SpaceX Just Bought the Airwaves to Become Your Phone Company

So basically: SpaceX wants to be your phone company, not just your internet in the woods. On Thursday it agreed to buy a nationwide chunk of radio airwaves that works inside buildings. On Friday, Wall Street took it seriously. Verizon, AT&T, and T-Mobile all dropped double digits in one day.

What SpaceX bought

SpaceX is buying Grain Management’s nationwide 800 MHz spectrum. That is up to 14 megahertz of paired licenses. The Wall Street Journal put the price at about $8 billion, according to Axios. SpaceX and Grain did not publish the terms.

A little history makes this funnier:

• The airwaves belonged to Sprint
• T-Mobile got them when it bought Sprint in 2020, and the government made it sell them
• Grain bought them from T-Mobile for $2.9 billion plus some of Grain’s own licenses. The FCC approved that in July
• Now SpaceX is buying them from Grain

So T-Mobile is SpaceX’s phone partner today, and SpaceX just bought T-Mobile’s old spectrum to compete with it.

The licenses cover about 100 percent of the U.S. population. The amount per county ranges from 4.85 to 14 megahertz, per the FCC. The deal still needs FCC approval.

Why 800 MHz matters

Satellites are great in a field. They are bad in a basement. Low band signals travel far and push through walls much better than higher frequencies.

SpaceX said the new spectrum “addresses one of the key remaining technical gaps that will pave the way for Starlink Mobile to become a major mobile carrier in the US.”

Elon Musk put it simpler on X: “This is the last critical piece of the spectrum puzzle needed for SpaceX to provide complete phone coverage in America.”

SpaceX also said most phones people already own support this band. You would not need a special phone.

The plan is not just satellites

This is the part people miss. SpaceX told the FCC it will build on the ground too, with radios and antennas on towers, rooftops, and other structures. Musk said in August that Starlink would use lots of small base stations, and that Starlink dishes on homes and businesses could help connect phones.

Here is what SpaceX is stacking up, per Ars Technica:

• 650 direct to cell satellites already up for today’s service
• FCC approval this week for up to 15,000 next generation phone satellites. SpaceX says they carry more than 100 times the bandwidth
• A $17 billion deal for EchoStar’s mid band spectrum, approved in May
• Now the 800 MHz layer for indoor coverage

SpaceX told Canada it expects next generation phone service to start by late 2027. It has not said when service using this new spectrum would reach customers.

Wall Street freaked out

On Friday, Oct. 9, Quartz reported:

• T-Mobile: down about 13 percent
• Verizon: down about 10 percent, on pace for its worst day since 2002, per CNBC
• AT&T: down about 10 percent

Axios said the three carriers lost about $36 billion in combined market value on the news.

The big three are not sitting still. Last week they finalized a joint venture to pool spectrum for satellite coverage of dead zones. And AT&T CEO John Stankey has said satellite phone service is “solving the last 2%,” not replacing towers.

The catch

Owning airwaves is not the same as running a carrier. Verizon and AT&T spent decades building towers, stores, billing, and customer service. Small rural carriers have also pushed back on SpaceX piling up spectrum. And no one knows the price of a Starlink phone plan yet.

My take

This is the most interesting thing to happen to cell phone plans in years. For a long time we have had three choices and they all cost about the same. If SpaceX can really cover rural roads, cabins, and the inside of buildings with one network, people will switch. The stock drop tells you the carriers’ investors think so too. I want to see a price and a coverage map before I get excited, but competition like this is how bills come down.