EchoStar<\/b> is canceling its plans for the direct-to-device (D2D) satellite constellation announced last month, instead selling spectrum to SpaceX<\/b> that will be used for Starlink\u2019s own D2D services in a $17 billion deal. <\/p>\n
Monday, EchoStar announced the sale of its AWS-4 and H-block spectrum licenses for approximately $17 billion, with the deal including up to $8.5 billion in cash and up to $8.5 billion in SpaceX stock, which is not publicly traded. <\/p>\n
EchoStar said it expects the sale will resolve the Federal Communications Commission\u2019s (FCC) inquiries into its spectrum \u2014 which the FCC launched in May after SpaceX questioned EchoStar\u2019s spectrum use.<\/p>\n
Analysts note the sale gives SpaceX access to its own spectrum, rather than sharing terrestrial spectrum for D2D services, and could make it even harder for others to compete against SpaceX in this market.<\/p>\n
EchoStar\u2019s stock price jumped nearly 20% on Monday after the announcement. <\/p>\n
It comes after two weeks ago, EchoStar announced a deal to sell 50 MHz of nationwide spectrum to AT&T for $23 billion, in a step toward resolving the FCC\u2019s inquiry. When that sale was announced, EchoStar said it would continue to \u201cevaluate strategic opportunities\u201d for remaining spectrum. <\/p>\n
With this sale, EchoStar is canceling the $1.3 billion contract with MDA Space to build 100 satellites for a standards-based direct-to-device (D2D) constellation. EchoStar had been talking about plans for a 5G Low-Earth Orbit (LEO) constellation for years that would marry the company\u2019s space and ground assets. <\/p>\n
Yet some analysts had doubts that EchoStar truly intended to build the D2D constellation. <\/p>\n
\u201cWe and others had wondered whether EchoStar really ever had any intention of launching a D2D satellite constellation, as they proposed a few weeks ago. It\u2019s pretty clear that the answer is, and was, \u2018no.\u2019 That was merely a negotiating posture, both for Starlink and for the FCC,\u201d telecom analyst Craig Moffett wrote in an analyst note.<\/p>\n
Moffett said the constellation plans signaled to SpaceX that EchoStar planned to compete in D2D unless it bought the spectrum, and to the FCC not to approve SpaceX\u2019s petitions to share its spectrum for free, because EchoStar planned to use it. <\/p>\n
Also as part of the deal announced Monday, SpaceX and EchoStar will enter into a long-term commercial agreement for EchoStar\u2019s Boost Mobile subscribers to access SpaceX\u2019s next generation Starlink Direct to Cell service. <\/p>\n
\u201cThis 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,\u201d EchoStar CEO Hamid Akhavan said in a release.<\/p>\n
SpaceX said the purchase will allow for the deployment of its next-generation Starlink Direct to Cell constellation, which the company said will be capable of providing broadband service to cell phones.<\/p>\n
SpaceX currently has 600 Starlink Direct to Cell satellites in orbit and service with T-Mobile in the U.S. and other mobile network operators (MNOs) around the world, using MNO spectrum under sharing frameworks. <\/p>\n
With EchoStar\u2019s S-band and Mobile Satellite Spectrum (MSS), SpaceX said it will deploy the next generation of satellites to fully utilize this spectrum, which will enable around 20 times the throughput capability compared to the first-gen satellites, with the overall Direct to Cell Network having more than 100 times the capacity of the first system, along with advanced phased arrays and 5G protocols. <\/p>\n
SpaceX said this will enable \u201cfull 5G cellular connectivity with a comparable experience to current terrestrial LTE service.\u201d <\/p>\n
\u201cSpaceX\u2019s first generation Starlink satellites with Direct to Cell capabilities have already connected millions of people when they needed it most,\u201d SpaceX President and COO Gwynne Shotwell said in a release. \u201cIn 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.\u201d<\/p>\n
Analysys Mason analyst Lluc Palerm Serra noted it\u2019s a shift in spectrum strategy for SpaceX, much like AST SpaceMobile purchasing MSS spectrum. He also noted that SpaceX could potentially launch its own direct-to-consumer D2D service. <\/p>\n
