Why Starlink Mobile Does Not Need to Copy Traditional Carriers
SpaceX is taking steps that could turn Starlink into a real alternative to today’s largest wireless carriers. This week it agreed to buy a nationwide block of low-band spectrum that helps signals work better indoors. The company also received approval to launch thousands of new satellites designed for phone service. SpaceX says it will combine those satellites with small ground radios placed on the same hardware that already holds Starlink dishes on rooftops of homes and businesses. The idea is to add coverage where it is needed instead of building a full network of large traditional cell towers from the start.
Critics say this will not work because satellites cannot deliver enough capacity in dense cities and small rooftop radios cannot match the coverage of traditional towers. They point out that one satellite beam covers a huge area and spreads its capacity thin when many people are nearby. Some argue SpaceX would need a massive number of small radios to equal the big carriers, along with the hard work of getting signals through buildings in urban areas. That view assumes SpaceX is trying to copy the existing networks and compete head to head everywhere with the same kind of infrastructure. What if SpaceX is not trying to do that?
https://www.pcmag.com/news/t-mobiles-cfo-dismisses-spacexs-cellular-ambitions-as-laughable
SpaceX has said it plans to use satellites for broad coverage, especially in places where towers were never economical, and then add small radios only where demand requires them. On an earnings call company leaders described putting cellular radios on the hardware that holds Starlink dishes and placing those on rooftops of homes and businesses. They said they would deploy the small radios as needed rather than spending large sums upfront on big base stations. The goal is a hybrid network that works indoors and outdoors, including in areas the current carriers do not cover well, without building a traditional tower network everywhere.
This approach is different from the way the largest carriers usually expand. It looks a lot like the model used by Helium, where people host small radios and earn from the traffic that moves through them. Carriers already use parts of that kind of network for offload in some places. SpaceX is also testing a community program where hosts share broadband access and earn money from neighbors who buy short passes. The company does not need to own every site. It can use existing locations and add radios over time.
https://www.fierce-network.com/wireless/helium-ceo-sees-spacex-validating-its-mobile-playbook
The largest carriers do not own most of the towers they use. Independent companies own the infrastructure and lease space to multiple carriers. Those companies make more money when more carriers put equipment on the same sites. There is no broad rule that keeps a new company from leasing space. When the SpaceX news came out, the stocks of the infrastructure companies rose while the carrier stocks fell.
There used to be way more than three major wireless carriers in the United States. Names like Alltel, MetroPCS, Leap Wireless, Nextel, Cingular, VoiceStream, Sprint, AirTouch, McCaw Cellular, and others once competed as independent players. The ones that differentiated themselves from the others grew by offering different plans, better value, or new technology. They gained customers, built share, and consolidated other carriers. Over time the market consolidated into the three largest carriers we have today. Some of those larger companies have also made big strategic bets outside their core business that did not work out and were later written down. Those efforts to diversify did not strengthen the core wireless business. They turned into costly distractions that left the carriers more commoditized and more exposed to new approaches that do not follow the same model.
The defenses the current largest carriers use may be designed for new companies that try to copy their model of large towers and the same kind of network. A different approach that relies on satellites for wide areas and small radios only where demand exists does not have to match them everywhere on day one. It can start in places where coverage is thin and expand from there. Only time will tell whether the existing defenses are enough to stop something that works differently.
Originally published on LinkedIn.