Verizon, T-Mobile, AT&T, watch out. Starlink is targeting your territory.
The low Earth orbit satellite outfit owned by Elon Musk’s SpaceX has received approval from the Federal Communications Commission to deploy 15,000 satellites to create a direct-to-device (D2D) network that could compete with the leading wireless carriers on terra firma.
The federal agency also waived a rule requiring satellite companies to lease spectrum from an earthbound company to provide D2D services. Now SpaceX can use its own spectrum for the service.
In addition, SpaceX has agreed to acquire low-frequency cellular spectrum to support ground-based coverage for its planned mobile service, including indoors. The deal requires FCC approval.
“The approval is significant for many reasons,” said Dimitris Mavrakis, a senior research director at ABI Research, a global technology intelligence firm.
“It is an approval of a massive constellation in a very low Earth orbit, lower than typical Starlink satellites,” he told TechNewsWorld. “These new satellites will be deployed specifically for D2D services in this orbit, making this plan the first of its kind.”
“Moreover,” he continued, “SpaceX now owns its own spectrum for D2D, bought from EchoStar recently, and has permission to deploy its D2D satellites. It’s the first satellite constellation aiming to compete against terrestrial networks.”
Path to Direct Competition
Approval to deploy 15,000 satellites gives SpaceX the scale to move from a niche dead-zone supplement to a credible nationwide full-service telecom provider, explained Ram Chandra Sachan, a network and security architect for a multinational information technology services provider in Bengaluru, India.
“Combined with the FCC’s waiver removing the requirement to lease spectrum from a ground-based operator, SpaceX can now own its full-service stack — spectrum and backend infrastructure — while also leveraging Starlink’s existing customer relationships,” he told TechNewsWorld.
“The waiver of the lease provision is huge,” declared Jim Dunstan, general counsel of TechFreedom, a technology advocacy group in Washington, D.C.
He explained that the FCC designed D2D services to ride on the back of existing terrestrial licenses, ostensibly to avoid interference.
“But that has never held water, since cellular systems — both towers and receivers — are absolutely designed to reject all but the strongest signal,” he told TechNewsWorld. “That means that there was never really a possibility of interference into the terrestrial cellular networks, because the satellite signal would always be the weakest signal.”
“That requirement was really the FCC’s way of placating terrestrial operators and keeping them in the driver’s seat,” he contended.
“The waiver, if it holds through subsequent licenses, means that SpaceX is no longer a carrier-to-carrier [B2B] provider,” he continued. “It can go directly to consumers, and there’s lots of talk that SpaceX has an eye on that market.”
“If SpaceX can make this work — and there are still some significant technical hurdles out there to get D2D service to be anything close to as good as terrestrial wireless in terms of sound quality — they could become a true fourth competitor,” he added.
Indoor Limitations
One of those hurdles is indoor coverage. “A phone has a tiny antenna and limited transmit power, and the link to a satellite hundreds of kilometers away is already near the edge,” explained Mohamed Idrissi, a telecom network architect in Paris and founder of 5GWorldPro.
“A wall or roof adds 10–20+ dB of loss at 2 GHz, which is often enough to kill the link,” he told TechNewsWorld. “Satellite-to-phone works under open sky. One concrete wall and you’re out of budget.”
He added that SpaceX’s planned purchase of Grain Management’s nationwide 800 MHz spectrum portfolio could help with penetration problems but pointed out that the spectrum would support a terrestrial coverage layer. “So the indoor fix is a ground network, which means building sites, backhaul and permits, like any carrier,” he explained.
John Strand, of Denmark-based telecom consulting firm Strand Consulting, pointed out that 80% or more of mobile cellular traffic happens indoors. “Building penetration losses, user orientation, and available satellite elevation all affect whether a useful signal can be established and at what data rate,” he told TechNewsWorld.
“Lower frequencies help, which makes SpaceX’s acquisition of 800 MHz rights strategically interesting,” he continued. “But it does not abolish the link budget. Even at the 800 MHz frequency, a satellite hundreds of kilometers above the earth loses too much signal strength to provide indoor coverage.”
Will Customers Pay More?
Strand acknowledged that people value better coverage but argued that does not mean they will pay more for it. “Satellite connectivity may be worth a premium to travelers, remote workers and people who regularly leave terrestrial coverage,” he noted. “For many other customers, it may be more attractive as a feature included in their existing mobile plan.”
“More coverage can make a service more valuable, but commercial success depends on how much customers will pay for it,” he added.
ABI’s Mavrakis maintained that SpaceX is unlikely to compete head-to-head with the leading carriers.
“Wireless carriers offer high-speed data services in areas where most of the population is concentrated, especially in urban centers,” he explained. “Even if SpaceX manages to solve its technical issues, it will still not make commercial sense to compete against wireless carriers who have been operating with this business model for years.”
“However,” he added, “for specific use cases like autonomous trucks, cars and drones, it will make more sense as the D2D service will be ubiquitous throughout the U.S.”
Lessons From Iridium and Satellite TV
Andrey Meshcheryakov, head of practice at Recombinators, a strategy and innovation consulting firm in Morristown, N.J., pointed out that satellite company Iridium tried to compete with terrestrial carriers in 1998. “Within about a year, it filed for bankruptcy, after billions had been invested,” he told TechNewsWorld.
Iridium’s satellites worked, he explained. What failed was everything around them. “The handsets were bulky and expensive, calls cost dollars per minute, and the phones barely worked indoors because satellite signals struggle to get through walls and roofs,” he said.
“What’s different this time is that SpaceX doesn’t ask anyone to buy a special phone,” he explained. “It works with the phones people already carry, which removes the barrier that killed Iridium.”
“The FCC’s earlier rule required a partnership with a ground-based carrier, so satellites supplemented existing networks instead of competing with them,” he continued. “Waiving it lets SpaceX become a competitor rather than just a partner.”
He maintained that the best guide to what happens next is satellite TV. “DirecTV and Dish never killed cable, but they won rural America first, became serious rivals and forced cable to compete on price,” he said. “Expect the same playbook here: coverage gaps and rural users first, pressure on Verizon, AT&T and T-Mobile pricing next. Full replacement for dense cities is unlikely while indoor service remains the weak spot.”
