Satellite Internet leads to the "rise of the new king"! Starlink attacks the traditional network territory, SpaceX's low-orbit constellation directly hits AT&T broadband empire.

As the absolute leader in the traditional broadband/fiber optics and wireless communication fields, and with a massive wired network coverage, the three major traditional telecommunications giants in the United States, such as AT&T (T.US), seem increasingly vulnerable to the continuing profit impact brought by the satellite low earth orbit (LEO) constellation network - which is the satellite internet force centered around SpaceX's Starlink, and they are increasingly facing the risk of users migrating to more competitive telecom opponents. These negative long-term factors prompt Wall Street investment giant Oppenheimer to downgrade the rating of this telecom giant from "outperform the market" to "perform in line with the market", and also revoke the previous target price of $32. Oppenheimer did not disclose a new lower target price, but has revoked the previous $32 target price; this effectively moves AT&T from a "still has clear upside potential" bullish framework to a neutral cautious framework of "awaiting risk repricing". Reflecting the concern about the impact of the Starlink/LEO satellite broadband on AT&T's broadband user growth, ARPU, and long-term capital expenditure return. In terms of market growth trends, satellite internet is entering a high-growth window. Fortune Business Insights predicts that the global satellite internet market will grow from $9.53 billion in 2026 to $33.4 billion in 2034, while a report from ResearchAndMarkets estimates that the global satellite internet market could grow from $5.1 billion in 2024 to $24.6 billion in 2030, with a compound annual growth rate of approximately 29.9%. These two studies jointly highlight that low-earth satellite broadband is transitioning from the "Aerospace Hi-Tech Holding Group grand narrative" to the "communication infrastructure market share reallocation" phase, landing and profit-growth stage. In the future, Starlink is highly likely to continue to erode the territory of traditional telecom operators like AT&T in low-density broadband, edge wired networks, some FWA substitutions, enterprise backup links, and direct mobile incremental markets, but will not completely replace traditional broadband/fiber optics and wireless communication, cellular core networks in the short term. For SpaceX, the space exploration + AI super giant with an imminent IPO valued at nearly $2 trillion, Starlink is one of the most critical commercial assets in its valuation system. The Payload Forecast Report shows that Starlink is expected to generate approximately $11.4 billion in revenue by 2025, accounting for about 60% of SpaceX's total revenue; in 2026, Starlink's revenue is expected to grow significantly by 80% to $18.7 billion, accounting for about 79% of SpaceX's total revenue. If this trend accelerates, SpaceX will no longer be just a rocket launch company, but a "global low earth orbit communication operator + commercial aerospace infrastructure platform". Oppenheimer even significantly raised its global space-related revenue forecast from $500 billion to $800 billion by 2035, and believes that SpaceX will disrupt the $1.6 trillion U.S. communication industry market size. Oppenheimer emphasizes that this is the positive catalyst logic for Starlink's business for SpaceX's record-breaking IPO and long-term valuation enhancement. Oppenheimer warns AT&T underestimates the threat from Starlink, as the telecommunications giant faces a major stress test Timothy Horan, a senior analyst at Oppenheimer, said: "We are concerned that traditional telecommunications industries, including AT&T, are underestimating the enduring and enormous risks brought by satellite internet forces, just as the cable TV industry initially severely underestimated fixed wireless access (FWA), and may only consider this frontier internet technology as a service that supplements the mobile communication field and a low-quality fixed broadband alternative that is only suitable for the most remote markets." Analyst Horan's forecast data compilation indicates that the industry trend will inevitably shift from fiber optics and fixed wireless access (FWA) to a satellite internet system; it is expected to gain more than 2 million new users per year and eventually may capture as much as 10% of the market share by 2030. "Therefore, the pricing of satellite internet services like SpaceX's Starlink is now comparable to traditional broadband systems, but with the upcoming V3 satellite having ten times the capacity, prices will rapidly decline," added analyst Horan. Due to the company's long-standing lag in expanding FWA access capabilities, Horan expects AT&T (T) to be a heavy spender in the upcoming AWS-3 auction. Horan from Oppenheimer also believes that AT&T's average revenue per user (ARPU) will face significant growth resistance, with its service revenue DRIVE shifting from ARPU to user volume base. In addition, AT&T's ARPU pressure will be magnified indefinitely by stronger wireless sector competitors such as T-Mobile (TMUS.US) and Verizon (VZ.US), with Horan emphasizing that the cost structures of the latter two are significantly better than AT&T's. The company recently announced a new promotional activity offering bundled sales of internet services for American households and benchmark wireless internet services, priced as low as $35 per month. According to statistics compiled by Seeking Alpha, among Wall Street analysts, AT&T (T) is still