SpaceX's ambitious wireless communication plans could disrupt the telecommunications industry in the United States. French and Italian analysts believe that traditional operators like Verizon do not need to worry in the short term.

According to a research report released by BNP Paribas on June 12, the long-term wireless communication strategy of SpaceX (SPCX.US) may be more complex than many investors currently believe, and the disruptive impact on traditional mobile operators may not be as significant as the market is concerned. BNP Paribas hosted a discussion with telecommunications industry analyst Sam McHugh and mobile communication technology expert John Dooley. Dooley has been involved in the development of direct-to-cell satellite services for a long time. The two discussed how SpaceX could break through in the satellite connectivity business in the future and potentially build ground wireless infrastructure to support future applications. Although speculation about SpaceX's Starlink Mobile satellite service challenging existing wireless operators has been increasing in the market, Dooley believes that relying solely on satellite technology is unlikely to be a complete replacement for traditional cellular communication services. For investors, this analysis suggests that concerns about SpaceX rapidly disrupting the wireless communication industry may be exaggerated. BNP Paribas believes that while the company may eventually build ground wireless assets to enhance its satellite network capabilities, the time point at which it poses a direct competitive threat to Verizon (VZ.US), AT&T (T.US), and T-Mobile (TMUS.US) may not be as close as some market participants fear in terms of economic costs, technical requirements, and deployment cycles. The bank expects that uncertainty surrounding SpaceX's plans will continue to suppress valuations in the telecommunications sector at least until after the Upper C band spectrum auction in 2027. A key conclusion from the discussion is that satellite coverage itself has inherent limitations, especially in indoor environments. Because the signal comes from space rather than nearby mobile communication base stations, indoor reception performance is likely to continue to be weaker than traditional cellular networks. Dooley believes that even with a large satellite constellation system, SpaceX may still need to build some ground wireless infrastructure to enhance network performance. However, the use of such networks may be fundamentally different from consumer mobile communication services. Dooley states that the upstream traffic generated by emerging artificial intelligence (AI) and autonomous machine applications is much higher than traditional consumer applications such as video streaming. Current wireless networks are mainly built around a model dominated by download traffic, so as the number of AI-connected devices increases, network capacity may face bottlenecks. This could create an opportunity for SpaceX to build a ground network specifically for AI and IoT applications, in combination with its satellite assets. Nevertheless, Dooley believes that if SpaceX wants to launch consumer wireless services that can replace traditional mobile communication plans, it will still face significant challenges. Unless it gains access to existing operator networks through the Mobile Virtual Network Operator (MVNO) model, or builds its own network covering the entire United States with around 60,000 base stations and significantly increased spectrum resources, this goal will be difficult to achieve. Therefore, he believes that in the foreseeable future, the consumer communication market will continue to be dominated by traditional wireless carriers. However, this development path may still cause confusion for investors. BNP Paribas points out that SpaceX is likely to continue exploring various commercialization opportunities and may maintain interest in the MVNO cooperation model. At the same time, any ground infrastructure that the company may build in the future may primarily target enterprise customers, AI applications, or machine-to-machine (M2M) communication scenarios, rather than the consumer wireless service market. However, in the early stages of deployment, this difference may not be clearly identified by the market. The discussion also touches on spectrum strategy issues. Although BNP Paribas had previously stated that SpaceX may be one of the bidders in the current AWS-3 spectrum auction, Dooley doubts this, believing that the company may not have a strong interest in these frequency bands. He believes that the Upper C band spectrum, which offers national coverage opportunities, may better align with SpaceX's long-term development plans and therefore be more attractive to the company. BNP Paribas states that this expert's views have alleviated the bank's concerns about Starlink Mobile replacing existing wireless operators. However, the bank also warns that this issue is extremely complex and uncertainty among investors about SpaceX's wireless communication ambitions is unlikely to disappear in the short term. McHugh wrote, "The pressure surrounding SpaceX and its potential to build a ground wireless network in the United States is unlikely to completely dissipate until the end of the 2027 Upper C band spectrum auction. This uncertainty will continue to exist for the wireless communication sector."