Dear Reader,
A lot of you wrote in this week asking what I make of Musk spending $8 billion for SpaceX to buy low-band 800 MHz wireless spectrum licenses.
What Happened to the Carriers
First, the immediate fallout.
If you own AT&T, Verizon, or T-Mobile, you did not have a good Friday.
AT&T fell 9.8%.
Verizon fell 8.8%.
T-Mobile fell 13.3%.
Combined, $39 billion in market value wiped out in a single day — just on news that Musk bought these licenses.
The market is terrified he’s going to launch a national wireless carrier.
Now, I want to be honest here.
I’m no Musk whisperer.
Trying to understand this man is like trying to understand your college friend who was tripping on acid.
Good luck with that.
But if you zoom out and look at the chess moves he’s made throughout his career — and I’d strongly recommend Walter Isaacson’s biography if you haven’t read it — a few things become clear.
The First Principles Pattern
Musk follows a consistent pattern when he builds something.
He doesn’t buy an existing company that has the scarce ingredient he needs.
He acquires the scarce ingredient itself and builds from scratch.
Instead of buying AT&T or Verizon and inheriting all their baggage — legacy tower networks, bad decisions baked into the cost structure, regulatory obligations — he bought the spectrum outright and plans to build his own hybrid network.
Satellites covering rural America.
Ground-based towers covering dense cities.
All built fresh. All first principles.
Marcus Aurelius asked: what is the nature of the thing?
Musk asks the same question.
Strip it down. Question every rule. Build it as if you were starting from scratch.
That’s what’s happening here.
The Independence Angle
There’s another piece worth understanding.
Under the existing regulatory framework, SpaceX needed a terrestrial carrier to use certain spectrum.
By owning these licenses outright, that dependency disappears.
The FCC ruled last week that SpaceX no longer needs carrier licensing deals.
That is a significant removal of a constraint on his business.
The Apple Angle
Some analysts think this is also a chess move against Apple.
Apple’s satellite phone features currently run through Globalstar.
The theory is that Musk is positioning SpaceX to pressure Apple into using SpaceX for future satellite features instead.
That would be a very valuable partnership.
And it’s exactly the kind of move Musk makes that most people don’t see until after it happens.
My Honest Concern
Here’s where I land on this.
I’d love to see Musk use this spectrum as an add-on to existing infrastructure rather than build his own full-stack carrier.
We talked about this yesterday with Starbucks and McDonald’s.
The franchise model versus owning the stores.
When you tap onto somebody else’s infrastructure and collect the cream off the top, you get a high return on a low investment.
When you build all the stores yourself, your investment explodes and your return on capital shrinks.
Starlink’s average revenue per user was $99 in 2023.
It’s now about $66.
That decline tells you exactly what happens when you move from a premium product serving the affluent market into mass market consumerism.
More customers. Tighter margins. Lower profitability.
Verizon and T-Mobile are living proof of where that road leads.
If Musk takes SpaceX down into mass market wireless, revenue will explode and margins will shrink.
From a pure financial perspective, that is not the right move.
But like I said.
Trying to understand this man is like trying to understand someone tripping on acid.
Lord knows what he actually wants to do.
What I do know is that whatever it is, it will be very, very interesting.
Have a wonderful day.
I’ll see you tomorrow.
“The Buck Stops Here,”
P.S. There’s been rumors about Musk building his own phone.
An xAI device that runs on his own satellites, his own spectrum, his own AI.
His own complete stack.
If that phone ever gets built — and knowing Musk, it probably will — there’s one thing you can say with near certainty about the chip inside it.
He won’t be able to build it without this company.
Every major smartphone chip on earth uses them.
Apple. Samsung. Qualcomm. Google.
All of them pay a royalty to the same little-known company for the right to use that architecture.
If Musk builds his phone, he will too.
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Written by Dylan Jovine