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Elon Musk’s SpaceX has told investors that it plans to launch a new Starlink mobile service for US consumers, in a move that would upend the country’s multibillion-dollar phone network market.
The company’s president and chief operating officer Gwynne Shotwell told investors during a recent IPO roadshow that the group was considering launching a Starlink retail product and could build its own terrestrial US mobile network, according to four people familiar with the matter.
The move would require Starlink to build a new retail offering by selling mobile contracts to individual customers, competing directly with the three big US network operators Verizon Wireless, AT&T and T-Mobile.
To date, SpaceX has offered more limited direct-to-consumer services in the US, preferring to give telecoms groups such as T-Mobile access to its satellites to supplement their existing network coverage in rural areas.
Although the terms of Starlink’s commercial deals are not disclosed, analysts believe it takes a cut from revenues generated by those customers whose mobile deals include access to its satellites.
SpaceX’s move into retail contracts would be one of the company’s most significant commercial expansions since launching Starlink, which already operates across more than 150 countries worldwide offering high-speed internet connections through its constellation of satellites.
A direct-to-consumer mobile offering would give SpaceX access to a far larger market than satellite broadband alone, potentially reducing its reliance on telecoms partners that currently act as intermediaries between Starlink’s satellites and end users.
SpaceX did not respond to a request for comment.
The plans come just days after its landmark initial public offering, which has heightened investor demands that the group continues delivering rapid growth and finds new revenue lines.
During the IPO roadshow, Musk sold investors on future plans to launch data centres into space and build a colony on Mars. Analysts at its lead underwriter Goldman have predicted a 100-fold surge in its AI revenues to $322bn by 2030.
While describing expanding Starlink as another key growth pillar in its IPO prospectus, SpaceX has never publicly confirmed that it plans to launch a retail mobile service.
There has been months of speculation over SpaceX’s future mobile plans after it paid $17bn to rival EchoStar for wireless spectrum licences to bolster its Starlink satellite network last September. Many analysts viewed the deal as laying the groundwork for an eventual retail offering.
In its bond offering prospectus, seen by the FT, SpaceX said that while it expected the Starlink Mobile service currently “to be most impactful for customers in remote areas uncovered by terrestrial mobile networks”, its longer-term ambitions appeared broader.
As its performance improved and satellite constellation grows, the prospectus suggests the company would “compete to be the preferred connectivity experience to our customers no matter where they are located, whether in rural, suburban or urban areas.”
The launch of a consumer Starlink mobile retail service would also complement the company’s existing broadband internet option, which served 10.3mn customers worldwide as of March.
However, the plans have been met with trepidation by analysts who have cautioned that the idea may simply be a gamble to extract better deals from Starlink’s telecoms partners and warned of the billions of dollars in build costs and radio wave spectrum needed to roll out mobile networks.
New Street Research estimates that the three US mobile network operators have a total of about 1,020MHz of spectrum, while SpaceX has just 65MHz.
David Barden, partner at New Street Research, said that building a “wireless network in saturated markets around the world would be incredibly hard.”
“[But,] as a starting point for negotiating the best possible revenue-sharing deal with mobile network operator partners? It makes tremendous sense,” he added.
Additional reporting by Ryan McMorrow in San Francisco
