Competition

by Roger Entner

Numbers and facts are important because they define ultimate limits and capabilities, but numbers and facts don’t make decisions: People make decisions. Nowhere is this truer than in the United States satellite broadband market of late 2025. If we look strictly at the operational scoreboard, the game is over. Starlink has achieved a scale that no competitor can mathematically replicate within the relevant investment horizon. While the data based on now a bit over one million respondents from our Recon Analytics Telecom Pulse Service shows that Starlink holding a massive customer satisfaction lead in rural America over terrestrial as well as satellite legacy providers like HughesNet, dwelling on this gap is an exercise in archaeological irrelevance. HughesNet is effectively liquidating its business model, and ViaSat is pivoting away from it. Both are implicitly acknowledging that the laws of physics have rendered them obsolete. Rural telcos stuck with DSL are holding on for dear life in an era that is rapidly coming to an end. The war against legacy GEO is not just over; the battlefield has been cleared. When the last remnants of rural DSL are being swept away by its skyborne replacement is only a matter of a few years.

The real narrative is not about Starlink beating zombies; it is about the politically engineered survival of its future competitors. The industry is bifurcating into two distinct realities: SpaceX’s operational “rout” and the strategic mandates sustaining Amazon Leo and AST SpaceMobile. These companies matter not because they are currently beating Starlink on metrics—they aren’t—but because the U.S. government and the nation’s largest wireless carriers have decided that a Musk monopoly is strategically unacceptable. Consequently, we are witnessing the creation of a managed market where strategic intervention and corporate hedging sustain competitors that market forces alone would eliminate.

The Carrier Insurgency: The “Never Musk” Wager

While T-Mobile grabbed headlines by pairing with an iconic inventor and a proven technology years ahead of the competition, the most consequential satellite-communications decision of recent years happened quietly in AT&T’s and Verizon’s boardrooms in 2024. Their commitments of capital and spectrum to AST SpaceMobile weren’t bets on the best technology available: they were bets on strategic independence. Even in 2024, it was clear that AST was operationally behind, struggling with a single-digit satellite count while Starlink was deploying thousands. The carriers knew that AST’s service would likely launch later and offer less initial capacity than the vertically integrated juggernaut of SpaceX. They looked at the spreadsheets, saw the performance gap, and decided to stomach it.

This was a calculated strategic sacrifice. AT&T’s decision to lock into a binding agreement with AST through 2030 represents a deliberate strategy to preserve network sovereignty rather than a forced reaction to market constraints. Management feared, and correctly so, that utilizing Starlink would ultimately accelerate Elon Musk’s ambition to become a full-fledged service provider, leading to their own disintermediation as network operators. If they partnered with Starlink, they risked becoming mere resellers in a Musk-controlled ecosystem, effectively funding their own future competitor. Consequently, AT&T was willing to endure the short-term pain of AST’s operational delays to nurture a competitor that preserves their control, calculating that the cost of funding a future Starlink monopoly far exceeds the risks of supporting a slower, inferior alternative.

Verizon followed a similar, albeit more hedged, logic. Their $100 million investment in AST was a coldly calculated but necessary option premium. Verizon leadership recognized that T-Mobile’s exclusivity with SpaceX was temporary, but they also recognized that a world with only one satellite provider gives that provider infinite pricing power. By propping up AST, Verizon keeps a non-SpaceX option alive to discipline the market. They are funding AST not because the tech is currently better—the gap between AST’s 5 satellites and Starlink’s 660 D2C satellites is 100-to-1—but because the contract isn’t with Musk. AST has effectively become a compliance cost for the wireless industry, a tax paid by carriers to ensure they never have to bend the knee to SpaceX.

This “Not-Musk” imperative explains why the investment thesis for AST remains robust despite the fact that its primary differentiator—broadband to the phone—has been neutralized. SpaceX’s confirmed Q1 2026 rollout of full data and voice capabilities has effectively evaporated AST’s unique value proposition. Yet, the carriers cannot waver. The 2025 rupture between Donald Trump and Elon Musk only validated the carriers’ 2024 foresight: relying on a single, politically volatile billionaire for critical infrastructure is a fiduciary hazard. AT&T and Verizon are stuck with AST, and they are happy to be stuck, because the alternative is captivity.

Amazon Leo: The “Too Big to Fail” Regulatory Gamble

If the carriers are engineering AST’s survival through capital, the federal government is engineering Amazon Leo’s survival through regulation. Amazon Leo is not a standard growth story; it is a binary derivative trade on regulatory relief. The scale of Amazon’s deployment deficit is staggering. As of late 2025, Amazon has managed to place only 153 satellites into orbit, leaving a gap of 1,465 satellites against the FCC’s deadline requiring 1,618 by July 2026. This gap is mathematically uncloseable through launch cadence alone. Consequently, Amazon requires a waiver that would typically invite withering scrutiny.

However, Amazon has successfully constructed a regulatory shield by securing BEAD awards for 211,194 locations across 33 states. These awards create a government interest in Amazon’s success. State broadband offices, desperate to show competition, accepted Amazon’s paper promises over SpaceX’s operational reality, effectively making Amazon too big to fail without collapsing a critical federal program. If Amazon cannot illuminate these locations, states face clawbacks and the administration faces a failure of its signature infrastructure project.

The most dominant policy force in the market today is the BEAD program. Amazon Leo’s dominance of the BEAD program was achieved by aggressively buying the market with average bids of just $560 per location, effectively undercutting Starlink by a factor of three. This secures a guaranteed revenue floor estimated at $177 million annually, which exists independent of consumer preference. Regulators are expected to grant the accommodation to avoid entrenching a SpaceX monopoly, using the waiver to provide political cover while maintaining the appearance of regulatory neutrality. The Trump administration increasingly favors Jeff Bezos over the volatile Elon Musk in this context, rendering regulatory accommodation probable. Amazon Leo survives not because it executed, but because the government cannot afford to let it die.

