SpaceX has entered into a purchase agreement with EchoStar for its AWS-4 and H-block spectrum licenses in a deal worth around $19 billion, giving the Starlink Direct to Cell service a potential hundred-fold capacity boost on its original service and, for EchoStar, resolving long-standing FCC scrutiny over spectrum use.
EchoStar will sell its AWS-4 and H-block spectrum licences for $8.5 billion in cash and up to $8.5 billion in SpaceX stock at a $400 billion valuation. Additionally, SpaceX will fund around $2 billion of cash interest payments payable on EchoStar debt through November 2027.
In connection with the transaction, SpaceX and EchoStar will enter into a long-term commercial agreement, which will enable EchoStar’s Boost Mobile subscribers – through EchoStar’s cloud-native 5G core – to access SpaceX’s Starlink Direct to Cell service.
“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,” said Hamid Akhavan, president & CEO, EchoStar.
“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.”
SpaceX president and COO Gwynne Shotwell said the deal would “advance our mission to end mobile dead zones around the world.”
“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. 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,” she said.
The deal saw a surge in EchoStar shares, hitting a record and up 23% in pre-market. Analysts BNP Paribas said it “was not wholly unexpected” and raised the spectre of Starlink becoming the “4th carrier over time”.
“We continue to see Starlink’s direct to device (D2D) ambitions as complementary to the telecoms terrestrial wireless offers rather than substitutive. Starlink does provide a more credible substitutive threat on the home broadband side with their satellite offering that uses different spectrum, which remains a marginal competitive threat to cable, Fixed Wireless Access and Fiber,” BNP Paribas said in a client note.
SpaceX began deploying Starlink satellites with Direct to Cell capabilities in 2024 with the aim of eliminating mobile dead zones. At the time, more than 20 percent of the land area across the US and 90 percent of Earth remained uncovered by terrestrial service.
Today, Starlink Direct to Cell has become the largest 4G coverage provider on planet Earth, connecting over six million users and counting.
The Direct to Cell constellation connects to the broader Starlink constellation (consisting of more than 8,000 satellites) through the Starlink laser mesh, which enables coverage anywhere in the world. Operating at 360 km above the surface of the Earth, Direct to Cell satellites fly lower than any other constellation in order to optimize the link between the cell phone and satellite. Building the constellation to its present form with its unique regenerative architecture involved designing, manufacturing, launching and operating cell towers in space, including development of the system’s eNodeB payload, phased array antennas, and core network, which enables network integration similar to a standard roaming partner. The service works with existing LTE phones wherever the sky is visible – no changes to hardware, firmware, or special apps are required.
Exclusive access to the purchased EchoStar spectrum, along with use of optimized 5G protocols designed for satellite connectivity, will enable a step change in performance for Starlink Direct to Cell.
The next generation of Starlink Direct to Cell satellites will be designed to fully utilize this spectrum. Driven by custom SpaceX-designed silicon and phased array antennas, the satellites will support thousands of spatial beams and higher bandwidth capability, enabling around 20x the throughput capability as compared to a first-generation satellite.
With the world’s most advanced phased arrays, the wider bandwidth operations enabled by this spectrum purchase, and optimized 5G protocols, the system will support an overall capacity increase of more than 100x the first generation Starlink Direct to Cell system. In most environments, this will enable full 5G cellular connectivity with a comparable experience to current terrestrial LTE service, SpaceX says, which will be used in partnership with Mobile Network Operators to augment high capacity terrestrial 5G networks.
