Musk clearly has influence at the FCC (remember that time he got Brendan Carr to launch a fake investigation to acquire more spectrum?), turning Starlink into a full wireless/cellular/satellite carrier would be very slow and very expensive.

So if you were a logic-driven investor you’d likely and correctly view this as a costly money pit with no returns anywhere on the horizon. The only real way to make it work would be to acquire somebody like T-Mobile, which would cost billions, take years to integrate, and face all sorts of operational and political challenges — especially if the economy is going to break (further) or control of Congress shifts.

So while a Starlink jump into wireless is certainly possible, I think it’s more likely that this is just putting a toe in the water in a way that might help them extract more favorable terms from their existing cellular partners (they currently offer an “out of range” option via T-Mobile). It’s also likely more IPO fluffing by people who know U.S. journalists and investors no longer truly inhabit operational reality.

Filed Under: cellular, competition, congestion, elon musk, fcc, phone unlocking, satellite, telecom, wireless

Companies: spacex, starlink