SpaceX wants to sell Starlink phone service directly to US consumers

Every satellite company eventually looks down at the much larger market on the ground, and SpaceX appears ready to make the move.

The company has told investors it plans to launch a Starlink mobile service for US consumers, the Financial Times reported on 26 June, citing people familiar with the matter.

If it happens, it would put SpaceX in direct competition with Verizon, AT&T, and T-Mobile.

The disclosure came from an unusual venue. President Gwynne Shotwell told investors during a recent IPO roadshow that SpaceX is considering launching a Starlink retail product and could build its own terrestrial US mobile network, according to the FT’s sources.

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That is a notably more ambitious framing than the company’s current arrangement, and it points at the wider market that has so far sat just out of reach.

That current arrangement is the thing it would replace. SpaceX already offers direct-to-cell connectivity in the US through a partnership with T-Mobile, beaming supplemental coverage from space to extend service into remote areas where towers do not reach.

A retail Starlink product would let SpaceX sell to consumers directly, reducing its reliance on the telecom partners that now sit between its satellite network and the people using it.

The business is also SpaceX’s cash machine, and the maths of its growth is getting harder, which sharpens the case for reaching new customers.

The hardware case for the ambition firmed up last year. Speculation about SpaceX’s mobile plans intensified after the company acquired wireless spectrum licences from EchoStar for $17bn, a purchase the FCC cleared and which gave it the terrestrial spectrum a standalone network would require.

Spectrum on that scale is not the kind of asset a company buys to remain a wholesale supplier to other carriers.

The economics of the move are straightforward enough to explain the interest. The US mobile market is measured in hundreds of millions of subscribers and tens of billions of dollars in annual revenue, a far larger pool than the satellite-broadband business Starlink has built so far.

Selling directly to consumers, rather than wholesaling capacity to a carrier that then resells it, would let SpaceX capture more of that revenue per user, assuming it can persuade those users to switch from networks they already have.

The obstacles are equally clear. Verizon, AT&T, and T-Mobile have spent decades and enormous sums building dense terrestrial networks, retail footprints, and customer relationships, and satellite connectivity, however impressive, is not yet a substitute for a full mobile network in a city.

SpaceX’s existing direct-to-cell service is positioned as supplemental coverage for dead zones, not a replacement for a phone plan.

For now this is a plan described to investors, not a product with a price or a launch date, and the reporting rests on the FT’s sources rather than a SpaceX announcement. The carriers it would challenge have spent decades and vast sums building their networks.

What SpaceX has is a satellite constellation already overhead, $17bn of spectrum, and, on this account, the intention to use both. The setting matters too: the pitch came during an IPO roadshow, which suggests investors will hear more before consumers do.