The Political Overlay: 2025 as an Accelerant

While the carriers made their anti-monopoly decisions in 2024, the political volatility of 2025 acted as a powerful accelerant, hardening the “Not-Musk” resolve across the ecosystem. The alliance between Donald Trump and Elon Musk collapsed in June 2025 due to disputes over fiscal policy and devolved into name calling. Although a pragmatic reconciliation began in November, the era of automatic regulatory preference for SpaceX is finished. The relationship has stabilized at “neutral,” a significant downgrade from the “favored” status Musk enjoyed early in the year.

This political oscillation drives strategic positioning. The Pentagon, seeking to hedge political risk rather than simply improve capability, directed “Golden Dome” defense planners to diversify away from exclusive reliance on SpaceX in favor of Amazon. This directive to “diversify” is now embedded in procurement logic, creating a permanent, protected market for a “second source” regardless of the headlines. Just as AT&T and Verizon funded AST to avoid commercial captivity, the Department of Defense is funding Amazon and AST to avoid strategic captivity.

The Reality of Market Bifurcation

The satellite internet industry has organized into four distinct competitive segments, and understanding this structure is essential because winners in one segment do not necessarily dominate the others. While Starlink dominates the LEO consumer broadband market with a +42 Net Promoter Score, the government and carriers have effectively decided to subsidize competitors to ensure market health. This creates a floor for Amazon and AST, and a ceiling on Starlink’s monopoly power.

The numbers are definitive: Starlink’s operational dominance provides a shield that regulation cannot easily penetrate. Its satisfaction lead creates a political asset, insulating the company because no administration can politically afford to disconnect rural American voters. However, the strategic landscape proves that performance is not the only metric that matters. Amazon Leo’s 211,194 committed BEAD locations provide a survival path even if the FCC denies a consumer waiver, converting it into a government-subsidized utility. AST SpaceMobile’s binding contracts with AT&T and Verizon ensure it remains a viable entity, serving as the industry’s indispensable “Plan B”.

Ultimately, the satellite industry acts as a mirror for the broader political economy. The “SpaceX Paradox” defines Amazon’s desperate position: to compete with Starlink, Amazon was forced to contract launches from its primary competitor, implicitly admitting that SpaceX’s capacity was necessary for its own survival. Yet, Jeff Bezos has successfully positioned himself as a “responsible” alternative, securing a vital revenue lifeline to sustain Amazon Leo. The market has bifurcated: Starlink wins on physics and performance in the consumer zone, while Amazon and AST win on politics and diversity mandates in the regulatory and carrier zones.

For investors and executives, the lesson is clear: The narrative of “failure” surrounding legacy providers is simply the sound of the past dying; ignore it. The real signal is the deliberate, expensive, and strategic effort by the world’s largest telecom companies to prevent a SpaceX monopoly. AT&T and Verizon knew exactly what they were buying in 2024: an inferior product that offered the superior benefit of independence. They decided to stomach the lag, the risk, and the cost because the alternative was a future where Elon Musk held the keys to their network. The data tells us who has the best product, but the strategy tells us who will be allowed to survive.

If you want to read more about the interplay between the satellite and broadband industry have a look here.
https://www.reconanalytics.com/products/2027-november-satellite-report-vf/

by Roger Entner

The New Competitive Divide: Connectivity as the AI Gatekeeper

The competitive narrative in the U.S. telecommunications and cable industry will be fundamentally shifting. The long-standing battle for broadband supremacy, once defined by headline download speeds for video streaming, will be fought on a new, more demanding front: the enablement of artificial intelligence. The quality, capacity, and latency of a user’s network connection have become the primary determinants of their ability to leverage advanced AI, creating a decisive chasm between empowered, high-value users and a constrained mass market. Consequently, multi-billion-dollar capital expenditures in fiber and mid-band 5G are no longer just network upgrades; they have to be calculated, strategic investments to capture the emerging, high-ARPU, AI-adopter segment whose productivity and loyalty are inextricably linked to network performance.

This pivot redefines the core product. Carriers are no longer selling mere internet access; they are selling the essential infrastructure for the next wave of economic productivity. This is a fundamental repositioning that reshapes the calculus of customer lifetime value, churn risk, and market positioning. The fight is no longer for the casual browser but for the power user, the creator, and the enterprise whose workflows are increasingly dependent on the network’s ability to handle the symmetrical, low-latency demands of generative AI workloads.

Findings from Recon Analytics’ AI Pulse Service are based on the largest commercially available dataset tracking American, usage, attitudes, intentions and perspectives on AI. We continuously survey 6,000 people weekly, 52 weeks a year, and have collected over 35,000 responses as of August 16, 2025. Our service operates on a proven weekly research cycle modeled after our established telecom practice. Each Thursday, clients provide proprietary questions. In response, we deliver interactive Tableau dashboards on Monday, a 10-20 page PowerPoint analysis on Tuesday, and a formal presentation of the findings on Wednesday before the next cycle begins.

Having the luxury of a 35,000 plus respondent dataset that is growing by 6000 respondents a week allows us to look at the details, patterns appear and connections can be tested that are not possible in small datasets. In telecom, some of our dataset we look at have now 1.2 million respondents, growing by 15,000 per week, and allows us to analyze through advanced AI models really deep. While small datasets of 4,000 to 6,000 respondents is a good size data set for weekly tactical questions of what a company should do next, our industry-leading large dataset is where fundamental research shines. We only started analyzing the dataset when we had 30,000 respondents for that very reason. Small data analysis gives poor results for big questions. That’s why we have these massively large sample sizes. In small datasets what we can show is correlation, in large datasets we can show causality. Not only is temporal precedence easy to show, but also exogenous events become causal indicators. When the same large cohort of people, same age, same socio-economic background, same jobs behave differently when everything, but one dimension is different, then it is highly likely causality. For example, when one person living in an area where there is fiber and she is using fiber displays a heavily focused video AI driven use case and her clone using FWA shows another usage behavior then this is correlation. Now if it is she and a few thousands like her, then it becomes causality.

This is the first research note in a series on that is skimming the surface about the interplay between AI and connectivity.

Competitive Analysis of Network Strategies

The industry’s major players are beginning to become aware of this shift, and their strategic announcements and capital allocation plans reflect a clear alignment toward capturing the AI-enabled future.

