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Wireless Carriers Unite Against SpaceX Starlink · Elon Musk Podcast

• 0:00
  AT&T, Verizon and T-Mobile have agreed in principle to form a
• 0:04
  joint venture to pool their wireless spectrum and build a
• 0:08
  unified satellite to phone network.
• 0:10
  You read through the industry reports on this and it
• 0:13
  immediately jumps out because you rarely see those three
• 0:16
  sharing anything. I mean they, they usually fight
• 0:18
  over every single subscriber and, you know, every available
• 0:22
  spectrum license they can find. Right, so seeing them form an
• 0:25
  alliance is highly unusual. Yeah, it really is.
• 0:28
  Which makes you look at the Wall Street analysis and ask, are the
• 0:31
  wireless carriers doing this to permanently eliminate cellular
• 0:34
  dead zones for you? Or are they just forming A
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  defensive huddle because of what SpaceX is doing to the
• 0:41
  telecommunications market? Well, the reason these
• 0:43
  terrestrial rivals are suddenly shaking hands requires looking
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  really closely at SpaceX. They are quickly becoming a
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  direct competitor here. Yeah, absolutely.
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  Because SpaceX is no longer just providing rockets or selling
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  dishes for your roof, they are becoming an actual network
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  operator. Look at the numbers they have
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  reached. Starlink currently has over 9
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  million subscribers spread across 155 countries.
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  They maintain 59 global carrier partnerships.
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  They even provide the Wi-Fi for Air Force One.
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  The scale of the operation is continuously expanding.
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  People tend to think of SpaceX purely as an Internet service
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  provider or an aerospace company, but the reality is more
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  like the company that builds the delivery trucks suddenly
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  deciding they're going to deliver the packages themselves.
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  That makes total sense. Right, because SpaceX is using
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  its own hardware in its own spectrum to bypass the
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  traditional carriers entirely. They are building the
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  infrastructure to go straight to the user.
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  They also recently spent $17 billion to acquire highly
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  valuable wireless spectrum from Echo. 17 billion.
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  Yeah, and wireless spectrum is essentially invisible real
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  estate. You need the rights to transmit
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  on specific frequencies. So spending $17 billion just for
• 1:56
  the airwaves shows they are entirely serious about
• 1:59
  controlling the whole pipeline. And they're not just holding on
• 2:02
  to that spectrum, they're actively deploying their next
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  generation V2 satellite. The V2 unit.
• 2:07
  Yeah, the hardware specifications on those V2 units
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  are exactly what is causing problems for the legacy
• 2:13
  carriers. Because the V2 satellite
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  satellites possess 100 times the data density and 20 times the
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  throughput of their first generation hardware. 100 times
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  the data density. If you are an executive at a
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  legacy telecom company, you are suddenly looking at a rocket
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  manufacturer that has better cell towers in orbit than you
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  have on the ground. Exactly.
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  If SpaceX controls both the satellite infrastructure and the
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  spectrum, they can dictate the terms of any partnership they
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  enter into. Although T-Mobile already has a
• 2:44
  commercial partnership with Starlink, I mean they were the
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  very first carrier to sign on for direct to cell service.
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  Like they were. So T-mobile's participation in
• 2:52
  this new joint venture with AT&T and Verizon is a clear signal
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  they want alternatives to a SpaceX monopoly.
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  They do not want to be entirely dependent on a single supplier
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  who is also, you know, actively building out a competing
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  network. Faced with SpaceX morphing into
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  a direct network operator, the legacy carriers need a
• 3:11
  structural defense. Which leads to the actual
• 3:13
  physical mechanics of their new joint venture.
• 3:16
  Right, and that relies heavily on spectrum pooling.
• 3:19
  Defensively, teaming up makes sense in the boardroom, but
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  practically merging 3 totally separate, highly guarded
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  cellular networks to talk to space is a really difficult
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  engineering problem. The joint venture plans to
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  combine their terrestrial frequencies.
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  Specifically, they are pulling the 600 megahertz, 700 megahertz
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  and PCs bands. If you think of wireless
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  spectrum like a highway, right now AT&T, Verizon, and T-Mobile
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  all have their own private narrow lanes.
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  By pooling the 607 hundred and PCs bands, they're essentially
• 3:50
  knocking down the concrete barriers to create one a huge
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  superhighway. Pulling the spectrum increases
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  spectral efficiency. When you have a larger
• 3:59
  contiguous block of frequency, you can target it more
• 4:01
  effectively with satellite phased array antennas.
