Elon Musk’s SpaceX is planning to expand its services by offering mobile contracts directly to individual customers in the US. This move marks a significant shift for the company, which currently provides high-speed Internet connections through its constellation of satellites.
According to sources familiar with the matter, SpaceX has been considering launching a Starlink retail product and could build its own terrestrial US mobile network. The plans were revealed during an IPO roadshow, where Gwynne Shotwell, president and chief operating officer, discussed the company’s future growth prospects.
The move would require Starlink to build a new retail offering by selling mobile contracts directly to consumers, competing with major network operators such as Verizon Wireless, AT&T, and T-Mobile. To date, SpaceX has offered more limited direct-to-consumer services in the US, preferring to give telecoms groups access to its satellites to supplement their existing network coverage in rural areas.
Analysts believe that Starlink takes a cut from revenues generated by customers whose mobile deals include access to its satellites. A direct-to-consumer mobile offering would give SpaceX access to a far larger market than satellite broadband alone, potentially reducing its reliance on telecoms partners.
The plans come just days after SpaceX’s landmark initial public offering (IPO), which has heightened investor demands for rapid growth and new revenue lines. During the IPO roadshow, Musk sold investors on future plans to launch data centers into space and build a colony on Mars.
While describing expanding Starlink as another key growth pillar in its IPO prospectus, SpaceX has never publicly confirmed that it plans to launch a retail mobile service. However, there have been months of speculation over SpaceX’s future mobile plans after it paid $17 billion to rival EchoStar for wireless spectrum licenses to bolster its Starlink satellite network last September.
Many analysts viewed the deal as laying the groundwork for an eventual retail offering. In its bond offering prospectus, seen by The Financial Times, SpaceX said that while it expected the Starlink Mobile service currently ‘to be most impactful for customers in remote areas uncovered by terrestrial mobile networks,’ its longer-term ambitions appeared broader.
The launch of a consumer Starlink mobile retail service would also complement the company’s existing broadband Internet option, which served 10.3 million customers worldwide as of March. However, analysts have cautioned that the idea may simply be a gamble to extract better deals from Starlink’s telecoms partners and warned of the billions of dollars in build costs and radio wave spectrum needed to roll out mobile networks.
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. David Barden, partner at New Street Research, said that building a ‘wireless network in saturated markets around the world would be incredibly hard.’
However, he added that as a starting point for negotiating the best possible revenue-sharing deal with mobile network operator partners, it makes tremendous sense.
Source: Original article