Space-based internet is coming, and traditional broadband providers may be swept away by it. Investment bank Oppenheimer said in a note Wednesday that regulatory and technology tailwinds are blowing in the direction of satellite internet and against older systems such as fixed wireless and fiber optics. Analyst Timothy Horan downgraded telecommunications giant AT&T from buy on Wednesday, citing looming pressure from startup SpaceX, which plans to list on the Nasdaq as early as next week. “We believe the growing threat from satellite (low-Earth orbit) constellations puts long-term broadband subscriber growth, and ultimately mobile, at risk,” the analyst told clients. Horan said he sees “strong regulatory support behind satellites, making it more likely that SpaceX will move directly into mobile.” AT&T stock has fallen 12% in the past three months and is flat for the year, lagging the broader market. T YTD Mountain AT&T, YTD In April, the Federal Communications Commission passed updates to its satellite spectrum sharing rules that the agency said could increase space-based broadband access by a “sevenfold.” Space-based internet providers like SpaceX’s Starlink “deliver high-speed, low-latency broadband and enable direct-to-device communication services,” FCC Commissioner Olivia Trusty said in an April 30 statement. “Operators are expanding connectivity.” Oppenheimer said older forms of broadband are still poised to do well in the short term, given the relatively high prices of services like SpaceX’s Starlink. However, the company believes AT&T is “most at risk” among carriers because “cable is experiencing challenges” and competitors Verizon and T-Mobil US have less exposure to broadband. “Within three years, new fiber production will cease, hitting the entire food chain,” the memo said. SpaceX plans to peg its IPO price at $135 per share, Reuters reported on Tuesday, citing people familiar with the plan. The company is aiming for a valuation of $1.75 trillion. Oppenheimer said the headline-grabbing IPO could highlight risks about AT&T for investors.