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  And that larger block allows for a much higher data throughput.
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  Yes, it supports A significantly higher number of simultaneous
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  users. It also solves a major physical
• 4:12
  problem called out of band emissions.
• 4:14
  Right, that happens when high power satellite signals bleed
• 4:17
  into adjacent frequencies. Because a satellite signal is
• 4:20
  incredibly loud. Think of radio frequencies like
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  apartments in a building. The satellite is a neighbor with
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  a huge subwoofer. If it is not coordinated
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  properly, that noise bleeds through the walls and degrades
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  the performance of ground based cell towers.
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  So by coordinating the spectrum use of all three major carriers,
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  they can create designated quiet zones for satellite
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  transmissions. Exactly.
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  That protects the terrestrial towers while still providing
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  coverage to your phone on the ground.
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  But the execution of this plan requires solving intense physics
• 4:53
  problems. I mean they have to handle
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  complex Doppler shift compensations in real time.
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  Because the satellite isn't stationary, it's moving at
• 5:00
  thousands of miles an hour in low Earth orbit.
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  Think of a police or ambulance siren as it speeds towards you.
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  The itch sounds higher and as it passes, the pitch drops.
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  Right, the Doppler effect. Now imagine your cell phone
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  trying to maintain a connection to a satellite moving at 17,000
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  mph. The frequency, the actual pitch
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  of the data is constantly warping.
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  The carriers have to build software that actively predicts
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  and corrects that warp in milliseconds.
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  Or your call simply drops. Yeah, and beyond the physics,
• 5:29
  they have to agree on common AP. Is they have to unify their
• 5:33
  billing back ends too. You are talking about
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  integrating the proprietary systems of three huge
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  competitors in real time. If you were driving down a rural
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  Rd. And your phone needs to switch
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  from a Verizon ground tower to an AT&T managed satellite
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  connection. The systems have to authenticate
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  your device. And verify your billing status.
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  And route the data instantly across shared space to ground
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  links. Legacy corporate bureaucracies
• 6:01
  might severely slow down this technical integration.
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  They are trying to build a consensus driven platform across
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  3 distinct corporate cultures. Meanwhile, SpaceX is completely
• 6:11
  vertically integrated. They own the satellites, they
• 6:13
  own the spectrum, they write the software and they build the
• 6:15
  Rockets. That vertical integration gives
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  them a really significant speed advantage.
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  It gives SpaceX more more time to capture the market while the
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  carriers are stuck in committee meetings arguing over API
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  standards. Well, the lack of a firm legal
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  contract or technical timeline for the joint venture points
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  directly to the financial timing of the announcement.
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  This looks less like an operational deployment and more
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  like a carefully timed corporate signal.
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  Right, because SpaceX is preparing for a highly
• 6:44
  anticipated initial public offering, they're targeting a
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  capital raise of up to $75 billion.
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  Financial analysts at Light Shed Partners looked at this joint
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  venture and noted that it is currently just a press release.
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  It's not an operational deal. It acts as a signal to Wall
• 7:00
  Street to sow doubt about SpaceX having an uncontested run at the
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  direct to device market. You announce an agreement in
• 7:06
  principle and the primary point is the announcement itself.
• 7:10
  The carriers want investors to think twice before assuming
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  Starlink will completely dominate mobile connectivity.
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  And SpaceX reacted exactly how you would expect.
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  Gwynn Shotwell, Spacex's president, publicly called the
• 7:22
  alliance David and Goliath Times 3.
• 7:25
  She said she is betting on David.
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  Framing a company raising $75 billion as the underdog is a
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  clever public relations move, but they also went aggressively
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  after the legal angle. Spacex's vice president of
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  satellite policy, David Goldman suggested the Department of
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  Justice might view 3 dominant competitors aligning against a
• 7:44
  new rival as a form of collusion.
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  I look at the timing and lean toward the view that it is a
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  hollow public relations stunt tying strictly to disrupt
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  Spacex's investor roadshow. They have no operational
• 7:57
  framework yet. You really think so?
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  Yeah, they just wanted to generate negative headlines
• 8:00
  right before SpaceX asks the market for $75 billion.
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  I see the joint venture as a necessary corporate defense.
• 8:07
  They are recognizing a severe threat to their core business
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  model and pooling their resources to build a
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  standardized alternative. They have to do this to survive.
