SpaceX's entry into the mobile communications market heightens competition concerns! Bank of America argues: T-Mobile US (TMUS) and telecom tower operators are expected to benefit

The Zhitong Finance App learned that after discussions with T-Mobile US (TM.US) Chief Technology Officer John Saw and US Communications Infrastructure Real Estate Investment Trust (REIT) Crown Castle (CCI.US) executives, Bank of America said that SpaceX (SPCX.US) plans to enter mobile communications services may benefit T-Mobile US, communication tower operators, and spectrum value.

According to previous reports, SpaceX is planning to enter the mobile communication operation market with its established dominant position in direct communication services between satellites and smartphones. Stable income from the mobile communications business will be used to fund ambitious dreams such as SpaceX's immigration to Mars. Once it continues to expand its share of the $740 billion market, it will pose a threat to existing telecom operators, including T-Mobile US.

For T-Mobile US, Bank of America said that SpaceX's limited cellular spectrum resources and large-scale infrastructure needed to build a terrestrial communications network covering the entire US will limit its ability to compete directly with existing mobile operators. Thus, it is likely that satellite connections will continue to complement terrestrial networks rather than replace terrestrial networks. Bank of America's view means that with SpaceX entering the mobile communications market, its competition with T-Mobile US will not necessarily be as intense as some investors expected.

Meanwhile, Bank of America analyst Matthew Griffiths and his team pointed out that SpaceX will face major obstacles in building a terrestrial mobile communication network covering the entire US, including limited cellular spectrum resources and the need to build thousands of communication towers and small base stations, while also meeting the requirements of zoning, electricity, fiber, and leasing.

Analysts also pointed out that a network model that mainly relies on users to deploy their own home base stations is unrealistic. John Saw estimates that if it wants to achieve outdoor coverage comparable to T-Mobile US, SpaceX may need to deploy 500 million to 1.5 billion home base stations across the US. Based on the estimated cost of about 1,000 US dollars per home base station, the total cost will be very high. Crown Castle also said that home base stations are more suitable for filling small-area network coverage gaps, while communication towers can provide electricity, fiber, and licensing support for larger network deployments.

Analysts said that considering that SpaceX has sufficient financial resources, the company may be able to deploy terrestrial communication sites more quickly, but if it is to reach the level of existing operators in terms of network coverage, capacity, indoor signal performance, and mobile communication capabilities, it will still require a large amount of spectrum resources and capital investment, and it will take several years of construction and implementation. Analysts added that direct satellite connectivity equipment services will probably still complement terrestrial communication networks, particularly in very remote rural areas.