Adam Levy, The Motley Fool Wed, October 14, 2026 at 9:09 AM EDT 6 min read SPCX -4.21% NVDA +0.97% T +1.60% VZ +1.75% TMUS +1.22% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Space Exploration Technologies (NASDAQ: SPCX) is threatening to upend yet another industry. This time, the company has the wireless communication sector in its sights, as it has now acquired what Elon Musk described as "the last critical piece" of the puzzle required to offer complete wireless coverage in America. Shares of the big three wireless carriers -- AT&T (NYSE: T), T-Mobile (NASDAQ: TMUS), and Verizon (NYSE: VZ) -- fell sharply on the news that SpaceX intends to compete in their arena.
However, SpaceX's latest big purchase could also be sending it down a path that will require it to spend billions of dollars more. While it's not a meaningful competitive threat to the wireless carriers yet, it could still have a significant effect on their finances as soon as next year.
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SpaceX has agreed to acquire 14 megahertz (MHz) of paired spectrum licenses in the 800 MHz band from Grain Management for a reported $8 billion. These are spectrum licenses T-Mobile had to give up as part of its merger with Sprint. The spectrum is particularly good for transmissions covering long (unobstructed) distances and penetrating buildings. That's what makes it so valuable to SpaceX, which has so far been limited to connecting to devices outdoors with its Starlink satellite constellation.
The new spectrum licenses will join SpaceX's existing licenses in the 2-gigahertz (GHz) spectrum band, which its new V2 Starlink satellites will use. However, if SpaceX truly wants to compete with the established wireless carriers, it will need a lot more spectrum.
It shouldn't be ignored that T-Mobile, Verizon, and AT&T aren't standing still. Earlier this year, the three formed a joint venture to expand their satellite direct-to-device wireless coverage. AT&T and Verizon have partnered with AST SpaceMobile, which is building a constellation of satellites to cover mobile dead zones. T-Mobile currently partners with SpaceX. The new joint venture aims to expand the number of satellite service providers the carriers work with.
In other words, the carriers are looking to offer the same type of unified service that SpaceX plans to, but to get there first. They already have access to the scarcest resource necessary to fulfill that goal: wireless spectrum. As mentioned, the low-band spectrum in the 800 MHz band that SpaceX is buying is good for covering long distances and penetrating buildings. However, it can't handle much traffic. That makes it good for providing coverage in rural areas, but not as good for more urban areas. Having a full breadth of spectrum, and a lot of it, is necessary for any wireless network that intends to compete nationwide.
SpaceX's soon-to-be-acquired 14 MHz of low-band spectrum is less than one-third of the amount held by Verizon, which has the smallest depth of low-band spectrum among U.S. wireless carriers. Its 65 MHz of mid-band spectrum is also less than one-third of the amount held by AT&T, which has the smallest depth in the mid-band range.
With that context in mind, it appears that building a competitive service will require SpaceX to spend a lot more -- not just to launch new satellites, but to buy additional spectrum licenses and construct the infrastructure needed to deploy that spectrum and establish a 5G network. That's bad for both SpaceX and the wireless carriers it plans to compete with.
While there are some pockets of spectrum now in the hands of private entities that could become available for SpaceX to buy, the likeliest seller of spectrum it could tap is the Federal Communications Commission (FCC). The U.S. regulator periodically auctions off rights to spectrum portfolios after clearing the airwaves.
This will create an issue for the other carriers as they look to fill gaps in their coverage, as a deep-pocketed bidder like SpaceX could increase the prices everyone pays for new licenses. As such, it could have a near-immediate effect on the carriers. The next FCC auction is scheduled for April.
Investors may not look favorably on the idea of SpaceX investing huge amounts of capital into wireless spectrum and a network to make use of it. There's not much growth happening in the wireless communication market, so the returns on invested capital in it will be significantly lower than the potential for funds deployed to pursue higher-growth opportunities like space launches and artificial intelligence.
The most likely scenario is that SpaceX is trying to put the carriers in a prisoner's dilemma. All three have stated they won't partner with SpaceX on a virtual network that would allow it to offer service to Starlink customers using one of the big carriers' networks. But if SpaceX's efforts to build its own wireless network prove a bigger drag on the incumbents' finances than a carrier would face if it simply struck a deal that allowed Starlink to piggyback on its network, it would make sense to bite the bullet. The question is, which carrier will cave first?
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Adam Levy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AST SpaceMobile. The Motley Fool recommends T-Mobile US and Verizon Communications. The Motley Fool has a disclosure policy.
Elon Musk Says SpaceX Just Bought "the Last Critical Piece" Required to Take on the Wireless Giants. Here's Why It Will Need to Spend Billions More to Compete. was originally published by The Motley Fool
