The FCC Is About to Put Drones on Cell Networks. Wall Street Is Selling the Networks.

Tomorrow morning the Federal Communications Commission votes on a one-paragraph change to a 1991 rule. If it passes, drones can use the 800 MHz Cellular band, 50 megahertz of licensed, nationwide, low-band spectrum that has been off-limits to anything airborne for 35 years.¹ The licensees are wireless carriers. In the same month, investors knocked AT&T down about 15% on fears that SpaceX will take its customers. I think the market is pricing the threat and ignoring the new market the government is about to hand those networks for free.

Key Highlights

• The order: The draft adds a paragraph to section 22.925 saying the airborne ban "shall not apply to uncrewed aircraft or uncrewed aircraft systems," and it gives drones a primary mobile allocation in the band.² The vote is set for the Oct. 29 open meeting at 10:30 a.m..³
• The opposition: AT&T, Verizon, T-Mobile, CTIA, Qualcomm, Ericsson, Skydio, Zipline and Lockheed Martin filed in support, and the order cites no commenter opposing the change.^{2, 4}
• The selloff: AT&T fell 10.82% on Oct. 9 after SpaceX agreed to buy Grain Management's 800 MHz spectrum, its steepest one-day drop since 2000⁵, and another 8.0% on Oct. 23 on a report that SpaceX wants access to at least 80,000 cell sites.⁶
• The catch: A cell signal is not a flight permit. Most of the uses the order names fly beyond the pilot's sight, which still needs a case-by-case FAA waiver until the FAA's Part 108 rule clears White House review, where it has sat since July 10.⁷
• The idea: AT&T (T) closed at $20.70 on Oct. 28, about 8 times forward earnings with a $1.11 annual dividend.⁵

Here is the strange thing about this rule. Nobody argued for keeping it.

The ban started as an FCC policy in 1984 and was written into the rules in 1991, and it was aimed at airplane passengers using cell phones, not at drones.⁸ The logic was sound for its time. A phone on a fast-moving airplane can see many towers at once and muddy the network for everyone on the ground. The draft order finds that premise no longer holds for drones.²

The FCC first asked whether to drop the restriction in January 2023. It issued a 5 GHz drone order in September 2024 and left the 800 MHz question unanswered. Then it asked again in April 2026.⁴ Three years and nine months for one paragraph. That is how regulation usually dies: not with a fight, but with a docket nobody prioritizes.

What The Order Actually Does

The mechanism is narrow, and I want to be precise about it, because the headlines are not.

The band covers 824 to 849 MHz and 869 to 894 MHz.² Carriers have held it nationwide since the 1980s. The draft exempts uncrewed aircraft from the airborne ban and keeps the ban for airline passengers. Drones must stay inside a licensee's service area, and a drone acting as a base station faces the band's existing power limits.⁸ A drone acting as a mobile station talks "with and through base transmitters only".²

If you remember one thing, remember this. The drone rides the carrier's network. It does not get its own spectrum. Every drone that uses this band is, in practice, a carrier customer.

Two more details matter. The draft declines to cap drone use at reduced power or below a set altitude, which Zipline and one individual commenter had asked for.² In the 890 to 894 MHz slice, international allocation rules mean drones cannot claim protection from interference or cause it.⁴ If adopted, the rule takes effect 30 days after it is published in the Federal Register.⁹

Why does the engineering hold up? Drones already fly on carrier networks in the 700 MHz and PCS bands, which never had an airborne ban, and the draft says the FCC knows of no interference from them.⁸ The 3GPP Release 15 standard added drone identification and height reporting, so a network can tell a drone from a phone and manage it.⁸ Ericsson and Qualcomm supplied the engineering case.²

The Free-Market Read

Let me steelman the other side first. Spectrum is a shared resource, and airborne transmitters are a real interference risk. The FCC's own April notice asked whether existing rules are enough "to protect terrestrial operations from a large number of potentially high-speed airborne transmitters".¹⁰ Public safety users, utilities and critical infrastructure groups have also argued that commercial consumer traffic and high-priority safety communications are not an optimal mix.¹¹ Those are fair points.

But look at who carries the risk. The licensees who would suffer from interference are the same companies asking for the change. AT&T told the FCC it had passed up customer projects because airborne bans add development and supply-chain costs, and Verizon said the band's long reach suits flights over rural and suburban areas.⁸ AT&T also said manufacturers had been reluctant to build drone radios that work around band-by-band airborne bans.²

That is the whole free-market case in one sentence. The party that owns the asset and bears the cost of misuse wants to put it to work, and the regulator is the only thing in the way.

When the owner of a property right asks to use it more, and the only opposition is a rule written for a different technology, the burden belongs on the rule. I would go further. I think the FCC should apply the same test to every other airborne ban still on the books. This order does not. It "does not speak to any airborne restrictions in other bands".² The April notice itself lists CBRS and portions of the 1.4 GHz, 2.3 GHz and 3.7 GHz bands as places where airborne use is barred.¹² One band down, several to go.

There is also a quiet lesson about the government's alternative. In 2024 the FCC set aside 5030 to 5091 MHz specifically for drone control links. As of the April notice, it had not taken the steps needed to put that band into service.² The purpose-built, centrally managed drone band is still not working. The privately run cellular networks already are. That is not an accident.

This is the same pattern I wrote about when the FCC erased a national TV ownership cap and when a court ruled the FCC never had the power to build USAC. Old constraints outlive their reasons. Removing them rarely makes news.

