Shotwell says mobile subscribers could surpass broadband base
SpaceX’s Starlink unit plans to target mobile phone subscribers, aiming to challenge AT&T, Verizon, and T-Mobile, according to people familiar with the matter.
President Gwynne Shotwell at a meeting with investors earlier this year discussed potentially building a ground network to provide mobile service, the people said. The discussions build on earlier thinking inside the company about terrestrial systems it could pair with satellites to go after the mobile market. Years ago, SpaceX had considered partnering with a U.S. telecom company with ground infrastructure to operate a mobile network in addition to developing its own terrestrial systems, people aware of those talks said.
The company has developed a prototype handset it recently showed to some investors, The Wall Street Journal reported. Many telecom executives and investors have speculated for years about whether the company would offer some sort of phone that could tap its satellite links.
SpaceX also has been amassing wireless spectrum to support its ambitions. It recently participated in an auction run by the Federal Communications Commission, gaining two cellular licenses for $8.5 million. Last year, it agreed to acquire spectrum from another satellite company in deals valued at more than $20 billion.
Starlink is the financial engine for SpaceX, providing Musk with firepower as his company pursues expensive, futuristic projects. The six-year-old service has around 10,000 satellites and counted more than 10 million home-broadband subscribers at the end of March. For years, Starlink’s bread and butter has been providing home broadband, a product that has taken off in many rural areas not served well by fiber-optic cables. It has built a big business connecting ships and aircraft.
The company has been developing a mobile unit, striking agreements to use its satellites to provide limited service on phones for subscribers of carriers when they are in remote areas. In the U.S., it partnered with T-Mobile to provide such links. Inside SpaceX, engineers have been working on upgraded Starlink satellites to provide mobile connections.
Taking on incumbent carriers for mobile subscribers would pose tough challenges for the company. AT&T, Verizon, and T-Mobile have powerful consumer brands with expansive ground infrastructure supporting their offerings. Starlink, as a satellite service provider, faces limits in serving cellphones. Satellite connections have slower speeds and performance on phones now. Analysts say SpaceX would need a ground network to provide links to locations satellites cannot service well, like inside buildings or tunnels.
“Terrestrial infrastructure is the best connectivity and speed and everything by far and away,” Verizon Chief Executive Dan Schulman said at a conference in March.
Top leaders at SpaceX believe the mobile opportunity is even bigger than providing Wi-Fi in homes. “I think more than half the population—the global population—has a cellphone,” Shotwell told CNBC during a recent interview. “I think the numbers of users of Starlink mobile will far exceed our Starlink broadband.”
The company remade rocket launching, going from a startup to a powerful incumbent. SpaceX also built up its satellite communications business with Starlink, upsetting executives who both rely on SpaceX rockets and compete with the internet service.
“It’s like with Tesla: if they can’t find the car seat they want from a supplier, they’ll just go out and make their own car seat,” said Walt Piecyk, a partner and telecom analyst at LightShed Partners.
SpaceX’s effort to target mobile subscribers is nascent, the people said. The company did not respond to a request for comment.