SpaceX’s FCC Push Secures $17B EchoStar Spectrum Deal
▼ Summary
– SpaceX has secured a $17 billion deal to purchase spectrum licenses from EchoStar, consisting of up to $8.5 billion in cash and $8.5 billion in stock, plus $2 billion in interest payments on EchoStar debt.
– The deal follows FCC pressure initiated by SpaceX’s complaints that EchoStar’s Dish Network underused its spectrum, prompting an investigation and threats of license revocation.
– EchoStar is selling its AWS-4 and H-block licenses in the 1.9 and lower 2 GHz bands to SpaceX, after recently agreeing to sell $23 billion in spectrum to AT&T.
– The purchase includes 50 MHz of US spectrum and global Mobile Satellite Service licenses, which SpaceX will use to enhance its Starlink Direct to Cell satellite constellation for mobile connectivity.
– SpaceX claims the spectrum will enable a major performance boost and 100x capacity increase for its next-gen satellites, aiming to provide full 5G cellular service comparable to terrestrial LTE.
SpaceX’s persistent engagement with the Federal Communications Commission has culminated in a landmark $17 billion agreement to acquire spectrum licenses from EchoStar. This strategic move not only strengthens SpaceX’s position in the satellite communications market but also resolves ongoing regulatory scrutiny over EchoStar’s spectrum usage.
Under the terms of the deal, EchoStar will receive up to $8.5 billion in cash and an equivalent amount in SpaceX stock. Additionally, SpaceX has committed to covering $2 billion in interest payments on EchoStar’s debt through late 2027. This arrangement follows earlier FCC actions prompted by SpaceX’s complaints that EchoStar’s subsidiary, Dish Network, was underutilizing its licensed spectrum. FCC Chairman Brendan Carr initiated an investigation and raised the possibility of revoking those licenses, leading EchoStar to pursue sales rather than engage in a prolonged regulatory battle.
The first significant outcome of this pressure emerged last month when EchoStar agreed to sell $23 billion in spectrum to AT&T. Now, the company has turned to SpaceX, offering its AWS-4 and H-block licenses, which operate in the 1.9 and lower 2 GHz spectrum bands. EchoStar stated that these transactions are expected to resolve the FCC’s inquiries, though both deals still require regulatory approval before finalization.
For SpaceX, this acquisition represents a major enhancement to its Starlink Direct to Cell initiative. The company is gaining exclusive access to 50 MHz of U.S. spectrum, along with global Mobile Satellite Service licenses. According to SpaceX, this will significantly improve performance by leveraging optimized 5G protocols designed specifically for satellite connectivity. The next generation of cellular-capable Starlink satellites is projected to deliver a 100x capacity increase over the current system, enabling full 5G connectivity that rivals terrestrial LTE service. This advancement will allow SpaceX to partner with mobile network operators to supplement and enhance existing 5G infrastructure.
(Source: Ars Technica)