AT&T’s Fiber-First Mandate is the most aggressive play to seize the premium AI user base. Bolstered by favorable tax provisions, AT&T’s Q2 2025 earnings announcements confirm an accelerated fiber deployment to 4 million new locations per year, with a target of reaching over 60 million fiber locations by 2030. This is a direct assault on cable’s historical dominance and a strategic move to build the definitive network for AI power users. The company’s emphasis on the “fusion of 5G and artificial intelligence” and its internal development of the “Ask AT&T” generative AI platform prove that it understands the operational and network demands of AI firsthand, positioning its network as the premier choice for AI-centric consumers and businesses.

Verizon’s “AI Connect” Ecosystem represents the most explicit branding of this new strategy. Unveiled in early 2025, AI Connect is a dedicated suite of solutions designed for AI workloads, leveraging Verizon’s “ultra-fast metro fiber U.S. network” and robust edge computing capabilities. This is not a consumer-grade offering; it is a direct appeal to the B2B and prosumer markets that require high-performance infrastructure. Strategic partnerships with NVIDIA for GPU-based edge platforms and Google Cloud for network optimization underscore this focus. The strategy is already yielding financial results, with Verizon reporting a sales funnel for AI Connect that has surged to $2 billion as of its Q2 2025 earnings call, validating the immediate revenue opportunity in enabling the AI economy.

T-Mobile’s Fiber, 5G and AI-CX Play leverages its leadership in 5G network performance as a platform for AI innovation. The company’s strategy is twofold: enable third-party AI applications through superior mobile connectivity and build its own AI-native services. The groundbreaking partnership with OpenAI to create the “IntentCX” platform is a transformative move to embed AI into the core of its customer experience, using its vast network and customer data as a competitive moat. This creates a powerful virtuous cycle: a superior 5G network enables better AI services, which in turn enhances customer loyalty, reduces churn, and drives adoption of higher-tier plans that can fully utilize the network’s capabilities.

Comcast’s and Charter’s DOCSIS 4.0 Counter-Offensive shows the cable incumbents are not ceding the high-performance market. Comcast’s “Janus” initiative, a collaboration with Broadcom, aims to create an AI-powered access network by embedding AI and machine learning directly into network nodes and modems based on DOCSIS 4.0. This is both a defensive and offensive maneuver. Defensively, it is designed to deliver the multi-gigabit symmetrical speeds necessary to compete with fiber. Offensively, it leverages AI for network automation and self-healing capabilities, which Comcast will market as a key reliability advantage. Similarly, Charter’s Q2 2025 earnings call detailed a phased DOCSIS 4.0 rollout to deliver 10×1 gigabit-per-second service, emphasizing its strategy of “converged connectivity” to retain customers by bundling best-in-class wireline and wireless services.

The Anatomy of the AI User: A Tale of Two Networks

Our Recon Analytics survey data shows that a user’s connectivity is the primary enabler of their AI usage patterns, creating a clear chasm between those empowered by superior networks and those constrained by legacy infrastructure.

Fiber connectivity is not merely another broadband technology; it is an AI adoption accelerator. The data is unequivocal: users with fiber-to-the-home connections are far more likely to be heavy, daily users of AI tools than their counterparts on cable, and especially those on DSL or satellite. The superior bandwidth, critically low latency, and symmetrical upload/download speeds inherent to fiber remove the performance friction that discourages experimentation and integration of advanced AI. A user on a high-latency connection who waits a minute for an image to generate will abandon the tool; a fiber user who receives a result in seconds will iterate, innovate, and integrate that tool into their daily workflow. This creates a powerful feedback loop where superior connectivity drives usage, which in turn drives perceived value and dependency.

Furthermore, the type of AI application a user engages with is directly correlated to their network’s capability. Analysis of Recon Analytics data shows that users with fiber and high-speed cable connections are disproportionately represented in bandwidth-intensive use cases, such as ‘Generating images’ and ‘Video editing / generation’. Conversely, users on DSL and satellite connections are clustered around lightweight tasks like ‘Web search’ and basic ‘Writing assistance / editing’. This network-defined behavior creates a new, actionable market segmentation. Operators can now identify and target “High-Bandwidth AI Creators” versus “Low-Bandwidth AI Consumers,” a distinction with profound implications for product bundling, marketing, and tiered pricing strategies.

While the smartphone is the universal access point for AI, the heavy lifting and more complex AI work is predominantly performed on desktops connected to high-quality fixed networks. This reinforces the strategic necessity of a converged offering. A customer requires both a leading 5G network for on-the-go AI queries and a powerful home or business fiber network for deep, creative, and professional work. Selling one without the other is an incomplete solution in the AI era. The table below, derived from Recon Analytics research, quantifies this emerging chasm.

Connection Type% of ‘Daily’ AI UsersTop 3 Primary AI Use CasesPrimary Access Method (% Mobile vs. Desktop)
Fiber45%1. Generating Images 2. Data Analysis 3. Writing Assistance55% Mobile / 45% Desktop
Cable32%1. Writing Assistance 2. Topical Research 3. Web Search65% Mobile / 35% Desktop
FWA28%1. Web Search 2. Topical Research 3. Writing Assistance70% Mobile / 30% Desktop
DSL11%1. Web Search 2. Topical Research 3. Social Media Posts85% Mobile / 15% Desktop
Satellite8%1. Web Search 2. Topical Research 3. Social Media Posts90% Mobile / 10% Desktop

Source: Recon Analytics, AI Pulse Service, August 2025

Network Readiness for the AI Onslaught: A Reality Check

The term “AI” has become a monolith, yet the network demands of AI applications exist on a vast spectrum. A nuanced understanding of these requirements is critical to assessing network readiness and identifying competitive vulnerabilities. Lightweight AI, primarily generative text and simple search queries, imposes minimal strain and is manageable by nearly all connection types. However, the market is rapidly moving toward more demanding applications.

