Tag Archives: John Stankey

Competing with Satellite Cellular

A recent article in Fierce Network quotes AT&T’s CEO John Stankey as saying that he’s not too worried about competition from satellite cellular providers. He said the new technology is better suited for specialty niches like maritime and IoT.

His comments raise a lot of interesting questions. First, Stankey is right that satellite cellular is not going to compete well head-to-head with traditional cellular in markets that have strong cell coverage. An Ookla report for the second quarter of 2025 shows nationwide median download speeds for the big three cellular providers as 275 Mbps for T-Mobile, 134 Mbps for Verizon, and 129 Mbps for AT&T. Speeds in urban markets are significantly higher.

A market weakness for the big cellular carriers is rural coverage, which is going to be a target market for satellite cellular. You don’t have to drive far outside most urban areas and county seats to encounter areas with little or no cellular coverage by the big companies.

There seems to be interest and a potential market for satellite cellular. Viasat released the results of a survey that indicated that 60% of cellular customers worldwide, and 56% in the U.S., would consider paying extra to get access to satellite cellular connections. You have to take a survey done at the early stage of the new industry with a grain of salt since real interest is going to depend on the quality, ease, and cost of using satellite cellular. The survey results are interesting because they show a lot of people who must be encountering situations where traditional cellular is inadequate.

Stankey pointed out the weaknesses of the satellite cellular concept. The biggest weakness is that there isn’t good indoor coverage. However, I would be shocked if somebody doesn’t eventually solve that problem. Perhaps Starlink dishes or standalone outdoor receivers can be used to communicate with cellular satellites, which could then somehow get the signal into the home. The issue that I haven’t heard being discussed is the ability of satellite cellular to connect to moving vehicles.

Stankey’s more significant observation is that a satellite network can never duplicate the huge amount of bandwidth needed to give cellular customers the services they want. He’s absolutely right, and it’s unrealistic to think that satellite providers could have enough bandwidth collectively to become the fourth major carrier in the market. Cellphone usage is no longer just about texting and voice calls, and cell customers want to stream videos and upload pictures and videos. For satellite to become a viable rural solution, it will need to provide enough bandwidth to satisfy expected customer demand.

There are a few other issues that will also affect the long-term competition issue. Cellular broadband speeds are still improving. For example, AT&T recently installed the spectrum acquired from EchoStar in 23,000 towers to improve speeds. We’re five years away from seeing the beginning of the 6G generation of cellphones. It’s too early to know specifically what that means, but it has to mean more speed and capability for terrestrial cellphone networks.

One of Stankey’s comments is intriguing: that satellite cellular might be the solution for IoT. I’ve been reading for a decade about the potential for widespread agricultural sensors, but this has never happened in any material way. A big part of the problem is the bandwidth needed to communicate with sensors. Rural cellular networks are generally lousy or nonexistent in areas that are mostly farm fields. The second issue has always been power, but there have been advancements in small solar power units that could finally combine with ubiquitous satellite cellular coverage to make farm sensors a reality.

Content Finally is King

One of the more common memes in our industry is the phrase “content is king.” This was first said by Sumner Redstone of Viacom in 1994 but made more famous by Bill Gates in 1996. The phrase has been used since then to describe how the creators of content have the power in our industry – be that programming or web content.

John Stankey, the CEO of AT&T Entertainment, recently emphasized this same concept in talking about the company’s planned merger with Time Warner. At the recent Mobile World Congress in Barcelona he said, “We just cannot envision a future where AT&T is relevant if we don’t directly participate in some of the water flowing through our pipes.”

All of the big ISPs have decided that content is key to their survival. Comcast already owns a mountain of programming, and after the merger with Time Warner, AT&T will be a content powerhouse as well. Verizon has climbed into the game with the acquisitions of AOL and Yahoo. There are web companies with the same philosophy. Netflix has built a new industry by creating new content. Google is pushing content heavily through YouTube. Amazon has started to create unique content and recently said they are going to make that a priority. Facebook is becoming a content force through Facebook Now.

I remember having this conversation with Derrel Duplechin of CCG back in 2000. We were asked by several clients to speculate about the future of the carrier industry and we foresaw that most carriers were likely on the path to eventually become what we called “dumb pipe” providers. I remember that this was a story that many of our clients did not want to hear.

We lived in a different carrier world in 2000. Most homes still had telephones and voice was the most profitable product for most carriers. The cable TV product that many of our clients sold then also had decent margins. But we predicted that both products would eventually sink in importance and in margins and that eventually most of our clients would earn most of their profits from broadband. We thought this would happen to all carriers, small and large, and we figured that the most profitable future companies would be those that found some other line of business other than just selling data pipes to end users.

We had some clients take this to heart and some of them have made a really good living by providing extra value to customers. For example, we have several clients who thrive by bringing a suite of products to businesses other than just plain connectivity. But for the most part, the majority of the ISP industry sells dumb pipes today. They compete with the speed of those pipes and with price and with good customer service – but the primary products (and the driver of most of the profits) are now data pipes.

The big companies like AT&T, Verizon and Comcast looked at that future and it scared them. It’s pretty obvious that if your only product is dumb pipes that your earnings are not going to continue to grow fast enough to satisfy Wall Street. This is probably what convinced Verizon to stop expanding their FiOS network. Both AT&T and Verizon got huge earnings boosts from expanding their cellular businesses, but that industry also seems to be heading towards the same plateau as landline ISPs – cell service is becoming a commodity.

So these big companies are now pursuing content because it looks to be the last area in our industry with the potential for significant bottom line growth. It’s going to be an interesting race to watch. Content providers have succeeded or failed over the years according to their ability to find smash hits. A huge hit movie or TV series can mean huge returns to the bottom line. But content providers that don’t create what the public wants to watch suffer badly in terms of stock prices and earnings. Being a content provider is not predictable in the same way as telecom.

Interestingly. AT&T, Verizon, and Comcast are now direct competitors of Facebook, Google, Amazon and Netflix. Content certainly is king, but content also brings the risk from competition. The companies that fall behind in this race are likely to be gobbled up by their more successful competitors. I find it extremely unlikely that all of these big companies will still be in existence in 10 years.

There is no real barrier to entry into the world of content creation other than having a pile of money. It’s likely that other big companies will join the content fray. But all of these companies are entering a world that is in big flux. For example, traditional video and web content might well be replaced by virtual and enhanced reality. The companies that succeed in content will have to spend a lot of money staying one step ahead of the competition, and my money is on the more nimble technology companies. Twenty years ago I would have been shocked to know that someday AT&T would have a CEO of Entertainment – and that may turn out to be the most important job in the corporation.