AT&T and SpaceX were both involved in significant deals to purchase underutilized spectrum licenses from beleaguered telecom operator EchoStar, but AT&T CEO John Stankey dismissed any real terrestrial competitive threat SpaceX might now present despite its own spectrum haul.

AT&T’s $23 billion spectrum haul from EchoStar included 30-megahertz of nationwide 3.45 GHz mid-band spectrum and approximately 20-megahertz of nationwide 600 MHz low-band spectrum in an all-cash transaction. SpaceX, in turn, spent $17 billion for approximately 50 megahertz of spectrum around the 2 GHz band to bolster its satellite-based connectivity business.

Stankey has stated AT&T plans to use its new premium priced spectrum licenses to power 5G-based fixed-wireless access (FWA) broadband services. SpaceX has noted it plans to use its new spectrum licenses to bolster its Starlink Direct to Cell service.

Despite hints that SpaceX’s bolstered spectrum position could provide a more robust platform to compete with traditional telecom players like AT&T, Stankey told attendees at this week’s Goldman Sachs Communacopia + Technology Conference that he is not convinced.

“Does 40 megahertz of spectrum allow for a remote or robust terrestrial replacement as we sit here today? The answer to that is no,” Stankey proclaimed.

“Over time, could that happen? Could somebody make a commitment to do something maybe different? Sure, it could happen,” Stankey added, before pointing to the now skeletal husk of EchoStar to highlight the difficulty of entering the mainstream telecom market. “We had a fourth wireless infrastructure player fail after many years of trying to figure out how to build that scaled infrastructure.”

Stankey pointed to the basic logistical challenges in building out a wide-reaching wireless telecommunications network, something the nation’s three largest facilities-based operators have been assembling for more than 35 years and at the cost of hundreds of billions of dollars.

“There's a lot more to building a wireless network than putting up 50,000 cell sites,” Stankey said. “You don't just put a bunch of sticks up and cover stadiums and cover 50 floors of a skyscraper, and cover hotels, and cover hospitals. Those are done in a very different way, and they require substantial amounts of infrastructure and investment to get that done. They require complicated arrangements with right of access, and there's norms about how those things occur.”

Stankey did admit that satellite connectivity could power “outdoor-based service that offered some fundamental, basic connectivity,” and that is indeed one way AT&T is approaching the satellite market. But that architecture pales in its ability to support leading-edge services like cloud-based AI.

“I do believe there's a basis for having a scale network that gets a bit off of the air and into fiber very, very quickly, and that those are highly geographically engineered to do that effectively,” Stankey said of current terrestrial networks. “That's a longer pad. That's something that's going to take some time to get done.”

Some analyst firms disagree.

Analysys Mason in a report last year wrote that the satellite communication industry is quickly moving from a legacy of limited capacity to one of abundance, which will produce new challenges.

“For an industry that has been defined by niche markets and scarcity economics, the shift to abundance is a new paradigm; with its own challenges and opportunities,” Analysys Mason’s Christopher Baugh wrote. “A broadening industry scope could fuel revenue growth for years, which could benefit several satellite players.”

Open RAN opens cost savings

Stankey this week also touted potential cost benefits AT&T could gain from deploying its new spectrum and related infrastructure on top of the carrier’s expanding open radio access network (RAN) ecosystem.

“The fact that we're building open interconnection at that point of the network means that we can have a competitive process of how those radios get built and how we think about them, and that probably allows us to build it less expensively than we might have five years ago,” Stankey said.

AT&T unveiled an ambitious $14 billion open RAN initiative in late 2023 that has a goal of carrying 70% of its wireless network traffic by the end of 2026. Ericsson was controversially tapped as the main network partner for the program, with a handful of RAN equipment vendors having since been approved to provide equipment.

That open RAN initiative recently hit an important interoperability milestone, which targeted an increasingly important challenge for open RAN deployments.

Stankey explained that the open RAN program has allowed the carrier to “collapse all of our routing infrastructure on a common architecture.”

“So whether it's a mobile core or it's a business core, whatever it might be, that's all on a homogeneous, consistent routing infrastructure, on general purpose compute that dramatically lowers costs associated with that. That's a big damn deal, because it allows us to treat products differently,” Stankey added. “Associated with that, and when you start to open up those interfaces and capabilities, you have the ability to build APIs into your network that allow for your customers to use it more effectively, and have the flexibility … all that work is underway right now, and we feel really good about where it's taking us.”