Medium-weight AI—including image generation, analysis of uploaded documents, and complex software coding assistance—requires substantial and consistent bandwidth that pushes the limits of slower cable plans and legacy Fixed Wireless Access (FWA). Heavyweight AI represents the true network stress test. Generative video, real-time AI-powered collaboration, and the transfer of large datasets for analysis are the applications that will define the next generation of productivity tools. Using 4K video streaming as a baseline proxy, these applications will require sustained, symmetrical speeds of at least 25 Mbps, and likely much more, particularly on the upload path, which is the Achilles’ heel of traditional cable networks.

Beyond bandwidth, latency is the critical differentiator for interactive and real-time AI. Applications such as autonomous systems, advanced voice assistants, and edge computing demand network latency below 100 milliseconds, with many requiring sub-50ms response times for a seamless experience. This is a domain where the physics of fiber optics and 5G network architecture provide an insurmountable advantage over the higher latency inherent in cable, DSL, and satellite technologies.

This technical reality means that inadequate connectivity is actively suppressing latent demand for advanced AI. Recon Analytics data indicates a segment of users, particularly on DSL and satellite, who abandon or avoid advanced AI tools because they perceive them as “too slow,” a direct result of their network’s inability to process queries in a timely manner. This user frustration is a primary trigger for churn and represents a significant, untapped market for providers who can deliver and effectively market an upgraded, AI-capable connection.

Mobile’s Central Role in the AI Future

The AI revolution will be mobilized. While complex, deep-work AI tasks will continue to rely on powerful desktops and fixed broadband, the vast majority of daily AI interactions will occur on smartphones. Recon Analytics data shows conclusively that mobile apps and mobile web browsers are the most common access points for AI across all user segments. The prevalence of high-end, AI-capable devices like the Apple iPhone 16 and and Google Pixel 7,8 and 9 in the survey data further underscores this trend. This places the mobile network at the absolute center of the AI ecosystem.

The quality of the mobile network is therefore paramount. As AI becomes deeply integrated into everyday applications—from real-time language translation to visual search and augmented reality—the performance of these features will be a direct reflection of the underlying network. A user experiencing lag or unreliability with an AI feature will not blame the app developer; they will blame their mobile carrier. This makes 5G network performance a direct and powerful driver of customer satisfaction, brand perception, and ultimately, retention.

The technical characteristics of 5G—specifically its high bandwidth and ultra-low latency—are the key enablers of this mobile AI future. T-Mobile’s use of its 5G Advanced Network Solutions to power predictive AI and real-time data streaming for the SailGP racing league is a potent, real-world demonstration of this capability. It proves that a superior 5G network can support applications that are simply impossible on older technologies or competitors’ less-developed networks. This transforms the network from a simple utility into a platform for AI innovation, a core tenet of T-Mobile’s strategy. The carrier with the best 5G network will possess a decisive competitive advantage, able to offer a superior experience for all AI applications and develop exclusive services that lock in high-value customers.

Uncovering Latent Demand: Mapping the Next Wave of Growth

The intersection of AI interest and connectivity deficiency creates clear, actionable market opportunities. A critical underserved segment is the “Rural AI Enthusiast.” Recon Analytics data identifies a cohort of users in rural and exurban areas who exhibit high interest in AI-powered tools but are trapped on legacy DSL or unreliable satellite connections. These users—often small business owners, remote professionals, and tech-savvy individuals—are acutely aware that their productivity and creative potential are being capped by their connectivity. This segment is not primarily price-sensitive; it is performance-desperate. They represent the lowest-hanging fruit for fiber overbuilders and high-capacity FWA providers. A targeted marketing campaign in these specific ZIP codes, promising to “Unleash Your AI Potential,” would yield a significant return on investment.

FWA is perfectly positioned as the bridge technology to serve these markets. While fiber remains the gold standard, FWA from AT&T, T-Mobile and Verizon can be deployed more rapidly and cost-effectively to deliver the 100+ Mbps speeds required to unlock the majority of medium-weight AI applications. This poses a direct and immediate competitive threat to incumbent DSL and cable providers in these regions, siphoning off their most valuable and dissatisfied customers.

Strategic Imperatives and Financial Implications

The emergence of the AI Connectivity Chasm mandates decisive strategic action. The financial stakes are immense, and inaction is the greatest risk.

For AT&T and Verizon:

The strategy is clear: double down on fiber. Every dollar of capital allocated to accelerating fiber deployment is a direct investment in capturing and retaining the highest-value customers of the next decade. Marketing must evolve beyond megabits per second to focus on outcomes: AI enablement, enhanced productivity, and creative empowerment. Verizon’s early success with its $2 billion AI Connect sales funnel validates the B2B opportunity, while AT&T’s aggressive fiber build targets the high-end consumer and prosumer markets. This must be paired with a converged strategy that leverages their 5G networks to offer a seamless connectivity fabric that cable companies cannot replicate.

For T-Mobile:

The imperative is to press the 5G network advantage relentlessly and supplement it with a solid fiber strategy, but recognize that FWA lives on borrowed time (more to this in a later research note.) Leadership in 5G is the key to owning the mobile AI experience. The partnership with OpenAI is a template for the future and must be expanded upon to create a suite of AI-native services that leverage the network’s unique low-latency and high-bandwidth capabilities. FWA must be used as a strategic weapon to aggressively poach dissatisfied DSL and cable customers in underserved rural and suburban markets where the AI-readiness gap is widest.

For Comcast, Charter and other cable providers:

The threat from fiber is real and requires an urgent response. The acceleration of DOCSIS 4.0 deployment is not optional; it is a matter of survival. Symmetrical speed is no longer a niche requirement for a handful of users; it is a baseline necessity for the growing segment of AI power users who must upload large files and datasets. Failure to match fiber’s upload capabilities will result in a catastrophic exodus of their most profitable customers. Concurrently, initiatives like Comcast’s Janus project must be prioritized to leverage AI for internal operational efficiency, thereby lowering costs to help fund the critical network upgrades.

