Starlink rattles carriers: can satellites really disrupt mobile?

The established order of U.S. mobile carriers—AT&T, T-Mobile, and Verizon—is facing a serious challenge from an unlikely source: SpaceX’s Starlink. With its exclusive deal with T-Mobile now expired, Starlink is poised to deliver wholesale wireless services to Mobile Virtual Network Operators (MVNOs) and offer direct-to-consumer mobile service, potentially bypassing the traditional cell tower infrastructure and shaking up the industry to its core.

At&t's measured response: a percentage play

AT&T’s CFO, Pascal Desroches, recently addressed the growing concerns during the Mizuho Technology Conference, tempering expectations about satellite’s potential. He conceded that satellite technology might serve approximately 1% of the population – those residing in remote, rural areas where traditional infrastructure struggles to reach. “I think satellite is a great solution for that,” he stated, highlighting AT&T’s partnership with AST SpaceMobile, an agreement slated to continue through 2030. This collaboration aims to provide space-based cellular broadband to standard smartphones, effectively eliminating cellular dead zones, a critical advantage for networks like FirstNet.

But AT&T isn't relying solely on AST SpaceMobile. CEO John Stankey has signaled a broader strategy, indicating plans to collaborate with “multiple satellite players” to fill coverage gaps in rural areas. The idea is to create a more robust network where AT&T customers can maintain seamless service even when traversing areas with limited cellular reception.

The anxiety among the “Big 3” is palpable. It led to the formation of a joint venture—a move that, while not affecting existing carrier-satellite partnerships, represents a significant pooling of resources. AT&T, T-Mobile, and Verizon are combining their spectrum and sharing the costs of building out direct-to-device (D2D) infrastructure—a strategic alignment intended to enhance their competitiveness in the burgeoning D2D market.

Convergence: at&t's perceived edge

Desroches believes AT&T is uniquely positioned to capitalize on the convergence of mobile and broadband services. The ability to bundle mobile cellular service with home broadband internet under a single bill is a powerful selling point, and AT&T’s recent acquisition of mid-band and low-band spectrum from EchoStar strengthens its position. The company anticipates reaching 40 million fiber passings by the end of the year, a potential customer base it aims to expand to 60 million by 2030, offering both fiber and wireless services at compelling prices, especially in urban and suburban markets.

Despite this optimistic outlook, AT&T’s stock has seen a slight decline this year. Wall Street is closely watching the company’s upcoming second-quarter earnings report, expected to show year-over-year growth in wireless service and net new postpaid phone subscribers—though potentially a slight dip compared to last year’s figures. The numbers will ultimately reveal whether AT&T's strategy to navigate the shifting landscape of mobile connectivity is truly gaining traction.