It would likely be too expensive and time-consuming for SpaceX to build a mobile network on its own. But the major wireless carriers have to hope one of their rivals doesn't sell out.

Elon Musk's SpaceX has talked up its big dreams in the telecommunications market.

Ever since T-Mobile and Sprint merged in 2020, the U.S. wireless-communications market has operated as a comfortable oligopoly. But lately, investors have worried that Elon Musk's SpaceX plans to disrupt what's been a predictable market for telecommunications services.

SpaceX's $(SPCX)$ Starlink business has so far been a niche provider to rural areas. But the company's initial-public-offering prospectus in May revealed that Starlink Mobile has ambitions to massively penetrate suburban and urban markets too - with the goal of providing better connectivity than what can be offered by cell towers on the ground.

Building that sort of network is far easier said than done, requiring a lot of time and a lot of spectrum. And it assumes SpaceX would even want to do the intensive buying and building work itself; its other option would be to strike a deal that allows it to buy network capacity from one of the current major players. Such an agreement would likely spur an industrywide price war and fierce competition for customers - the main reason why the biggest three operators have vowed not to ink this sort of partnership.

Executives at the established wireless providers have generally shrugged off the Starlink threat. SpaceX's direct-to-cell constellation "will never be an effective competitor to a mobile network," T-Mobile US $(TMUS)$ CFO Peter Osvaldik told MarketWatch earlier this week.

"It's basically not possible because of physics," Verizon Communications $(VZ)$ CEO Dan Schulman added on his company's Friday earnings call. "It's very difficult for satellite providers to provide a service even close to what we can provide with our broadband services."

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Still, it's clear that investors in recent months have felt unsettled. AT&T shares $(T)$ have fallen 8% since the time SpaceX publicly filed its IPO paperwork in May, while shares of Verizon are off 8% in the same span and T-Mobile's stock is down 10%. SpaceX isn't the only thorn in the sides of those wireless companies, which also must deal with higher interest rates and fierce pricing competition between carriers. But Morningstar analysts said they suspect that the SpaceX threat has been a major source of the valuation pressure.

Telecoms aren't scared

There's a reason the telecommunications business is dominated by a few major players. Effectively competing is expensive, requiring persistent participation in spectrum auctions and constant investments in network competitiveness.

SpaceX's route to achieving its grand connectivity vision for Starlink is riddled with multibillion-dollar problems and would require decades' worth of catching up, according to MoffettNathanson analysts. Starlink's satellite spectrum capacity doesn't come close to matching ground connectivity speed, their research recently highlighted.

Even after paying $19.6 billion for 65 MHz of spectrum from EchoStar $(ECHO)$ last fall, SpaceX still meaningfully lags behind the big three carriers' low- and midband capabilities, which MoffettNathanson estimates are still 10 times more than SpaceX's.

Low-band spectrum travels far and goes through walls easily, but offers slower connectivity. Midband is faster and carries more data, but does not travel as far or go through thick walls as well. Wireless providers need balanced portfolios in order to serve customer needs effectively.

SpaceX would need to spend billions at Federal Communications Commission auctions to acquire spectrum and establish the bands needed for a reliable connection, according to MoffettNathanson. T-Mobile CFO Osvaldik doubts that SpaceX has a credible path to low-band spectrum, since upcoming auctions are focused on mid- and higher-frequency bands.

Operating a satellite-only network, meanwhile, would come with geographic and signal constraints. The signal from a satellite in low-Earth orbit is about 48,400 times weaker than the signal from a ground tower located one mile away, before accounting for crucial obstacles like ceilings or walls, MoffettNathanson's research indicated.

These limitations are why large carriers have actually been willing to partner with Starlink or rival AST SpaceMobile $(ASTS)$, viewing their direct-to-device satellite mobile services as a niche complement to existing terrestrial coverage. T-Mobile partnered with Starlink in February 2025 to offer these capabilities to its subscribers, but the company says it's seen little usage outside of national parks.

This summer, T-Mobile's satellite usage represented just 0.0003% of total network usage, according to Osvaldik, who said it would drop even further as colder seasons progressed.

"We just fundamentally understand they'll never be a substitute product," he said.

A quicker way to gain stature in the wireless market would be to merge with one of the big three providers. But experts say that's a less plausible option, as any such combination would face regulatory and financial hurdles.

One big caveat

MoffettNathanson analysts said that each of the three major wireless companies have to trust that their rivals won't agree to let Starlink partner with them as a mobile virtual network operator, or MVNO.

That refers to a model whereby companies can rent network capacity from established providers and sell wireless plans under their own brands. It's how budget carriers like Consumer Cellular can pass cost savings on to their customers by foregoing large-scale infrastructure buildouts.

If Space X were to strike an agreement with one of the major wireless networks, it would suddenly be able to offer customers terrestrial coverage and overcome the major roadblock keeping it from competing effectively in the U.S. wireless market.

For that reason, the three big providers seem to have an unspoken agreement to prevent disruption: Never give Starlink an MVNO deal. Executives at each of those companies clearly indicated in May that they had no intention of granting Starlink this sort of arrangement.

Verizon has already learned the pain of letting cable competitors rent out network capacity, after it signed MVNO agreements with Comcast $(CMCSA)$ and Charter Communications $(CHTR)$ in 2011. Those companies then went on to launch their own wireless brands, undercutting Verizon on pricing and gaining market share.

SpaceX's position creates a classic prisoner's dilemma among the big carriers, noted Julie Zhu, a senior research associate at MoffettNathanson. She told MarketWatch that if a mobile-network operator were to crack and sign an MVNO agreement with SpaceX, the entire industry would lose out from letting an aggressive competitor come in and dramatically lower the bar on pricing. The partnering company would lose too, Zhu noted - just perhaps not quite as much.

Telecommunications investors likely wouldn't take kindly to a SpaceX MVNO partnership, further lowering the odds of this sort of deal, MoffettNathanson said.

While the big three providers have signaled that they don't want to do business with SpaceX in this capacity, that won't necessarily stop Musk's company from trying to force their hands.

One way SpaceX could attempt this is by using its "deep pockets" to make expensive bids at FCC spectrum auctions, according to a Morningstar report. The company could get aggressive at these auctions by not only collecting spectrum as a potential bargaining chip, but also by bidding up prices and raising the cost of business for its rivals, Zhu noted.

Whether that strategy would pay off is still an open question. It's tough to say if SpaceX will amass enough spectrum that it becomes attractive to one of the big network carriers as they consider their future bandwidth needs.

But regardless of SpaceX's viability as a mobile competitor, wireless investors may still worry about when the next shoe will drop with a notoriously volatile company.

Wolfe Research analyst Peter Supino suggested as much when he upgraded AT&T's stock to overweight earlier this week.

"Yes, Starlink may bully its way into mobility, but it would take years to acquire and clear the right spectrum," he wrote. "Unless Starlink behaves very aggressively, the Big 3 will probably not provide an MVNO."

Yet Supino added that he now values AT&T's stock at an earnings multiple "below historic averages to reflect a stubborn Starlink overhang."

-Julian Torres

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July 25, 2026 08:00 ET (12:00 GMT)

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