The financial implications are stark. Revenue growth will be driven by the acquisition and retention of high-ARPU customers willing to pay a premium for AI-capable networks. While the capital expenditures for these network upgrades are substantial—AT&T projects $22 to $22.5 billion in capital investment for 2025 —the long-term operational costs of fiber and modernized 5G networks are lower than legacy systems. The market is bifurcating into networks that can power the future and those that cannot. Being on the wrong side of the AI Connectivity Chasm will be financially ruinous, relegating providers to a shrinking, low-margin segment of the market and ensuring long-term decline.

by Roger Entner

OpenAI and xAI’s dalliance with adult content is a flirtation with disaster. It is an attempt to court a low-value, transient market segment at the direct expense of the high-value professional users who have been the bedrock of their entire revenue model until now. Even more importantly, it limits advertising opportunities as very few, if any, advertisers want to have their products and services next to adult content. Our data from the Recon Analytics AI Pulse Service, a continuous survey of over 88,000 U.S. adults, is unambiguous: the pursuit of adult content alienates the highest-paying customers, triggers enterprise-wide bans, stalls user growth, and negatively impacts the free-to-paid conversion pipeline. This path doesn’t lead to a new revenue stream; it leads to destruction.

The Economic Engine: Work Users Generate 3X the Revenue and Reject Adult Content

The fundamental flaw in an adult content strategy is its direct collision with the platform’s revenue core: the professional user. In our October 17 to 19, 2025 survey of 6,212 adults shows that users dedicating 75% or more of their AI time to work have a paid subscription rate of 32.5%, compared to just 10.0% for primarily personal users. This is a 3.25X monetization advantage that no amount of consumer engagement can surmount.

The numbers are stark. Work-focused users (50%+ professional use) convert to paid subscriptions at a 2.4X higher rate than personal users. Despite being a 23% smaller group in our sample, they generate 66% more paid subscribers. Professionals pay for productivity—a measurable ROI. Consumers, resistant to price, seek entertainment, which is a subjective value.

Introducing adult content thus repels the very group that pays the bills. A full 32.0% of work-focused users report they would be less likely to use a platform that offers it – a potential loss of almost 3X as many high-value subscribers for possibly gaining a low-value personal customer. Factoring in the 2.4X revenue multiplier, the net impact is a significant loss.

The Enterprise Firewall: The Highest-Value Segments Are the Most at Risk

Any ambition to further penetrate the enterprise market is severely challenged with an adult content strategy. Corporate IT departments and HR leaders do not react to risk; they prevent it. The mere presence of adult content capability, regardless of opt-ins or age gates, makes a platform toxic for corporate deployment.

Our data shows that the most lucrative enterprise segments are the most opposed. Mid-size companies (2,000-4,999 employees), which boast the highest paid penetration at 32.6%, show a 26.8% negative reaction. Large enterprises (5,000-9,999 employees) react even more strongly, with 33.1% indicating they would be less likely to use such a platform.

This is more than churn: it’s a cascading revenue failure. One HR incident triggers a company-wide ban, instantly canceling thousands of paid seats. Competitors like Microsoft and Google will weaponize this, positioning Copilot and Gemini as the safe, professionally-vetted alternatives. ChatGPT’s adult content dalliance becomes their single greatest sales tool.

Growth Killer: Non-Users See a Barrier, Not an Invitation

The 1,491 non-users in our survey represent the entire growth market. Their verdict on adult content is devastating: 40.4% state it makes them less likely to try AI, while a mere 9.9% show increased interest. For every potential customer this strategy might attract, it permanently blocks four.

These potential users, who already harbor concerns about privacy (22.7%) and distrust of AI builders (17.9%), see adult content as a confirmation of their fears. It signals that platforms prioritize monetization over safety and legitimacy. The 49.8% of non-users who are indifferent are not waiting for adult content; they are waiting for a clear professional use case, which this strategy directly undermines.

Sabotaging the Pipeline: Free-to-Paid Conversion Collapses

The 2,712 free users in our survey, nearly 40% of whom are work-focused, are the prime candidates for conversion to paid. Yet, because professionals need to justify subscription costs as a business expense, adult content acts as a poison pill in this pipeline. A staggering 32.9% of these professional free users say they would be less likely to use the platform, effectively eliminating 344 high-potential subscribers from the funnel before a sales pitch is even made.

The Revenue Math: A 10:1 Case for Professionalism

Any financial model attempting to justify an adult content strategy collapses under the weight of one simple fact: the users you gain are worth dramatically less than the users you lose. The math isn’t just unfavorable; it’s a blueprint for value destruction. Let’s put this in the starkest possible terms by examining the trade-off.

  • The Value We Lose: The work-focused user base is the economic engine of the platform, monetizing at a rate 2.4 times higher than personal users. Introducing adult content places 32.0% of these premium customers at risk of churn. In our model, this means losing 138 high-value subscribers. When weighted by their proven economic impact (138 subscribers x 2.4 value multiplier), this represents a revenue loss equivalent to 331 standard-value subscribers.
  • The Value We Gain: In exchange, the platform might attract a 17.8% increase in paid subscribers from the personal-use segment. This optimistic scenario yields 46 new, low-value subscribers. Since they represent the baseline, their value multiplier is 1.0. This translates to a revenue gain of only 46 standard-value subscribers.

The net result is a poor exchange: sacrificing the equivalent of 331 high-value revenue units to gain 46 low-value ones. This is a value destruction ratio of more than 7-to-1. This calculation doesn’t even touch the downstream damage to the conversion pipeline and new user acquisition, which amplifies the losses significantly.

Forfeiting the Advertising Goldmine for a Reputational Toxin

The cardinal rule of digital advertising is brand safety. Blue-chip advertisers—the Cokes, Toyotas, and Procter & Gambles of the world who pay premium rates—have zero tolerance for their brands appearing adjacent to controversial or adult-oriented material. The mere capability for adult content generation, even if segregated or behind an age gate, contaminates the entire platform from a brand safety perspective.

This decision instantly removes the platform from consideration for 99% of high-value ad budgets. Instead of competing for billions in brand advertising from the Fortune 500, the platform is relegated to the digital red-light district, forced to rely on low-CPM advertisers from industries like gambling or adult entertainment. This not only yields a fraction of the potential revenue but also reinforces the toxic brand identity that alienates enterprise customers.

The Path Forward: A Choice Between Revenue and Ruin

The market presents a stark choice. AI platforms must decide whether to serve the work users who deliver 3.25X higher paid penetration and a 2.4X revenue advantage, or chase personal users who offer inferior economics on every metric and foreclose the advertising opportunities.

