Despite the market reaction, executives at all three telecom companies recently said satellite broadband is unlikely to materially threaten their core businesses.
- SpaceX President Gwynne Shotwell said Starlink could win “quite a few” customers from the three wireless carriers during the company’s earnings call.
- Verizon said satellite technology remains constrained by physics and is better suited for rural markets than dense urban and suburban areas.
- AT&T and T-Mobile also stated that their existing wireless and fixed wireless networks offer superior performance for most consumers today.
Shares of Verizon (VZ), AT&T (T), and T-Mobile (TMUS) fell in early morning trade on Wednesday after SpaceX (SPCX) President Gwynne Shotwell said Starlink could eventually “acquire quite a few” customers from the three largest U.S. wireless carriers.
Despite the market reaction, executives at all three wireless carriers have recently stated that satellite services are unlikely to become a meaningful competitor to their core businesses.
Of the three, VZ stock took the biggest hit, down as much as 2.5% in pre-market trade. AT&T stock fell over 2% while TMUS stock dipped over 1%. On Stocktwits, retail sentiment around AT&T and Verizon stated in ‘bearish’ territory over the past day, while sentiment around T-Mobile improved to ‘bullish’ from ‘neutral’ territory.
What Did SpaceX Say?
“The big 3 in the United States, AT&T, Verizon, and T-Mo, roughly between them, $600 billion a year,” Shotwell said during SpaceX’s first-ever earnings call. “And I anticipate us to be able to acquire quite a few of their customers because I think our service will be better.”
She added that Starlink would have an edge over the “big 3” because it will eliminate dead zones by leveraging satellite technology. “It will be better during any sort of natural disaster because, surprisingly, even though space movies make space look super dangerous, it’s a pretty quiescent environment,” Shotwell said.
T-Mobile CEO Brushes Aside Satellite Threat
Speaking on T-Mobile’s earnings call last month, Chief Operating Officer Srinivas Gopalan said the company’s fixed wireless access (FWA) product remains “far superior” to low-Earth orbit (LEO) satellite services for mainstream broadband.
Gopalan said T-Mobile has worked closely with satellite technology for years, but has yet to see a compelling reason to expand partnerships because satellite does not offer meaningful product differentiation or access to new customer bases.
“Our product itself more than serves the purposes,” he said, adding that T-Mobile’s network performs particularly well even in many rural markets.
AT&T Thinks Starlink Is Late To The Game
AT&T CEO John Stankey also pushed back against concerns that Starlink could materially disrupt the wireless industry. In a CNBC interview following the company’s earnings, Stankey said new competitors are inevitable but argued that satellite providers face the difficult task of competing against networks built through decades of infrastructure investment.
“There are going to be new competitors,” Stankey said. “But the reality is that they’re coming to the game very late after this industry has been established.”
Verizon Says Physics Limits Satellite Broadband
Verizon CEO Hans Vestberg made perhaps the strongest case against satellite replacing terrestrial networks. During Verizon’s earnings call, Vestberg said the company has seen no evidence that satellite broadband is affecting customer growth and stated that technical limitations make it difficult for satellite providers to compete in densely populated markets.
He said satellite beams cover large geographic areas, limiting the number of households they can serve without reducing network performance. Even if next-generation satellite systems improve over the next five years, Vestberg estimated they would still support only a fraction of the homes that Verizon’s terrestrial network can serve.
“We’re like 100x to 1,000x more efficient,” he said, adding that nearly all of Verizon’s revenue comes from urban and suburban markets where fiber and wireless infrastructure remain far more scalable than satellite.
Vestberg acknowledged that satellites have an important role in serving remote rural communities where building traditional networks is uneconomical, but said the technology is complementary rather than a replacement for terrestrial broadband.
Retail Investors Remain Divided
Some retail investors also questioned whether Starlink would significantly disrupt incumbent carriers. One Stocktwits user said satellite internet still requires customer-installed equipment and can be affected by adverse weather, making it less attractive than traditional wireless service for most households.
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Another user suggested the market reaction reflected investor sentiment more than any immediate competitive threat.
VZ’s stock has gained over 20% this year, while T stock is down 2.5% and TMUS shares have fallen more than 11%.
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