\u201cSpaceX\u2019s spectrum strategy for D2D is pivoting from using terrestrial spectrum, partnering with MNOs, to ensuring its own spectrum portfolio [which means] stronger negotiating power against MNOs,\u201d Serra wrote. \u201cIf MNOs don\u2019t move fast and build their D2D strategy, Apple and Starlink will capture the D2D opportunity instead.\u201d <\/p>\n
Analyst Tim Farrar noted in a write-up of the deal that the spectrum SpaceX is purchasing is not supported by any current phones and SpaceX will need support from device manufacturers, which could have implications for device manufacturer and D2D competitor Apple. <\/p>\n
\u201cI do think it is possible that Apple\u2019s senior executives might decide they can\u2019t compete with Starlink in providing D2D capabilities. That could mean Apple ultimately deciding to abandon the C-3 constellation and partner with SpaceX, either on an exclusive or non-exclusive basis,\u201d Farrar told Via Satellite<\/i>, pointing to reporting from The Information about SpaceX pressuring Apple to work with it on D2D. <\/p>\n
\u201cROI has never been the primary determinant of SpaceX\u2019s decisions, when the opportunity presents itself to dominate an industry and force competitors out,\u201d Farrar wrote. \u201cBy spending $17 billion, SpaceX has not only persuaded EchoStar to give up its D2D plans but has now made it much harder for any competitor to move forward when they can\u2019t possibly compete with SpaceX\u2019s speed in bringing new satellites to market.\u201d <\/p>\n
For MDA Space, the termination takes away a 100-satellite contract that had the potential to expand to 200 or even thousands of satellites. <\/p>\n
MDA Space will be compensated for all related termination costs and fees with this termination \u201cfor convenience,\u201d CEO Mike Greenley told investors on Monday. <\/p>\n
\u201cThis arbitrary and unexpected development is completely unrelated to MDA Space\u2019s performance and our products and services. While we are disappointed with this outcome, it is our practice to structure our contracts in a manner that ensures we are protected in the event of any unforeseen circumstances, and our EchoStar contract is no different,\u201d Greenley said. <\/p>\n
He called it a \u201chighly, highly unusual situation,\u201d and said MDA Space will not take any financial hit from the cancellation. He said the contract included a framework for a termination for convenience. <\/p>\n
\u201cIn the case of the EchoStar contract \u2026 they were obviously coming out of some challenging financial times. We put extra effort into ensuring our protection in that contract, which is why we\u2019re comfortable that we will be properly compensated in the termination for convenience,\u201d he added. <\/p>\n
The company reiterated its fiscal 2025 financial outlook and guidance and said the constellation does not impact its own CapEx plans. MDA Space is continuing progress on its expanded satellite manufacturing facility to support its other constellation customers Telesat Lightspeed and Globalstar. <\/p>\n
MDA Space\u2019s stock price dropped more than 24% on Monday. <\/p>\n","protected":false},"excerpt":{"rendered":"
EchoStar is canceling its plans for the direct-to-device (D2D) satellite constellation announced last month, instead selling spectrum to SpaceX that will be used for Starlink\u2019s own D2D services in a $17 billion deal. Monday, EchoStar announced the sale of its AWS-4 and H-block spectrum licenses for approximately $17 billion, with the deal including up to […]<\/p>\n","protected":false},"author":1,"featured_media":47475,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[2],"tags":[],"class_list":["post-48474","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"acf":[],"_links":{"self":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/48474"}],"collection":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/comments?post=48474"}],"version-history":[{"count":0,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/48474\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media\/47475"}],"wp:attachment":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media?parent=48474"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/categories?post=48474"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/tags?post=48474"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}