According to reports, share prices of Elon Musk-controlled companies surged significantly when Donald Trump emerged victorious in the recently concluded United States presidential elections resulting in an increase of a staggering $26 billion in the personal wealth of Elon Musk in a single day which immediately took his total net worth to $290 billion. In the weeks following the elections, Musk’s net worth continued to soar and he is now estimated to be worth an unprecedented $347.8 billion.
The sudden surge in the share prices of Elon Musk-linked companies is not unconnected with the fact that he played a major role in helping Donald Trump secure his electoral victory and his perceived closeness to the president-elect which will put him in a position to influence the policy direction of the incoming Trump administration while challenges faced in getting regulatory approval for many of his ambitious projects are expected to be whittled down.
This perhaps is why the Federal Communications Commission (FCC) relaxed its stringent rules and granted SpaceX the green light to utilize its Starlink broadband satellites to provide T-Mobile customers with direct-to-cell connectivity. “This decision marks a ground breaking development in telecommunications, as it is the first official collaboration between a satellite operator and a wireless carrier to receive FCC approval for delivering supplemental cell coverage from space.”
The global telecommunications industry is on the cusp of a revolution, thanks to Starlink’s pioneering direct-to-smartphone services. This innovative technology, set to become operational as a result of the FCC approval to use Starlink broadband satellites to keep T-mobile smartphone users connected in cellular dead zones across the United States, promises to democratize access to mobile connectivity, bridging the digital divide and transforming the way people communicate. In this article, we’ll delve into the economic impact of Starlink’s direct-to-smartphone services on the global telecommunications industry.
Traditional telecommunications companies have long relied on a hub-and-spoke model, where cell towers provide coverage to a limited geographic area. Starlink’s direct-to-smartphone services, on the other hand, utilizes a constellation of Low-Earth Orbit (LEO) satellites to provide wider coverage at a much lower cost. This paradigm shift will disrupt the traditional telecommunications landscape, creating new opportunities and challenges for industry players.
Starlink’s direct-to-smartphone services will bring mobile connectivity to underserved and unserved communities worldwide, unlocking new economic opportunities and bridging the digital divide. The rollout of Starlink’s services will also create new job opportunities in the telecommunications sector, from installation and maintenance to customer support and sales. Regarding pricing, Starlink’s direct-to-smartphone services are expected to be priced competitively, potentially disrupting the traditional telecommunications pricing model with their cost advantage while forcing incumbent players to adapt.
Despite the expected favorable regulatory climate by the incoming Trump administration in the United States, Starlink will still need to navigate complex regulatory frameworks in various countries, ensuring compliance with local laws and regulations. Regarding infrastructure, while Starlink’s satellite constellation will provide global coverage at a lower cost, the company will still need to invest in ground infrastructure, including gateway stations and network equipment.
With Starlink’s cost and global coverage advantage, it is certain to disrupt the global telecoms industry. The big traditional telecommunications companies may be forced to respond to Starlink’s entry by investing in their own satellite-based services, while the smaller operators may be forced out of business or acquired by the bigger operators. However, Starlink’s threat to the global telecoms industry will still need to cross regulatory hurdles since Starlink will still need to secure spectrum allocations in various countries, which may be a complex and time-consuming process.
The trade-off will be whether the regulatory authorities in various countries are more eager to adopt new technology at a lower cost or they are more interested in protecting their local operators. However, if we have learned any lessons from the way technology has been disrupting the world in recent decades then we will know that technology always wins.
Starlink’s direct-to-smartphone services will have a profound impact on the global telecommunications industry, bringing new opportunities for economic growth, job creation, and increased accessibility. While challenges and concerns exist, Starlink’s innovative technology and competitive pricing model are poised to disrupt the traditional telecommunications landscape, forcing incumbent players to adapt and innovate. As the global telecommunications industry continues to evolve, one thing is clear: Starlink’s direct-to-smartphone services will be a game-changer.
Oshobi, a development economist, management consultant, and author writes from Lagos, Nigeria.