widely considered a "buy" or equivalent rating, but Seeking Alpha's quantified model rating, created by AI, views the stock as a "hold", with a quantified score of 3.42 out of 5, with high profitability scores but very low growth prospects. Low-orbit satellite forces are reshaping the global network connectivity landscape! Starlink approaches the heartland of traditional broadband AT&T is one of the giants in the traditional telecommunications industry in the United States, and a core player in the broadband/fiber optics and wireless communication field. The company's official annual report shows that its Communications business provides wireless, wired telecom, and broadband services to American consumers, as well as communication services to global enterprise customers; this business contributed about 97% of operating revenue in 2024 and almost all operating profits. In other words, AT&T's main revenue source is mobile communication services, 5G wireless communication, fiber optic broadband, enterprise communication, fixed broadband, and related equipment sales. AT&T has both vast traditional wired network assets and is accelerating investment in 5G and fiber optics, however recent assessments by Oppenheimer and other Wall Street institutions suggest that the impact of Starlink and other low-orbit satellite broadband on this telecom giant is expanding. The LEO satellite system is likely to become a new infrastructure layer for the global connectivity map in the future, forcing a fundamental reassessment of the basics of traditional telecom operators in the market. From a fundamental technological perspective, the impact of Starlink on traditional telecom operators like AT&T is real, but it first erodes not the main battlegrounds of high-density cities like New York and Los Angeles with high-quality fiber optics, but rather rural, suburban, low-density broadband, DSL/cable edge users, fixed wireless access (FWA) replacement markets, enterprise backup links, maritime and aviation vehicle connections, and future direct mobile scenarios. The core logic behind Oppenheimer's downgrade of AT&T's stock rating lies in the possibility that traditional operators may seriously underestimate the impact of LEO satellite broadband, just as they did with FWA, considering it only as a "supplementary service for remote areas"; but Starlink's pricing, capacity, and retail channels are continuously improving, and it is beginning to have the conditions to upgrade from a "coverage filling type tool" to the "most formidable broadband competitor". Technologically, the revolutionary aspect of low-earth orbit satellites is that they transition satellites from the traditional high-orbit, long-latency, low-capacity mode to the near-earth orbit, large constellation, frequent reuse, low latency, and rapidly iterated network architecture mode. Starlink is currently one of the dominant players in the low-earth orbit internet market, with reports indicating that its user base has exceeded the 9-10 million level; and reports suggest that the next generation V3 satellite has significantly higher network capacity, with data indicating zone capacity well above that of the V2 Mini, and supporting higher bandwidth experiences. It is worth noting that the economic implications of capacity upgrades are crucial: as unit satellite throughput increases, launch costs are internalized by SpaceX, and terminal costs continue to decrease, Starlink's marginal supply costs and pricing space will continue to improve, potentially approaching or even falling below some traditional broadband packages. If Starlink can provide sufficient usable broadband in a "no-need-to-dig, no-need-for-final-mile construction, quick deployment" manner, it will squeeze the pricing power of traditional operators in edge markets. However, professionals, including analysts from Oppenheimer, generally believe that Starlink will not "completely replace" traditional ground communication networks like AT&T, Verizon, and T-Mobile in the short term. Spectrum resources, single satellite coverage area capacity, weather factors, terminal costs, indoor coverage, high-density urban capacity, and regulatory coordination are still real constraints. Some academic research also points out that LEO constellations have strong value in low-density user areas, but when user density significantly increases, the capacity per user can quickly decrease; and measurement studies show that rainy days can significantly lower Starlink's uplink and downlink throughput. This means that Starlink's strength lies in "global coverage at any angle" and "rapid deployment", rather than replacing fiber optics and cellular networks in all high-density urban scenarios. What truly changes the competitive landscape is the combination of "satellite broadband + direct mobile phones + ground operator competition". The direct mobile satellite communications market is predicted to grow from $3.56 billion in 2026 to $26.57 billion in 2034, with a compound annual growth rate of approximately 28.54%; this indicates that in the future, satellites will not only serve as a home broadband alternative, but may also become a supplementary layer for mobile communication networks, covering emergency communications, wilderness, maritime, aviation, Internet of Things, and weak coverage areas. Traditional operators can choose to cooperate with satellite companies to extend networks, or they may be directly competed against by new players like Starlink and AST SpaceMobile in high-value user segments, international roaming, enterprise connectivity, and IoT scenarios.