The Great Bifurcation in AI is not about content; it’s about business models. One path leads to enterprise integration, professional legitimacy, sustainable subscription revenue as well as the opportunity to monetize non-paying users with advertising. The other leads to a niche consumer market, reputational damage, and a stunted business model. Platforms attempting to serve both will satisfy neither.

For platforms like ChatGPT, exploring adult content is a violation of fundamental business logic. The strategy is a failure in revenue, acquisition, retention, and market expansion. The only rational move is to abandon this exploration immediately and double down on the professional positioning that justifies their valuation. For competitors, it is a gift: an opportunity to unequivocally brand themselves as the enterprise-safe choice and capture the exodus of high-value users.

by Roger Entner

The U.S. wireless industry has officially entered a new era, catalyzed by a landmark transaction that confirms the final collapse of EchoStar’s long-held ambition to become a fourth facilities-based carrier. EchoStar has entered into a definitive agreement to sell its complete portfolio of prized AWS-4 and H-block spectrum licenses to SpaceX for approximately $17 billion. The deal, consisting of up to $8.5 billion in cash and an equivalent amount in SpaceX stock, also includes a provision for SpaceX to fund approximately $2 billion of EchoStar’s debt interest payments through late 2027 and establishes a long-term commercial agreement for SpaceX to provide its next-generation Starlink Direct-to-Cell (D2C) service to EchoStar’s Boost Mobile subscribers.

This agreement is not merely a corporate restructuring; it is the definitive end of a regulatory dream and the formal beginning of a new, more complex competitive paradigm. The transaction solidifies the U.S. terrestrial wireless market as a stable, three-player market while simultaneously igniting a new, asymmetric competitive front in satellite-to-cellular connectivity. SpaceX, now armed with dedicated, purpose-built spectrum for Mobile Satellite Service (MSS), and its primary terrestrial partner, T-Mobile, possess a significant first-mover advantage in the race for ubiquitous coverage. This move elevates the D2C value proposition from a niche, emergency-only feature into a core, marketable network attribute.

The cascading effects of this deal will reshape the strategies of every major player for years to come. For EchoStar, it marks the final pivot from a would-be network operator to a “hybrid MVNO” and a significant shareholder in SpaceX, a stunning financial victory for its chairman, Charlie Ergen, born from the ashes of operational failure. For Verizon and AT&T, it provides urgency to accelerate their own D2C counter-strategy with partner AST SpaceMobile. Finally, the transaction presents a novel challenge for regulators. The review will be forced to look beyond traditional concerns of terrestrial spectrum consolidation and grapple with the profound implications of SpaceX’s vertical integration, examining its dominance in the satellite launch market and its new, powerful position in the downstream market for satellite connectivity services. The two-front war has begun.

I. The Deal That Ends an Era: Deconstructing the EchoStar-SpaceX Agreement

The definitive agreement between EchoStar and SpaceX represents one of the most significant strategic transactions in the recent history of the U.S. telecommunications sector. Its architecture reflects the unique financial positions and strategic imperatives of both companies, transferring a uniquely valuable set of spectrum assets that will power a new generation of satellite services and formalizing a commercial alliance that provides a lifeline to a struggling wireless brand.

Financial Architecture and Valuation Analysis

The transaction is structured to provide EchoStar with immediate financial relief and long-term upside, while allowing SpaceX to acquire a critical strategic asset without depleting its capital reserves needed for its ambitious launch and satellite manufacturing programs. The core terms of the agreement are as follows :

  • Total Consideration: The deal is valued at approximately $17 billion.
  • Cash Component: SpaceX will provide up to $8.5 billion in cash.
  • Stock Component: SpaceX will provide up to $8.5 billion in its own stock, with the valuation fixed as of the date the definitive agreement was signed.
  • Debt Servicing: In a crucial provision that addresses EchoStar’s immediate liquidity crisis, SpaceX has agreed to fund an aggregate of approximately $2 billion in cash interest payments due on EchoStar’s substantial debt through November 2027.

This 50/50 cash-and-stock structure is a work of strategic financial engineering. A pure cash deal of this magnitude would place immense strain on SpaceX, a company with massive and continuous capital expenditures for its Starship development and Starlink constellation deployment. Conversely, a pure stock deal would have been unacceptable to EchoStar’s creditors, who require cash to service the company’s more than $26.4 billion in total debt. The balanced split provides an elegant solution. SpaceX preserves vital capital for its core operations, while EchoStar secures sufficient immediate liquidity to manage its most pressing debt obligations and stabilize its financial footing.

Furthermore, by accepting a significant equity stake in one of the world’s most valuable private companies, EchoStar Chairman Charlie Ergen has transformed what could have been a simple liquidation of assets into a long-term investment. This move aligns the financial interests of both parties in the success of the D2C venture that this very spectrum will empower. It gives EchoStar and its shareholders continued participation and upside potential in the high-growth satellite connectivity ecosystem, effectively hedging the sale of its own ambitions against the success of its acquirer.

Asset Deep Dive: The Strategic Value of AWS-4 and H-Block Spectrum

The intense pursuit of these specific licenses by SpaceX was driven by the unique and irreplaceable nature of the AWS-4 band. While the H-block licenses are a valuable addition, the AWS-4 spectrum—encompassing the 2000-2020 MHz uplink and 2180-2200 MHz downlink bands—is widely considered the “golden band” for D2C services.

Its value stems from its history and technical characteristics. Unlike repurposed terrestrial spectrum, such as the sliver of T-Mobile’s PCS G-block currently used for the beta T-Satellite service, the AWS-4 band was originally allocated for Mobile Satellite Service (MSS). The propagation physics of both bands are ideal for the challenges of space-to-ground communication, making it far more efficient for connecting satellites to standard smartphones. More importantly, its existing regulatory framework as an MSS band provides a more direct and less contentious path for satellite use, sidestepping many of the complex technical and legal challenges associated with using terrestrial-designated bands from space under the FCC’s new Supplemental Coverage from Space (SCS) framework.

