Verizon CEO Challenges Starlink’s Path to Becoming a Major US Mobile Player

A Competitive Landscape Under Scrutiny

As the telecommunications industry watches Elon Musk’s SpaceX expand its Starlink satellite ambitions, Verizon CEO Dan Schulman has weighed in on the potential for the company to disrupt the US wireless market. During a third-quarter earnings call held on Monday, Schulman addressed the growing speculation surrounding Starlink’s entry into the mobile sector, emphasizing that while he takes the threat seriously, the path to true competition is fraught with significant obstacles.

Schulman noted that he operates under the assumption that SpaceX will execute its stated goals flawlessly. However, he cautioned that even with perfect execution, the fundamental requirements of building a competitive mobile network remain daunting. According to the Verizon chief, Starlink’s current satellite-based model is not yet equipped to rival the efficiency of established terrestrial networks, particularly in the high-density urban and suburban areas that account for the vast majority of industry revenue.

The Cost of Terrestrial Expansion

The core of Schulman’s argument rests on the necessity of land-based infrastructure. He stated that for Starlink to offer a service that truly competes with the likes of Verizon, it would need to move beyond satellite-only connectivity and invest heavily in a terrestrial network. Schulman estimated that such an undertaking would require the construction of as many as 80,000 large cell towers, integrated with a complex combination of fiber optics and satellite links.

The financial and temporal costs of this build-out are substantial. Schulman projected that SpaceX could face an investment of up to a half-trillion dollars over a period of six to eight years. Furthermore, he noted that the physical construction alone would likely take between four and six years to complete. Beyond the hardware, the company would also need to develop the operational infrastructure required to support a major mobile carrier, including retail customer service and back-office systems.

“If they build a terrestrial network, it will basically look and feel like every other network,” Schulman remarked. “Then they need to build retail customer service, back office systems, et cetera, and all of that gets them basically the same network and same capabilities and same cost structure as what we have today.”

Market Reactions and Industry Sentiment

The conversation around Starlink’s mobile capabilities intensified earlier this month following reports that the company had acquired a batch of mobile-friendly low-band spectrum. The news triggered a notable reaction in the stock market, with major US mobile carriers seeing their share prices dip by approximately 10%. While Verizon has managed a partial recovery, the market sensitivity highlights the perceived potential for disruption.

Despite the market jitters, not all industry leaders share the same level of concern. John Stankey, the CEO of AT&T, recently took a more dismissive stance, suggesting that investors should not “over-rotate” on the news of a single carrier acquiring low-band spectrum.

Schulman, however, maintains that the wireless landscape is evolving rapidly and that Verizon must adapt accordingly. He remains confident in the current efficiency of terrestrial networks, asserting that they are currently between 100 and 1,000 times more efficient than the satellite-based systems Starlink currently employs. As SpaceX continues to develop its technology, the industry remains divided on whether the satellite giant will eventually pivot to the massive terrestrial investment Schulman describes or find a way to circumvent the traditional infrastructure model entirely.

Source: businessinsider.com