AT&T $T, T-Mobile $TMUS, and Verizon $VZ agreed in principle on Thursday to form a joint venture aimed at eliminating wireless dead zones across the U.S., with a focus on rural and underserved communities.
Pooling spectrum resources and satellite partnerships is the central mechanism of the venture, which will use direct-to-device satellite technology — a system that routes connections through orbiting satellites instead of ground-based cell towers — to bring coverage to areas that currently lack it. The agreement still requires definitive contracts and other customary closing conditions before it can be finalized, the company said.
None of the carriers' existing satellite deals are being dissolved by the arrangement, according to Bloomberg. T-Mobile's deal with SpaceX's Starlink, AT&T and Verizon's shared arrangement with AST SpaceMobile, and Verizon's separate agreements with Amazon $AMZN Leo and Skylo will all continue operating independently. On the consumer side, each carrier will retain full control over how it prices and packages its services.
Rather than requiring every satellite provider to negotiate and build out separate technical solutions for each of the three carriers individually, the venture is designed to let the industry develop direct-to-device capabilities on a unified basis, the company said. The structure would also lower barriers for satellite operators that have not yet entered the market.
The carriers said the venture aims to provide redundant connectivity during natural disasters and other emergencies when ground-based networks go down, and to establish common technical specifications for a more consistent customer experience.
"Our goal is to make staying connected simple, no matter where you are — on a rural highway, in a national park, on a boat, or during an emergency," AT&T CEO John Stankey said in a statement.
T-Mobile CEO Srini Gopalan said in a statement that the venture would use expanded satellite capacity to "deliver the best possible service to customers" and help accelerate innovation across the wireless and satellite industries. Verizon CEO Dan Schulman said in a statement the partnership "gives customers more options, continues to strengthen America's infrastructure and increases competition for satellite providers."
Earlier the same week, the FCC signed off on a sweeping spectrum transaction involving EchoStar, SpaceX, and AT&T valued at roughly $40 billion, according to Reuters. SpaceX is acquiring 65 megahertz of EchoStar's spectrum for $17 billion, a purchase intended to bolster Starlink's ability to deliver direct-to-device service at scale. FCC Chairman Brendan Carr described the deal to Reuters as opening a concrete route for Starlink to compete in the direct-to-cell space.
According to Reuters, the carrier alliance may have a strategic dimension beyond coverage expansion, with certain analysts viewing it as a hedge against SpaceX's growing footprint in direct-to-device service and its potential to encroach on territory long held by the traditional wireless giants.