By acquiring the entire portfolio of these licenses, SpaceX secures exclusive, nationwide rights to this optimal spectrum. This acquisition is transformative, enabling SpaceX to develop and deploy a next-generation Starlink D2C constellation capable of moving beyond the limitations of the current text-only service. With dedicated, purpose-built spectrum, SpaceX can now credibly pursue its roadmap of offering reliable voice, streaming-grade data, and robust IoT capabilities directly to unmodified smartphones, a quantum leap in service capability.

The Commercial Alliance: Defining the Future of Boost Mobile and Starlink D2C

A core component of the definitive agreement is the establishment of a long-term commercial alliance. This partnership will enable EchoStar’s Boost Mobile subscribers to access SpaceX’s next-generation Starlink D2C service, with the connection being managed through Boost’s own cloud-native 5G core network. While seemingly a straightforward value-add for customers, this commercial agreement serves multiple, layered strategic purposes for both companies and for the deal’s regulatory prospects.

For EchoStar, the alliance provides a desperately needed lifeline and a unique point of differentiation for its struggling Boost Mobile brand. Facing relentless subscriber losses and the decommissioning of its own physical network, Boost can now market a truly innovative feature—ubiquitous satellite connectivity—to stanch churn and potentially attract new customers in the hyper-competitive prepaid market. It allows EchoStar to maintain a narrative of being a technology-forward competitor even as it fully transitions to a “hybrid MVNO” model, reliant on the networks of its rivals. It still does not solve Boost Mobile’s remarkable inability to sell its services successfully.

Most critically, this commercial component is a masterful piece of regulatory strategy. The preservation of Boost Mobile as a distinct competitive entity, now enhanced with a unique satellite offering, provides essential political cover for the transaction. It allows the Department of Justice (DOJ) and the Federal Communications Commission (FCC) to approve a deal that otherwise permanently cements a three-player terrestrial market. Regulators can plausibly argue that they have preserved a “fourth wireless competitor,” even if that competitor no longer owns a radio access network. This framework directly mirrors the “hybrid MNO” model established in EchoStar’s prior spectrum sale to AT&T, creating a consistent and defensible regulatory precedent that will ease the path to approval.

II. EchoStar’s Final Chapter: From Contender to Catalyst

The sale of EchoStar’s most valuable spectrum assets was not a strategic choice but an inevitability, the culmination of years of financial strain, commercial missteps, and overwhelming regulatory pressure. The company’s journey from a government-mandated fourth carrier to a motivated spectrum broker is a stark cautionary tale about the brutal economics of the modern wireless industry. Yet, for its chairman, it represents the profitable conclusion to a decades-long speculative bet.

Anatomy of a Forced Sale: Financial Distress, Network Failure, and Regulatory Pressure

The fire sale of EchoStar’s spectrum was precipitated by a combination of three fatal blows that left the company with no viable path forward other than liquidation.

First, the company’s financial position had become untenable. Saddled with a total debt load exceeding $26.4 billion, EchoStar reported a net loss of $306 million in the second quarter of 2025 alone. The financial distress grew so acute that the company began missing multi-million dollar interest payments, a clear signal of a looming liquidity crisis. The post-pandemic rise in interest rates had closed the window for the cheap financing necessary to fund a nationwide network buildout, leaving the company hemorrhaging cash from its wireless division and presiding over a legacy pay-TV business in secular decline. The inclusion of a $2 billion interest payment provision by SpaceX in the final deal underscores the severity of this financial pressure.

Second, EchoStar’s flagship strategic initiative, a technologically advanced, greenfield 5G Open RAN network, was a commercial catastrophe. Despite earning technical praise for its rapid deployment, the network failed to attract a critical mass of subscribers, becoming a “ghost town” that generated no meaningful revenue or positive cash flow. This failure proved that simply building a network is not synonymous with building a successful wireless business. The surrender was signaled definitively when the company laid off 90% of its wireless engineering organization following its initial spectrum sale to AT&T, an irreversible move away from any serious network ambitions.

Finally, the FCC, under Chairman Brendan Carr, delivered the coup de grâce. Prompted by public questions from Elon Musk about why EchoStar was allowed to hold valuable spectrum without fully utilizing it, the commission launched a high-profile campaign against the company’s “spectrum squatting”. This regulatory pressure, amplified by relentless lobbying from SpaceX, initiated formal inquiries into EchoStar’s buildout compliance and effectively froze the company’s ability to raise capital. Cornered financially and regulatorily, Chairman Charlie Ergen was forced to abandon his decades-long strategy of hoarding spectrum, leaving a sale as his only remaining option. Both the AT&T and SpaceX deals are explicitly framed by EchoStar as necessary steps to resolve these pending FCC inquiries.

The Definitive Pivot: Termination of the MDA Space Contract

If any doubt remained about EchoStar’s complete and total surrender of its network infrastructure ambitions, it was erased by a single, decisive action that occurred concurrently with the SpaceX deal announcement. On September 8, 2025, EchoStar issued a termination for convenience notice to MDA Space for a major satellite constellation contract that had been announced just five weeks prior, on August 1, 2025.

This sequence of events reveals the stark, binary choice the company faced. The initial MDA Space contract was a bold statement of intent, committing EchoStar to a multi-billion dollar project to build its own Low Earth Orbit (LEO) satellite constellation for D2D services, positioning itself as a direct competitor to Starlink. It was the “build” path. The subsequent termination, explicitly cited as the result of a “sudden change to EchoStar’s business strategy and plan in the wake of spectrum allocation discussions with the Federal Communications Commission,” was the definitive pivot to the “sell” path. This was not a gradual strategic evolution but an abrupt reversal. The deal with SpaceX made building its own constellation both unnecessary and impossible. The termination of the MDA contract is the final, irrefutable evidence that EchoStar has permanently exited the network infrastructure business, both on the ground and in space.

The Financial Epilogue for Ergen: A Masterclass in Spectrum Arbitrage

Despite the spectacular operational failure of the fourth-carrier project, the great spectrum reshuffle represents an immense financial victory for Charlie Ergen. Over several decades, he masterfully acquired a vast portfolio of spectrum licenses, often at prices far below today’s market value. The recent sales are the culmination of this long-term arbitrage strategy.

