- The Besen Group says Starlink Mobile has a strong path to a U.S. MVNO deal despite current pushback from the Big 3
- Spectrum acquisitions could give Starlink leverage to negotiate better wholesale terms with a carrier
- Analysts see Starlink evolving beyond niche satellite coverage into a major global mobile competitor
There’s an old saying in business that “everything is negotiable.” That cliché seems apt when considering Starlink Mobile’s future role in the wireless industry.
Sure, all three of the biggest U.S. mobile network operators (MNOs) say they’re not interested in doing an MVNO deal with Starlink. Alternatively, they announced a joint venture where they’re working together with multiple satellite low Earth orbit (LEO) entities to eliminate dead zones and expand the direct to device (D2D) market.
That’s all well and good – and shows how nervous the carriers are about Starlink Mobile seizing their customers, according to Alex Besen, founder and president of The Besen Group.
Last week, he led a webinar titled “Direct-to-Cell Disruption: Analyzing the Starlink Mobile MVNO Opportunity” that highlighted a case study on Starlink Mobile’s prospects for striking an MVNO deal. The Besen Group case study sells for $2,950, but Besen gave us a sneak peek at some of the broader themes.
The upshot: While AT&T, T-Mobile and Verizon say they’re not keen on an MVNO with Starlink, Elon Musk’s company has other options. For example, Starlink Mobile could work with a mobile virtual network aggregator (MVNA) or buy an existing MVNO.
Spectrum as leverage for MVNO
But ultimately, Besen believes Starlink Mobile will strike an MVNO agreement with one of the Big 3 U.S. MNOs, possibly using spectrum it’s acquiring from EchoStar as leverage in negotiations.
“They will say, 'Look T-Mobile, for example, you don't want us on your network, but guess what? We will give you X amount of midband spectrum and then in return, you’ll give us a much better wholesale rate,’” he said.
Once that’s done, there’s no stopping Starlink Mobile from expanding further into the wireless space. Besen predicts that within about five years, Starlink will have close to 20 million U.S. mobile subscribers.
“There is no way Starlink Mobile is going to focus on the key niche segment,” like emergency texts or calls in remote areas. “There's no way. They're building this constellation, right? They will become the first global mobile satellite operator eventually,” he said.
Asked who has the most to lose, Besen replied: “I think the traditional carriers. That’s going to be the question: How are they going to compete with Starlink? There’s not much they can do.”
Unfortunately for them, “they have to think how they're going to remain in business with Starlink in the marketplace,” he said. That extends to MVNOs, fixed wireless access (FWA) players and the cable companies that offer broadband and mobile phone bundles.
All this is happening as SpaceX prepares for a blockbuster IPO. Last week, SpaceX filed its S-1 prospectus with the Securities and Exchange Commission (SEC), where it spelled out how it expects to provide the “preferred connectivity experience” to customers no matter where they’re located, whether in rural, suburban or urban areas.
SpaceX is expected to debut on the Nasdaq exchange on June 12 under the ticker SPCX.
Path to ‘bully’ its way into MVNO
Besen certainly isn’t the only analyst who thinks Starlink eventually will strike an MVNO agreement with one of the U.S. MNOs. In a research note for investors last week, Peter Supino of Wolfe Research said: “We see a path for Starlink to ‘bully’ its way into an MVNO agreement within the next year.”
Based on today’s facts and circumstances, “we believe AT&T, T-Mobile and Verizon when they say that they will not provide an MVNO to Starlink. When the facts and circumstances change, the MNO’s risk/reward calculations will change. Once a fourth mobile network looks inevitable, an MNO will grant an MVNO in order to earn some money on the path to the inevitable,” Supino said.
The inevitable is Starlink Mobile providing a fourth mobile network, and that starts with spectrum. Starlink’s 65 megahertz of AWS-3 (unpaired), AWS-4 and H block spectrum are fit for mobile use, but “we believe that spectrum lacks the contiguous bandwidth required to serve a double-digit % share of the U.S. market with robust 5G service,” Supino said.
To get more spectrum, Starlink could aggressively bid in the Federal Communications Commission (FCC) 2027 upper C-band auction, which is a contiguous block with similar propagation characteristics as the lower C-band spectrum that sold in 2020 for a whopping $81 billion.
“As this auction nears, Big 3 amenability to an MVNO should rise,” Supino said. “If a fourth U.S. mobile network by Starlink looks inevitable, someone should slow them down and earn some MVNO revenue along the way.”
Nearer term, Starlink Mobile parent company SpaceX is qualified to bid in the AWS-3 auction, where it could acquire more licenses for the purpose of using them to negotiate better wholesale rates with existing terrestrial carriers, Besen said.
He doesn’t believe SpaceX will use spectrum licenses to build an actual terrestrial mobile network; rather, Musk will use existing terrestrial infrastructure, either directly from carriers or through something like the aforementioned MVNO acquisition scenario.
Who blinks first?
As for which of the Big 3 is most likely to strike an MVNO deal with Starlink, Besen said he thinks AT&T is the best candidate because of its spectrum position.
However, he’s flexible with his guesses. “I might be wrong. Maybe T-Mobile changes their mind,” he said. “It makes more sense if they can work with T-Mobile because they're already partnering with them today.”
Verizon isn’t out of the question, either, given it’s in turn-around mode right now. Earlier this month, Recon Analytics founder Roger Entner told Fierce that he thought Verizon would be the most likely MNO to do an MVNO with Starlink.
For now, it remains a guessing game as we wait to see what’s next for the Big 3’s JV.