The US cellular businesses of AT&T, Verizon and T-Mobile have had their market presence threatened if not actually dented by the recent moves by EchoStar and Musk’s Starlink. The move by EchoStar in selling off large chunks of spectrum to AT&T (for terrestrial) and Starlink (for satellite) has put the whole sector under the microscope.

Perhaps not helping are comments from Elon Musk saying that a financial move on AT&T is not out of the question.

In essence, the Starlink move has the greater implication. Sam NcHugh, an analyst at investment bank BNP Paribas, reviewed with Dr Tim Farrar the overall situation. Asked whether Starlink could disrupt the wireless industry, the pair said ‘No’. “The (D2C) service’s inherent limitations (number of satellites / capacity, amount of spectrum, indoor Coverage issues, antennae size in phones, uplink power), mean it won’t be a substitute for terrestrial networks.”

Furthermore, Farrar is sceptical this will lead to any meaningful substitution of wireless towers. In his view, the transaction rationale lies in Starlink’s need to acquire these assets to be able to compete long term in D2C market, as it provides a route to maintaining their advantage of nascent competitors, while it may also be beneficial to Starlink’s own ‘equity story’.

“Taking the example of North America, Farrar argues only c. 5 per cent of Starlink’s D2C satellites would be over the country at any given point, implying c. 30 or so satellites, which with single digit Gbps capacity each implies limited capacity. Contrast this with a terrestrial operator like T-Mobile that has 85k macro sites and >30k small cells, which can offer gig-plus capacity on many sites, and it demonstrates Satellite is just not a substitute product. Looking ahead, this technology is limited by the physics limiting the capacity of the technology, e.g. users will have to go outside to take a phone call under D2D services, while a data point from TMUS suggests that 80 per cent of phone calls are taken indoors,” says McHugh’s note for clients.

The note continues: “It is technically possible that Starlink could use the spectrum on their own D2D network (Satellite to Cell phones) in rural areas, while also leasing some of the spectrum to wireless carriers in urban areas, who could utilise their existing tower top equipment. Farrar does not think leasing out the spectrum is a high priority for Starlink in the short term. He believes that Starlink will likely approach all big-3s to work as roaming partners.”

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Categories: Blogs, Broadband, Inside Satellite, Satellite

Tags: AT&T, Echostar, starlink, T-Mobile, Verizon