Elon Musk’s SpaceX just made a big move to become a mobile carrier heavyweight in the US

Elon Musk’s SpaceX is moving past satellite internet, and it’s making a big move into the US wireless market. The company has agreed to buy cellular spectrum licences from investment firm Grain Management in a deal reportedly worth about $8 billion, its biggest move yet to compete with established mobile carriers such as AT&T, Verizon and T-Mobile, according to a WSJ report.

The deal is for spectrum in the 800MHz band, which is for mobile services delivered via terrestrial infrastructure such as cell towers, not satellites. If the acquisition is approved, SpaceX could combine those airwaves with its growing Starlink satellite network to create a more comprehensive wireless service.

SpaceX plans to integrate Starlink satellites with terrestrial mobile coverage

SpaceX has already been rolling out Starlink in areas beyond the usual broadband. The company has been working with T-Mobile for over a year to offer basic wireless connectivity in remote areas. SpaceX is also launching newer Starlink satellites that are capable of carrying more data. The US Federal Communications Commission has approved SpaceX’s plan to launch up to 15,000 satellites dedicated to mobile services.

The new spectrum could fill in the gaps that satellites struggle to reach, such as inside buildings. SpaceX says it will link its satellite constellation to an advanced terrestrial network to connect devices.

But SpaceX can’t become a nationwide mobile carrier simply by buying spectrum. The company would still need to build ground infrastructure, perhaps cell towers or rooftop equipment, to use the frequencies for regular mobile service. Constructing a traditional tower network could cost billions of dollars, though SpaceX executives have also talked about using smaller cells as an alternative.

The spectrum itself is a key part of the plan. According to Reuters, SpaceX is acquiring up to 14MHz of paired spectrum in the 800MHz low-band range from Grain Management. These airwaves can travel farther and penetrate buildings better than higher-frequency signals, making them useful for broad mobile coverage. 

Higher-frequency spectrum can carry more data at faster speeds, but generally covers a smaller area. The deal still requires approval from the Federal Communications Commission (FCC). If cleared, SpaceX plans to combine the spectrum with ground-based radios and antennas, alongside its next-generation Starlink satellite network, to expand mobile connectivity.

AT&T, Verizon and T-Mobile have a new competitor to worry

And the ambitions of SpaceX are already shaking up the market. Shares of AT&T, Verizon and T-Mobile fell more than 6% in after-hours trading after news of the deal, while SpaceX shares rose around 3%.

This isn’t SpaceX’s first big bet on wireless spectrum. Last year, it struck a cash-and-stock deal worth roughly $17 billion to buy satellite spectrum rights from EchoStar. It later agreed to buy more ground-based cellular licences from the company for $2.6 billion. The Grain Management deal would be another key piece of that strategy.

The upside for the consumer could be more coverage, especially in places where regular cell service struggles to reach. But there are no assurances of better coverage and lower prices, and SpaceX has not yet come up with a full plan for a standalone mobile service.

The big question now is whether Musk can turn Starlink’s satellite advantage and its growing portfolio of spectrum licenses into a network to rival America’s telecom giants on their own turf.

RELATED COVERAGE: