By David Shepardson
WASHINGTON, May 14 (Reuters) – Verizon, AT&T and T-Mobile said on Thursday that they agreed in principle to form a new joint venture that seeks to address long-time coverage gaps especially in rural areas by using satellite-based technologies.
The largest U.S. wireless companies said the plan seeks to end nearly all dead zones without mobile service. The plan also aims to ensure redundant connectivity during natural disasters and improved network performance using so-called “direct to device” satellite technology.
On Tuesday, the Federal Communications Commission approved EchoStar’s $40 billion sale of wireless spectrum to SpaceX and AT&T. EchoStar is selling 65 megahertz of its spectrum to SpaceX for $17 billion to boost SpaceX’s Starlink’s next-gen device to device offering.
The venture will make joint investments in using satellite-based, direct-to-device technologies to address coverage gaps. Some analysts also suggest the joint venture could be defensive as some have raised concerns SpaceX could eventually compete more directly with the U.S. wireless carriers.
FCC Chairman Brendan Carr told Reuters in an interview the $40 billion spectrum sale provides a very clear pathway for Starlink to “enter the direct to cell market.”
SpaceX CEO Elon Musk has said the company has deployed more than 650 Starlink satellites for a fledgling direct-to-device business. Musk has said the goal is “deliver full cellular coverage everywhere on Earth.”
Carr said Starlink will have the ability on its own or in partnership with traditional carriers to address the dead zones. SpaceX is gaining access to exclusive-use spectrum for a Starlink device-to-device or direct-to-cell service and other offerings. The FCC said AT&T’s low-band spectrum will expand coverage across the United States, especially in rural and underserved areas.
“We’re fundamentally reshaping the wireless industry through this approval,” Carr said. “Our job as regulators is to help the market have a fair shot at sorting itself out. We’re not picking direct to cell as a winner, but we’re also not artificially keeping it on the sidelines and declaring it a loser.”
The FCC also granted waivers for SpaceX to address convergence of wireless and satellite broadband. The announcement allows SpaceX to use its new spectrum flexibly for terrestrial, space-based and hybrid network architectures.
The FCC is requiring EchoStar to establish an escrow account of $2.4 billion that would cover any amounts that Echostar may eventually owe in connection with disputes over work under the licenses.
(Reporting by David Shepardson; Editing by Sharon Singleton and Nick Zieminski)
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