The following summarises a Bloomberg Opinion column by Thomas Black, who covers industrial and transportation sectors. It reflects the author’s personal views.
- Black argues Musk’s move into US mobile services differs from his previous ventures because it is not a new market or a gap to fill but a direct fight with three entrenched competitors in a $240 billion market with little subscriber growth, since most people already own a phone.
- The precedent is discouraging. EchoStar’s Dish DBS unit attempted to become a fourth carrier, spending $30 billion on spectrum and $16 billion on wireless infrastructure, never completed the network, saw subscribers fall from 8.5 million in 2021 to about 7.4 million, and filed for bankruptcy in June. SpaceX agreed last year to pay $17 billion for EchoStar’s medium-band spectrum.
- The satellite advantage is misaligned with the revenue. Black notes satellite capacity broadens coverage to rural and remote areas, but that is not where the people or the profits are. Competing in cities means building the hybrid network Musk envisages, with 15,000 direct-to-device satellites plus ground infrastructure, at a cost of tens of billions.
- Everyone has already lost something. The three carriers fell sharply the day after Musk confirmed his intentions, and SpaceX itself is down about 9% this week.
What Happened?
SpaceX last week bought 14 megahertz of paired low-band spectrum, a premium wireless asset, and received FCC approval to build its direct-to-device satellite network. Even with both spectrum purchases it remains far behind the incumbents’ capacity and will need more. Richard Haas, a spectrum expert at LS Telcom in the UK, estimates macro base stations at cell towers cost up to $250,000 each and that SpaceX may need around 50,000 sites, putting that element of the investment at roughly $12 billion, which he describes as not onerous. The opportunity Black identifies is that Verizon and T-Mobile earned operating margins above 20% in 2025 with AT&T close behind, so a cheaper comparable service could take share, though incumbents would respond on price. SpaceX is simultaneously investing in a data centres in space network and reportedly borrowing $40 billion to buy Nvidia chips for its xAI venture, while much depends on launching Starship frequently and recovering both stages to lower costs.
Why It Matters?
Buying the spectrum from the company that went bankrupt deploying it is the detail that should anchor any assessment. EchoStar committed $46 billion to this exact strategy, finished with an incomplete network and fewer subscribers than it started with, and its unit is now in Chapter 11. SpaceX has superior technology, better funding and a genuine satellite capability EchoStar lacked, so the outcome need not be the same. But the $46 billion establishes the order of magnitude for what entering this market costs before any revenue arrives, and the subscriber decline establishes how hard it is to take customers from incumbents who will defend them. The addressable market argument is the structural critique and it is hard to answer. SpaceX’s differentiated asset serves remote and rural users, who are the least profitable segment, while urban density is where the margins sit and where satellite capability confers no advantage. Competing there requires replicating terrestrial infrastructure, which is precisely the business the incumbents have spent decades and enormous capital building. If the proposition reduces to eliminating dead zones, the addressable market is small; if it extends to full urban service, the cost is very large. Both readings are problematic for returns. The capital commitments stacking up deserve attention from anyone holding the shares. A 15,000-satellite constellation, $17 billion of spectrum, roughly $12 billion of ground sites, space data centres, $40 billion reportedly borrowed for chips and continued Starship development are being undertaken at once, in a credit market that has just repriced AI borrowers hard. The company’s own shares are down 9% this week and 25% below their post-IPO peak.
What Next?
Watch for detail on strategy, timeline and expected returns, which Black says investors need and have not received. Further spectrum acquisitions are necessary and expensive, and incumbents will bid against SpaceX for them. The carriers report shortly, with AT&T on October 21 and the others the following week, and capital expenditure guidance will show how hard they intend to fight. For SpaceX, the $40 billion chip borrowing is the other large financing to follow given current credit conditions. Consumers are the likely beneficiaries of a price war, which is the same thing as saying shareholders on both sides are not.
Affected Tickers and Coins: SPCX, T, VZ, TMUS, SATS, NVDA
Source: Bloomberg Opinion
