SpaceX will still need macro towers

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 18:54

   I mean, think about all the advertising that's done, the fulfillment, dealing with the phones, phone subsidies, and that's a big part of the financing. I think it's just like how many customers are we talking about? So, you know, for the amount of spectrum that they have now in the network that I'm talking about for $10 or $15 billion, you're not taking 50% share overnight. And I don't think that would be that expectation from day one.

2. 19:16

   But then the theory of telco is you do that initial CapEx build, you have your initial spectrum purchases, 10, 20, maybe 30 billion, another 10 or 15. billion dollars in terms of capex and then if you are successful and you do get that 5 or 10 million customers the opportunity to invest more happens right if you go back to the old days when cable the cable view of wireless was going to be hey we're going to get these mbnos we're going to drive the wireless companies into the dirt and then we're just going to buy them and i think that happened in in at least one european market and that was the cable bull thesis that was occurring so you could have the same bull thesis i think emerge from the spacex bulls here where they're going to say, hey, we'll get those first 5 or 10 million customers. We'll drive them into the

3. 19:58

   ground. Verizon is going to be so desperate for any type of revenue because their revenue declined. They're just going to hand them a wholesale deal, and then they'll start selling Spectrum. There's going to be a Spectrum auction with the FCC. And you can see how the narrative can build based on, hey, initial CapEx, not that big, get in the market. And then if it's successful, we start investing more. Let's talk about the terrestrial network for one more term. I heard you throw a little water on the idea that they're going to build Femtocells. That is what Elon and Gwen Shotwell have been saying, that they don't need to build the traditional kind of terrestrial network that AT&T and Verizon and T-Mobile have, where you have a lot of fiber backhauled at big sites that require all kinds of zoning permits and everything, that they can

4. 20:17

   basically just put small cell stations next to Starlink dishes, put them anywhere they want, and blanket the world with them. And Starlink itself will be the backhaul. Now, I sense some problems with this. Like, Starlink is not 100% reliable all the time. If you have a network that is not 100% reliable all the time. You've got some problems. So maybe you've got to backstop it somehow. But you don't think that's what they're doing.

5. 20:39

   You think they're going to build a regular terrestrial network. I mean, I'm sure that'll be a part of it. But you need macro towers for the type of coverage and penetration and power that it's just, I mean, not to explain physics to SpaceX, they probably know it better than anybody. But I think what you'll see is, you know, as they talk more about this low band spectrum that they purchased, that when we get on the conference calls of these tower companies, is that you're going to find out that you're going to see a lot of those antennas show up on towers. It's just natural. And I think, you know, you can talk about femtos, but it's hard to see that the network is going to get built without macro towers. One of the weirder aspects of the telecom industry as it's constituted in the United States right now is that the cell carriers own

6. 21:21

   some of their towers and operate some of their towers. And then there are these crazy third parties that literally have names like TowerCo that operate a bunch of the other towers. Are Are those captured? Do you think SpaceX can get deals with those companies? Are they built? hold into their big partners. These are huge REITs. American Tower is the biggest one. It's probably one of the largest companies in this. When you consider any REITs, there's other companies out there. So they have these towers. They have space, in many cases, where basically SpaceX can just go and get an additional antenna. So it's a lot easier to do that now than when the wireless companies were initially building this stuff and having to erect their own towers.

7. 22:02

   In addition, you know, EchoStar is going through a bankruptcy. They have a lot of radios that could be used, that could be bought on the cheap, that could expedite, you know, SpaceX's entrance in the market. They haven't shown interest in that yet. You know, the EchoStar bankruptcy process hasn't yet concluded, but EchoStar can still be a potential partner here by selling them, again, radios that are already on tower.

8. 22:24

   So you've lifted the amount of time. Those radios use the spectrum that SpaceX is purchasing. so it can be a quick fix for them to enter the market. Who knows if they do that? They may have their own view like Masa did