Carrier heavyweight warns that helping SpaceX could come back to bite the big three

SpaceX’s major announcement from last week has had the big three US carriers on the defensive. For reference, the Elon Musk-founded company is aiming to become a nationwide competitor to AT&T, T-Mobile, and Verizon, and it has done so by striking an agreement to acquire spectrum in the 800MHz band. The development should eventually help the company offer reliable indoor coverage. However, there’s a lot that needs to be done before that ambition can come to fruition, and T-Mobile’s parent company, Deutsche Telekom, is making sure SpaceX knows that.

In an investor relations webcast on Monday, the parent company and its CEO, Tim Höttges, addressed concerns regarding the disruption of the telecom market by the presence of satellite providers (via PCMag).

When asked about the risk Elon Musk and SpaceX pose to traditional telecom operators, Höttges said that although satellite-powered mobile connectivity is a useful solution for rural areas where coverage is limited, it doesn’t make sense as a replacement for terrestrial mobile networks in densely populated urban cities. “Why should I have to make calls over a satellite network when I can already get good coverage, or the best coverage, today?” Höttges asked (translated from German).

He added that Deutsche Telekom, and as a result, T-Mobile, still maintain a strong position in the telecom market in the US, and that is expected to remain the case thanks to its existing infrastructure, significant spectrum holdings, and established customer base. SpaceX, meanwhile, still has to figure out how it wants to make use of the 800MHz spectrum it just agreed to acquire. It could leverage its satellites to beam down signals to ground stations, which could then broadcast the low-band frequency to nearby phones. But that would still require SpaceX to build or acquire said ground-based stations.

A warning against partnering with SpaceX

Höttges also argued that network operators should be wary of partnering with companies like SpaceX through an MVNO arrangement. Considering that MVNOs don’t have to bear massive overhead infrastructure costs, they can often offer services at a lower price than what traditional carriers charge. “I do not think it would be a good idea to court SpaceX through an MVNO arrangement now,” said Höttges. For what it’s worth, T-Mobile already has several MVNOs under it, including Mint Mobile, US Mobile, GoogleFi, and more. The network operator likely doesn’t see these MVNOs as massive competitive threats, unlike SpaceX.

Interestingly, T-Mobile already has a partnership with SpaceX in place, though that is limited to satellite connectivity. The two companies also plan to bring satellite connectivity to Europe in 2028.

It’s unclear how SpaceX intends to put its new spectrum to use. What’s clear, however, is that the Musk-founded company will have to make big investments before it can realistically compete with the big three.