• 8:15
  Well, if the carriers want to avoid antitrust scrutiny and
• 8:18
  make this joint venture functional, they need satellite
• 8:21
  partners other than Starlink. Right, they need to prove this
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  is an open platform and not just a closed monopoly, which is why
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  AT&T and Verizon are heavily backing AST Space Mobile.
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  AST is a company focusing on high speed cellular broadband
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  rather than just basic texting capabilities from space.
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  They actually demonstrated download speeds of nearly 100
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  megabits per second from space. They achieved that using huge
• 8:47
  phased array antennas. Phase array antennas do not
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  physically move to track a target like a traditional
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  satellite dish. They use hundreds of small
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  elements to electronically steer the radio beam directly to an
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  unmodified smartphone on the ground.
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  Delivering 100 megabits per second means you could
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  potentially stream video from a tent in the middle of a National
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  Park. The issue for AST is
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  infrastructure scale. They only have a handful of
• 9:11
  satellites in orbit right now. They also recently lost a
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  satellite during a rocket failure.
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  Which highlights the exact risk of relying on third parties.
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  If you rely on external rockets to build your network, a failure
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  halts your progress. Unlike SpaceX, who builds both
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  the Rockets and the satellites, so they control their own
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  deployment schedule. Exactly Another alternative the
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  carriers are looking at is Amazon's Project Kuiper, known
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  as Amazon Leo. The friction between these
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  aerospace companies and terrestrial brands usually comes
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  down to who actually controls the customer experience.
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  Right. Look at what happened with Delta
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  Airlines. Delta rejected Starlink.
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  Because SpaceX demanded A frictionless connection without
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  a login portal. SpaceX wanted the Internet to
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  just works seamlessly the moment you connect to it on the plane.
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  But Delta wanted to force passengers through their custom
• 10:01
  Delta Sync ecosystem. If you've flown Delta and had to
• 10:04
  deal with a login screen just to get Wi-Fi, you know exactly what
• 10:07
  this is. Delta wants you to login, see
• 10:09
  their branding, maybe watch an advertisement or link your
• 10:12
  frequent flyer account. They want to control the digital
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  journey. So Delta chose Amazon Leo
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  instead. That illustrates exactly why the
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  joint venture exists. Carriers want a standardized
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  system they can control, rather than bending to the proprietary
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  rules of a single satellite provider.
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  Right, if you rely entirely on Starlink, you have to play by
• 10:33
  Spacex's rules. If you build a unified platform
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  that works with AST, Amazon, and others, the carriers retain
• 10:40
  their power over the customer relationship.
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  Setting aside the corporate maneuvering, the actual defense
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  the carriers will use for regulators rests on how this
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  architecture impacts the average smartphone user.
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  Well, terrestrial networks currently failed to provide a
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  signal to users roughly 2.79% of the time.
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  That percentage sounds small, but when you apply it to
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  hundreds of millions of smartphone users, it represents
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  millions of instances where people are completely
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  disconnected. It means dropping calls on rural
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  highways, having no navigation in national parks or losing
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  connection during emergencies when local cell towers lose
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  power. A unified standard means any
• 11:16
  phone can connect to any qualified satellite.
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  This effectively eliminates rural dead zones entirely.
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  It also provides critical disaster resilience when ground
• 11:25
  networks fail, such as during extreme weather events.
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  We have clear historical precedence for this kind of
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  industry cooperation. Industry cooperation created GSM
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  roaming and the E 911 emergency system.
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  Right before those standards, using your phone outside your
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  home network was incredibly difficult.
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  With E 911, carriers had to agree on shared technical layers
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  so that emergency calls would route successfully regardless of
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  which company owned the nearest. Tower The government forced them
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  to carry those calls. If the FCC and the Department of
• 11:57
  Justice approved the joint venture, satellite connectivity
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  stops being a premium carrier add on, it becomes a reliable
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  baseline public utility. Making emergency communications
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  universal is a very strong argument against the claims of
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  collusion. It serves a clear public good
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  that individual market forces have not been able to solve on
• 12:14
  their own. The boundary between ground
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  based cell service and space based Internet is disappearing.
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  The physical infrastructure is merging into one continuous
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  network. So the wireless carriers
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  realized they had to cooperate in the sky so they could
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  maintain their positions to compete on the.
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  Ground the question is whether consumer will actually be
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  willing to pay extra for this invisible safety net, or if the
• 12:38
  market will quickly expect satellite backup to be a
• 12:41
  standard free feature of owning a smartphone.
• 12:44
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