Schulman noted that pure satellite service cannot compete effectively outside remote rural areas and SpaceX needs a terrestrial network to have a chance at providing a service comparable to a terrestrial network.

  • Schulman estimated the total investment to build a terrestrial network at $300 billion to $500 billion over seven to eight years, after which SpaceX would still need retail distribution, customer service, and back-office systems. 
  • The Verizon CEO expects SpaceX to come in as a potential sixth competitor rather than a fourth years after. 
  • Musk, however, estimates that the buildout would take only roughly half the time as Schulman expects.

Verizon CEO Dan Schulman on Monday dismissed the near-term threat from SpaceX’s Starlink ambitions, arguing that any serious challenge in the U.S. mobile market would require a full terrestrial network costing hundreds of billions of dollars and taking four to six years to build.

CEO Elon Musk, however, disputed the timeline, pinning it at “2 or 3 years.”

Schulman’s Assessment Of A SpaceX Entry

“I also operate under the assumption that everything SpaceX says they will do, they will do, and that they will execute flawlessly. That's my operating assumption on it,” Schulman said on Verizon’s third-quarter earnings call.

He noted that pure satellite service cannot compete effectively outside remote rural areas and the company needs a terrestrial network to have a chance at providing a service comparable to a terrestrial network like itself.

“...without a terrestrial network, their addressable market for broadband services is relatively small,” he said. “In suburban and urban areas, where like 98% of our revenues are, we're somewhere between 100x- 1,000x more efficient than they are.”

Schulman described SpaceX’s reported outreach to tower companies and requests for information as consistent with plans for a conventional ground network. That buildout, he said, would require 65,000 to 80,000 macro sites, extensive backhaul, radio access network equipment, and substantial additional spectrum. He estimated the total investment at $300 billion to $500 billion over seven to eight years, after which SpaceX would still need retail distribution, customer service, and back-office systems.

“There is no magic wand,” Schulman said. “There is no shortcut.”

The result, in Schulman’s view, would be a network with similar capabilities and cost structure to existing carriers—positioning SpaceX as a potential sixth competitor rather than a fourth.

“It's very hard to throw a punch against something that doesn't exist, but once they come into the market, we will be ferociously competitive,” he added.

SpaceX’s Efforts At Rivaling VZ

SpaceX is seeking to establish itself as a standalone wireless competitor and recently acquired low-band spectrum that will help integrate its Starlink satellites into what CEO Elon Musk has described as a “major mobile carrier.”

Last week, Bloomberg also reported that SpaceX is pursuing agreements for a minimum of 80,000 cell sites across the United States as it advances plans to build a fourth nationwide wireless carrier. The report said that SpaceX is in discussions with at least one major cellular infrastructure company and that Crown Castle Inc. (CCI), among the largest U.S. owners of cellular towers alongside American Tower (AMT) and Vertical Bridge, was also approached for the purpose.

Verizon Reports Strong Q3

Verizon, meanwhile, earlier on Monday reported strong third-quarter earnings, including 406,000 postpaid phone net additions, and raised full-year guidance. The stock, however, slipped as its quarterly revenue fell below Wall Street expectations.

The company now expects full-year adjusted earnings per share of $5.04 to $5.06, compared with its previous estimate of $4.99 to $5.04.

How Did SPCX, VZ Retail Traders React?

On Stocktwits, retail sentiment around VZ stock was 'neutral' at the time of writing, while sentiment around SPCX was 'extremely bullish.'

VZ stock has gained 6% year-to-date. Meanwhile, SPCX is currently trading at around $149, above its June IPO price of $135. 

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