The spectrum battle begins: SpaceX spends $17 billion to acquire EchoStar's spectrum licenses.

Elon Musk, CEO of SpaceX

On September 8th, EchoStar, a US telecommunications company focused on satellite communications and internet services, announced a definitive agreement with SpaceX. It will sell its AWS - 4 (referring to a type of satellite communication spectrum resource) and H - band spectrum licenses for approximately $17 billion. The deal includes up to $8.5 billion in cash and up to $8.5 billion in SpaceX stock. Additionally, the definitive agreement stipulates that SpaceX will pay a total of approximately $2 billion in cash interest on EchoStar's debt until November 2027.

The two companies also stated: "SpaceX and EchoStar will sign a long - term commercial agreement that will allow EchoStar's Boost Mobile customers to access SpaceX's next - generation Starlink Direct to Cell service through its cloud - native 5G core network."

01. FCC Tightens Spectrum Licenses, EchoStar Struggles to Survive

Before the deal between SpaceX and EchoStar in May this year, the US Federal Communications Commission (FCC) threatened to revoke EchoStar's spectrum license after SpaceX accused EchoStar of hardly using its allocated 2GHz/AWS - 4 spectrum. EchoStar has faced survival challenges in recent years due to the slow progress of its 5G network construction, and the regulatory pressure from the FCC has further exacerbated its difficulties. Former President Trump urged EchoStar to reach a settlement with FCC Chairman Brendan Carr.

In August this year, EchoStar sold some of its wireless spectrum licenses to AT&T for $23 billion. This new deal with SpaceX worth approximately $17 billion has also alleviated, to some extent, the FCC's concerns about its long - term "spectrum idling". It's worth noting that SpaceX's actions in the spectrum field don't stop here. The company has also filed complaints with the FCC, raising questions about the spectrum usage of several satellite operators such as Globalstar, Ligado, and Viasat.

Meanwhile, the FCC is also advancing a public consultation on new uses for the uplink C - band (3.98–4.2GHz). This band is adjacent to the 3.7GHz spectrum where Verizon and AT&T are deploying 5G services. The C - band auction in the US in 2021 brought a record $80 billion in revenue to the Treasury. Now, SpaceX's tough stance on this sensitive band is almost like a direct confrontation with the entire US wireless industry.

02. Musk and SpaceX's Spectrum Ambitions

How much spectrum does SpaceX really want? Judging from the relevant lawsuits accepted by the FCC, Musk's company has almost targeted all available spectrum resources, especially those valuable bands held by competitors.

EchoStar has publicly stated that SpaceX has obtained approximately 25,500 megahertz of spectrum for free without paying a single cent to the US Treasury. In EchoStar's view, SpaceX's real purpose is not just to expand capacity, but to hoard spectrum to curb the development of "Device - to - Device (D2D)" services by satellite operators including itself. Whether it's EchoStar, which has a slow start, or other satellite companies still in exploration, they may all become "victims" of this spectrum war.

The only exception is T - Mobile. This operator partnered with Starlink, a subsidiary of SpaceX, in 2022 and agreed to provide 5 megahertz of G - block PCS 1.9GHz spectrum for Starlink's D2D service. This service initially only supported text messages but is planned to be expanded to applications such as trail guides, weather updates, and social media in October. A chart from Airwave Research shows that the PCS spectrum provided by T - Mobile for Starlink's D2D service is only a small part of the terrestrial spectrum.

Analysts point out that what SpaceX really wants is the Mobile Satellite Service (MSS) spectrum, which is currently controlled by EchoStar and other satellite companies. Similarly, AST SpaceMobile, a competitor in the D2D field, is also seeking deals for dedicated satellite spectrum with Ligado and EllioSat, and is collaborating with operators such as AT&T and Verizon to use the 850 MHz terrestrial spectrum.

Tim Farrar, President of TMF Associates, said that the advantages of satellite spectrum lie in global coordination, availability across the US, and cost - effectiveness. In a report he and Armand Musey, President of Summit Ridge Group, released in January this year, they pointed out that the MSS spectrum is more suitable for D2D services. Farrar said: "Terrestrial spectrum is very precious, especially in urban areas, and mobile operators are reluctant to give up too much. Shifting to MSS spectrum is a wise choice because these spectrums are not widely used and do not face problems such as GPS interference."

Luke Pearce, an analyst at CCS Insight, holds a similar view. He said that Starlink is seeking dedicated satellite spectrum to avoid the technical and regulatory challenges associated with using mobile operators' terrestrial bands, which may cause interference and geographical limitations. In contrast, "dedicated satellite spectrum provides a proven and reliable way to achieve consistent and wide - reaching services." Pearce also pointed out that part of Starlink's motivation for promoting spectrum acquisition may be strategic, aiming to prevent competitors from obtaining exclusive access to key bands and to prevent Starlink's competitive position in the satellite and D2D service fields from being restricted.

Blair Levin, a policy analyst at New Street Research and former FCC Chief of Staff, humorously commented: "Others' spectrum should be shared, but one's own spectrum should be protected by high walls." He said that SpaceX's behavior in this regard is no different from other companies, but the FCC's task is to determine what is in the public interest.

03. SpaceX Is Temporarily Unaffected by the Relationship between Trump and Musk

Since Musk's relationship with former US President Trump deteriorated in June, there has been widespread speculation about the status of Musk's companies at the FCC. Levin said that as of now, there is no evidence from the FCC or the US Department of Commerce that this incident has changed SpaceX's status.

Another question is: Why does FCC Chairman Carr seem to pay special attention to EchoStar? EchoStar, founded by Charlie Ergen, said that Carr's regulatory investigation is the reason why it cannot continue to advance its 5G network construction, leading to an unclear business outlook. Farrar pointed out that Ergen has promised many plans over the years, but the progress of its wireless network construction is slow and lags behind the spectrum resources it has obtained, which has caused dissatisfaction.

This spectrum war is not only about technology and market competition but also involves public interests and regulatory balance. The FCC's final decision will have a profound impact on the future of the US satellite communication industry.

This article is from "Tencent Technology", author: Wu Ji. It is published by 36Kr with authorization.