According to sources familiar with the matter, SpaceX (SPCX.US) and major U.S. home internet provider Charter Communications Inc. (CHTR.US) have held high-level executive discussions regarding a potential collaboration on consumer mobile phone services.
Under the discussed framework, Charter could utilize its terrestrial internet infrastructure to carry a portion of SpaceX's mobile phone traffic, operating in a manner akin to its existing Spectrum Mobile service. If finalized, this partnership would represent a crucial step forward for SpaceX in its ambition to become a direct-to-consumer mobile phone provider.
SpaceX recently completed a historic initial public offering. Its most profitable segment is currently the satellite-based Starlink home internet service. The company currently offers a Starlink Mobile add-on service through T-Mobile US Inc. for a monthly fee of $10, enabling text messaging and internet-based voice calls in remote areas. Charter declined to comment, and SpaceX did not respond to requests for comment.
Terrestrial Infrastructure to Augment Satellite Network, Spectrum Acquisition Underway
As reported earlier this week, SpaceX has informed investors of its plans to offer mobile services directly to consumers. To achieve this, the company requires significant mobile spectrum holdings and terrestrial infrastructure, in addition to its existing satellite spectrum.
In recent auctions held by the U.S. Federal Communications Commission (FCC), SpaceX successfully secured rights to mobile spectrum in the AWS-3 band. The company had also acquired certain mobile spectrum rights from EchoStar Corp. last year.
Gwynne Shotwell, President of SpaceX, stated in a recent interview, "The user base for Starlink Mobile will far exceed that of our Starlink home broadband service. Not everyone needs Starlink home broadband, as there are many other options in the market. However, I believe the number of Starlink Mobile users will significantly surpass our home broadband business."
Last year, Charter entered into a merger agreement with Cox Communications, expanding its customer base by over 20%. Through its Spectrum Mobile brand, Charter provides wireless phone services to its cable TV and home internet customers. This service relies on infrastructure leasing agreements with T-Mobile and Verizon Communications, with Charter routing most of the traffic through its own Wi-Fi networks.
If this potential partnership with SpaceX materializes, it would not only help SpaceX address its terrestrial network limitations and accelerate its mobile communications strategy but could also open up new wholesale revenue streams for Charter, potentially intensifying competition in the already highly contested U.S. wireless communications market.
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