SpaceX is exploring a move into the US mobile phone market: Starlink takes on the telcos
According to the FT, Starlink is considering a direct-to-consumer offering in the US, with Verizon, AT&T and T-Mobile in its sights. But for Musk, the challenge is also to convince the market that growth can extend beyond satellites
Starlink’s next area of expansion may not be space, but the US mobile phone market. SpaceX is reportedly considering launching a retail service aimed directly at consumers, thereby competing with Verizon, AT&T and T-Mobile and radically changing its business model
The rumour comes from the Financial Times, which reports that SpaceX’s president and chief operating officer, Gwynne Shotwell, outlined the project to investors during a recent roadshow. The proposal under consideration is reportedly to develop a Starlink-branded mobile phone service and, in due course, to establish a terrestrial mobile network in the United States as well.
It would be a step up in scale. So far, Starlink has primarily functioned as an enabler: a space-based network capable of supplementing terrestrial infrastructure in areas where mobile coverage is non-existent or poor. The agreement with T-Mobile moves in this direction. SpaceX provides the satellites, whilst the operators retain the commercial relationship with the end user. With its own retail offering, however, Musk would be attempting to skip a step in the value chain, transforming Starlink from a technology provider into a telecoms operator.
The timing is no coincidence. Following the IPO, investors are calling on SpaceX to chart new paths to growth. Mars, space-based data centres and artificial intelligence are all part of the vision for the future. But mobile telephony is all about the present: a huge, mature market, brimming with recurring subscriptions. And, above all, it is larger than satellite broadband alone, which in March had 10.3 million Starlink customers worldwide.
There had already been a hint last September, when SpaceX spent $17 billion to acquire wireless spectrum licences from EchoStar. Many analysts believe that move paved the way for a direct mobile service. In the bond offering prospectus seen by the Financial Times, SpaceX states that Starlink Mobile will initially have a greater impact in remote areas not covered by terrestrial networks. But it adds that its ambition is to become “the connectivity experience of choice for our customers, regardless of their location, whether in rural, suburban or urban areas”.
