SpaceX attacks $1.7 billion deal to buy Echostar spectrum for Starlink’s phone service

Elon Musk’s SpaceX has agreed to obtain a 50MHz wireless spectrum and mobile satellite service spectrum license from Echostar for use with the Starlink Satellite Network.

Echostar will sell AWS-4 and H-Block Spectrum licenses in exchange for $8.5 billion in cash and $8.5 billion in SpaceX shares. SpaceX claims that the deal will allow the company to provide broadband speed internet access to mobile phones around the world by developing and deploying “direct cell” constellations. Of the cash, $2 billion is made as direct cash interest on liabilities held by Echostar.

SpaceX was approved last year by the Federal Communications Commission to proceed with plans to provide a direct version of Starlink Satellite Internet Service with T-Mobile as its provider. This spectrum purchase allows SpaceX to operate more freely without relying on other network providers.

In particular, SpaceX said that when the next satellite operates, the new spectrum will allow for a “optimized 5G protocol” directly to telephone services. The agreement also provides customers with access to Echostar’s Boost Mobile Service Access for Starlink phone services.

The agreement was under heavy pressure from the FCC and, after public encouragement from SpaceX, began an investigation into the use of Echostar’s spectrum holdings in May. According to Bloomberg, President Trump personally urged Ecostal CEO Charlie Ergen to sell the spectrum license in the weeks that follow. On August 26th, Echostar sold AT&T a spectral license worth $23 billion.

In a statement, Echostar said it believes today’s Spectrum Sale to SpaceX will resolve the FCC investigation along with the AT&T deal.

Spectrum trading effectively ends Ecostal’s own ambitions to build direct satellite constellations. As part of the move, Echostar simultaneously canceled its $1.3 billion contract with Canadian satellite maker MDA Space, which was announced just five weeks ago in August with 100 satellites.

SpaceX said Monday that the new spectrum will allow “more than 100 times” upgraded satellites to have the capabilities of first-generation StarLinks directly directly to cell satellites.