SpaceX’s Wireless Threat Rises With Spectrum Deal

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Well, bonds issued by Verizon Communications and AT&T weakening today following SpaceX's announcement that it will buy US Spectrum that will help the company become a major mobile carrier in the US. And Jess, we've seen it play out in some of these wireless names.

Jason Kelly (0:30)

Especially we were just talking about AT&T, T-Mobile, Verizon, among the top decliners in the S&P 500 today just because of the back and that tied with SpaceX.

SPEAKER_1 (0:40)

It does feel like disruption, innovation in a big way, possibly for the cellular space. Hey, let's get a round up of the SpaceX universe. No one knows it like Loren Grush. She's Global Space Reporter at Bloomberg News. She joins us from Austin, Texas. Loren, good to have you here with us. Let's start with this story. We increasingly, when it comes to the SpaceX world, we talk about Starlink. This feels like they are spreading their wings here.

Loren Grush (1:05)

Well, I think it doesn't really come as too terribly of a surprise. We knew that they had really grand ambitions for Starlink and specifically with its direct to sell capability, which is this idea or this design of being able to provide cell service to an unmodified smartphone with their satellites that they have in orbit. They have a fraction of these direct to sell satellites up there right now. But I think they've talked a big game about wanting to expand and to actually be a competitive mobile service provider that could actually take on some of the incumbents. And so, I think there was a lot of criticism or at least skepticism about them being able to do that. But I do think that this is a big piece of the puzzle if they are going to work towards that ultimate goal.

Jason Kelly (1:56)

Well, talk to us more about that criticism because what's the reality and how likely they'll be able to really compete in that space when we were just talking about those wireless carriers down today, whether it's obviously AT&T or Verizon or T-Mobile. But in reality, could this happen for SpaceX?

Loren Grush (2:12)

Yeah, I think the biggest criticism that came from a lot of the incumbents is the physics of the issue.

There are some limitations with the cell service and the spectrum that they have right now, which is that it's hard to penetrate through walls, through buildings. Obviously, that's not going to work if you want to use a Starlink system for your average cell service. We do take calls frequently inside of our homes. And so, this specific band is supposed to help with that interference problem. I think that there is still speculation that if they really want to compete and actually have a comparable service, they're going to need more elements, right? So, specifically, more terrestrial infrastructure, like towers. And it's unclear exactly how they plan to move forward on that. But I think, you know, we'll probably see some play in that in the months and years ahead.

SPEAKER_1 (3:08)

I'm glad you went there, Loren. You were part of the team reporting this out today, the story on the Bloomberg. You do get into the build out, and they also have to launch more satellites. We've talked so much about Starlink, the growth, the bet on this requires, you know, developing the company's Starship rocket. So, where are we on that? And just give me some time frame around all of this, because I think we read the story and we're like, oh, this is happening tomorrow, but all of this is going to take time.

Loren Grush (3:35)

Right. I was just about to say this. You can't go out and buy a Starlink cell service right this second, right? And yes, it does rely a lot on launching a new batch of Starlink satellites into orbit. Now, right now SpaceX has 11,000 plus Starlink satellites in orbit right now. So, they've shown their chops at being able to launch a bunch of these satellites into space and to operate them seamlessly at the same time. However, only a fraction of those are available for direct-to-cell service. Ultimately, SpaceX wants to upgrade those massively with their new V2 Starlink mobile satellites, which are supposed to launch on SpaceX's massive Starship rocket, which I'm sure you've seen has been being developed and launched on those test flights down in South Texas. Those are supposed to start launching in earnest next year. But Starship still has some ways to go on that front too. They just reached orbit for the first time on Starship in September, so I think like two weeks ago.