Winners And Losers

The obvious winners are commercial drone operators. The order names precision agriculture, utility and pipeline inspection, search and rescue, wildfire monitoring and parcel delivery.⁸ Low-band signals travel far, which matters most where towers are sparse.

The less obvious winners are the networks. The order "changes what AT&T and Verizon can sell to drone operators".² Every connected drone in this band is a device on a carrier plan. The spectrum is already paid for and already built out. The incremental cost of a new class of customer on an existing network is small.

Who loses? Not much, which is part of why the vote is likely. Consumer drone pilots see no immediate change, because the order covers FCC spectrum rules, not FAA flight rules.¹³ Operators flying DJI hardware are already cut off from new equipment by the FCC's Covered List.⁴ If anyone loses ground, it is the case for a separate, government-designed drone network.

The Numbers The Market Is Watching

Now the part I find most interesting. The market spent October treating 800 MHz as a threat to the carriers, not an opportunity.

On Oct. 9, SpaceX agreed to buy Grain Management's nationwide 800 MHz low-band spectrum, reportedly for about $8 billion and pending FCC approval, for its Starlink Mobile service. AT&T closed down 10.82% at $22.18 on about 150 million shares, its steepest one-day drop since 2000, while T-Mobile fell 13% and Verizon 10%.⁵ On Oct. 21, AT&T beat on earnings and raised its 2026 adjusted EPS outlook to about $2.40, and the stock still fell 6.45%.¹⁴ On Oct. 23 it fell another 8.0% on a report that SpaceX wants access to at least 80,000 U.S. cell sites.¹⁵

One clarification matters here. The FCC order covers the Cellular band at 824 to 849 and 869 to 894 MHz.² Reports describe Grain's holding only as nationwide 800 MHz low-band spectrum.¹⁴ I would not assume the two overlap. The point is not that SpaceX's spectrum and the carriers' spectrum are the same. It is that the market priced "800 MHz" as a weapon pointed at the carriers in the same month the FCC moved to widen what carriers can do with their own 800 MHz licenses.

The threat is real. SpaceX said on Oct. 20 that Starlink Mobile monthly users jumped 37% to over 22 million.¹⁶ I am not dismissing it. But I do not think a satellite network is the natural home for a low-flying inspection drone that needs a strong, steady link. It would compete for the phone in your pocket long before it competes for that.

Since the end of 2025, AT&T is down 16.7%, T-Mobile is down 27.1% and Verizon is up 6.0%, while the S&P 500 ETF is up 13.3%.^{5, 17, 18, 19}

The Bear Case

I could be wrong on this, and you should weigh these before acting.

First, drone revenue is small next to a company with $32.3 billion of quarterly revenue.¹⁵ This order will not move AT&T's earnings in 2027. If you buy the stock for drones alone, you are buying the wrong story.

Second, the FAA is the real gate. Part 108, the rule that would make beyond-line-of-sight flights routine, has been under White House review since July 10.⁸ Spectrum without flight permission is a road with no cars.

Third, the SpaceX threat could be bigger than I think. A fourth nationwide carrier with satellites, 800 MHz spectrum and access to tens of thousands of towers would pressure pricing for years. AT&T's postpaid phone churn already rose to 0.92% from 0.86% last quarter.²⁰

Fourth, leverage. Net debt rose to $149.8 billion after the EchoStar spectrum deal closed.²¹ And the draft can still change or be pulled before tomorrow's vote.²²

The Idea: AT&T (T)

My idea is AT&T. Not because drones will save the quarter. Because the market is pricing AT&T as a network about to lose relevance, in the same month regulators are expanding what that network is allowed to carry.

Why the policy helps: AT&T is one of the licensees in the band and filed in favor, saying airborne bans had cost it customer projects.⁸ The order makes every 800 MHz-connected drone a device on a carrier network. It is optionality the company does not have to pay for.

The data point: AT&T closed at $20.70 on Oct. 28, at about 8.0 times forward earnings, with a $1.11 annual dividend, and a market value near $139 billion.⁵ Management still expects free cash flow of $18 billion or more this year and about $10 billion of buybacks in 2026.²³ The average analyst target is $28.55.²⁴

What the market may be missing: the quarter itself. AT&T added 379,000 postpaid phones and a record 769,000 internet customers, including 442,000 on fiber, and wireless service revenue grew 5.0%.²⁵ A business adding customers on two networks at once is being priced as if it is losing them. The drone order is the smallest piece of that, but it points in the same direction as the operating numbers.

If you own the stock already, the October drop changed the price, not the business. Risks: SpaceX competition, pricing pressure, leverage, a slow FAA, and an FCC order that could change before or after the vote.

What would prove me wrong: if postpaid phone additions turn negative or churn keeps rising next quarter, the SpaceX story is winning and the cheap multiple is a value trap. I would also rethink it if the FCC pulls or narrows the drone item tomorrow.

I keep score on every idea here, winners and losers (FMR Idea Scorecard).

What To Watch Next

Three dates. First, the Oct. 29 vote and the final text, especially any power, altitude or interference conditions the draft did not include.²⁶ Second, the same meeting takes up new rules for direct-to-device satellite service and a new auction of 25 MHz in the 1675 to 1695 MHz and 2020 to 2025 MHz bands.²⁷ That satellite item is where the SpaceX fight goes next. Third, Federal Register publication, which starts the 30-day clock. I track dated items like these on the Deregulation Investor's Catalyst Calendar.

And watch the FAA. The FCC can open the airwaves. Only Part 108 opens the sky. When that rule moves, the market will start asking which networks the drones will ride. I suspect the answer will look a lot like the companies it is selling today.

Related analysis

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