SpaceX has bought $17 billion worth of satellite spectrum from debt-ridden operator EchoStar to enhance Starlink direct-to-cell phone performance.
The sale ends EchoStar’s plans to build its own constellation in low Earth orbit (LEO) that would beam 5G connectivity directly to smartphone users in under-connected areas on Earth. The company, founded in 1980, operates a fleet of 10 geostationary satellites, offering internet broadband via satellite as well as satellite TV broadcasting.
EchoStar’s business, however, has been suffering for years due to declining consumer interest, especially as it has faced competition from fast-growing LEO constellations, such as SpaceX’s Starlink, which provide better throughput and lower latencies. Since May, questions have swirled around EchoStar’s financial health after the company failed to pay $326 million in interest on its debt.
The deal with Starlink will ease the financial burden while enabling EchoStar to integrate Starlink’s direct-to-device coverage into its offering.
“For the past decade, we’ve acquired spectrum and facilitated worldwide 5G spectrum standards and devices, all with the foresight that direct-to-cell connectivity via satellite would change the way the world communicates,” Hamid Akhavan, president and CEO of EchoStar, said in a statement.
“This transaction with SpaceX continues our legacy of putting the customer first as it allows for the combination of AWS-4 and H-block spectrum from EchoStar with the rocket launch and satellite capabilities from SpaceX to realize the direct-to-cell vision in a more innovative, economical and faster way for consumers worldwide,” Akhavan added.
Starlink launched its direct-to-device service in 2024, enabling users in remote locations to send text messages via its ever-growing satellite network. The EchoStar spectrum covers the so-called H block part of the Advanced Wireless Services spectrum at frequencies between 1915-1920 megahertz (MHz), which is used for 4G and 5G mobile voice and data transmission.
SpaceX will pay $8.5 billion in cash for the spectrum licenses plus another $8.5 billion in SpaceX stock.
For SpaceX, the spectrum purchase means more capacity on its direct-to-cell satellites, further enabling broadband data access to cell phones in the future. The company estimates the new spectrum could increase the throughput of the next-generation satellites up to 20 times compared to the generation in orbit right now.
“We’re so pleased to be doing this transaction with EchoStar as it will advance our mission to end mobile dead zones around the world,” Gwynne Shotwell, SpaceX president and chief operating officer, said in a statement.
“SpaceX’s first-generation Starlink satellites with direct-to-cell capabilities have already connected millions of people when they needed it most — during natural disasters so they could contact emergency responders and loved ones — or when they would have previously been off the grid,” she added. “In this next chapter, with exclusive spectrum, SpaceX will develop next-generation Starlink direct-to-cell satellites, which will have a step change in performance and enable us to enhance coverage for customers wherever they are in the world.”
The deal also ended the U.S. Federal Communications Commission’s investigation into EchoStar’s use of the allocated spectrum, which had previously been questioned by SpaceX. In August, EchoStar agreed to a $23 billion sale of 50 MHz of terrestrial mobile spectrum to telecommunications giant AT&T.
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