The August 2025 sale of 600 MHz and 3.45 GHz spectrum to AT&T netted approximately $23 billion, a price tag roughly $9 billion higher than what EchoStar originally paid for those licenses. Combined with the approximately $17 billion transaction with SpaceX, the total proceeds from the spectrum liquidation will be around $40 billion. This sum is more than sufficient to retire EchoStar’s entire $26.4 billion debt load, with a substantial multi-billion dollar profit remaining for Ergen and the company’s shareholders. While his dream of being a wireless network king is dead, the poker player has walked away from the table with the jackpot.

III. Starlink’s Quantum Leap: Forging a New Satellite-Terrestrial Paradigm

The acquisition of EchoStar’s AWS-4 and H-block spectrum is a watershed moment for SpaceX. It catapults the company’s Starlink division from a promising but niche player in the D2C space into a position of formidable power, armed with the ideal assets to realize its global ambitions. This deal fundamentally alters the D2C value chain, supercharges its alliance with T-Mobile, and introduces complex new questions of vertical integration for antitrust regulators.

From Partner to Kingmaker: The Power of Dedicated MSS Spectrum

Until now, Starlink’s D2C service, offered in partnership with T-Mobile, has been a groundbreaking but technically constrained offering. It has operated by leasing a small slice of T-Mobile’s terrestrial PCS spectrum, a band not optimized for the physics of space-to-ground communication. This has limited the service to basic text messaging, with a roadmap for voice and data still in development.

The acquisition of dedicated, nationwide MSS spectrum changes everything. As previously noted, the AWS-4 band is purpose-built for satellite communications, offering superior performance and a clearer regulatory path. Owning this “golden band” allows SpaceX to transition from a D2C partner, reliant on a carrier’s terrestrial assets, to a D2C kingmaker that controls its own destiny. With exclusive rights to this spectrum, SpaceX can now engineer a fully optimized, next-generation satellite constellation designed to deliver on the full promise of D2C: reliable voice, high-quality data streaming, and ubiquitous IoT connectivity directly to standard smartphones. This elevates the D2C value proposition from a novelty or emergency feature into a core, marketable network attribute, fundamentally changing the competitive landscape.

The T-Mobile Alliance Supercharged: Forging a “Ubiquity Moat”

The most immediate beneficiary of SpaceX’s empowerment is its primary U.S. partner, T-Mobile. The combination of T-Mobile’s extensive terrestrial 5G network and Starlink’s enhanced D2C capabilities creates a hybrid network with a profound competitive advantage. T-Mobile will soon be able to market a service that offers virtually seamless connectivity, eliminating terrestrial dead zones for core voice and data services across the vast majority of the U.S. landmass.

This capability directly addresses a primary consumer pain point and a top purchase driver: the ability to make calls and use data anywhere. This “ubiquity” feature becomes a formidable competitive moat. It creates a stickier service that could significantly reduce customer churn, particularly among high-value subscribers in rural areas, outdoor enthusiasts, and enterprise clients in sectors like logistics, agriculture, and transportation. It provides a compelling reason for customers of rival carriers to switch to T-Mobile and a powerful reason for existing customers to stay. While the service will have inherent limitations, satellite signals struggle to penetrate buildings, confining the primary use case to outdoor environments, its value in eliminating outdoor dead zones gives T-Mobile an asymmetric advantage that rivals, with their still-nascent D2C partnerships, cannot immediately match.

Antitrust Headwinds: Scrutinizing the Vertical Integration of a New Power Broker

While the transfer of spectrum licenses from a non-competitor (EchoStar) to a new entrant (SpaceX) may not trigger traditional horizontal antitrust concerns, the deal’s approval is not guaranteed. It is highly unlikely that the FCC or DOJ will put significant conditions on this deal even though it raises a more complex and potentially more problematic issue: vertical integration and the market power of SpaceX.

The structure of this transaction creates a classic vertical integration scenario that will force antitrust authorities to consider novel questions in the telecommunications space. SpaceX is already the dominant player in the upstream market for satellite launch services, controlling a vast majority of the global commercial launch market. Many of its direct competitors in the satellite communications industry, including companies building rival D2C constellations, are dependent on SpaceX’s rockets to get their satellites into orbit. This reliance has already raised concerns about SpaceX potentially favoring its own Starlink constellation.

By acquiring scarce, premium MSS spectrum, SpaceX is now poised to become the dominant player in the downstream market for D2C services in the U.S. This combination of upstream and downstream market power will compel antitrust enforcers to examine whether SpaceX could leverage its launch monopoly to harm competition in the D2C market. This could manifest in several ways consistent with a classic “raising rivals’ costs” antitrust theory, such as using discriminatory pricing for launches, prioritizing its own satellites over those of competitors, or demanding exclusionary contract terms that limit a customer’s ability to use other launch providers. This shifts the regulatory focus from the FCC’s public interest standard on spectrum utilization to the DOJ’s stricter antitrust framework concerning market power, competitive foreclosure, and the potential for a dominant firm in one market to stifle competition in an adjacent one.

IV. The Terrestrial Counteroffensive: AT&T and Verizon’s Race for Parity

While the SpaceX-EchoStar deal reshapes the satellite-cellular frontier, the battle on the terrestrial front continues unabated. For Verizon, the imperative to secure additional mid-band spectrum is now more acute than ever, though its path is complicated by legal disputes. In response to the formidable T-Mobile/Starlink alliance, Verizon and AT&T have been forced into an unprecedented defensive partnership, betting their D2C future on a single satellite provider, AST SpaceMobile.

The Strategic Imperative for AWS-3 and the Shadow of a Lawsuit

Verizon’s network has long been defined by its quality and reliability, but it faces a relative deficit in critical mid-band spectrum compared to T-Mobile’s vast 2.5 GHz holdings. AT&T’s recent $23 billion acquisition of EchoStar’s 3.45 GHz and 600 MHz spectrum threatened to widen this gap, potentially leaving Verizon in third place in the 5G capacity race.

However, this straightforward strategic move is complicated by a significant legal entanglement. EchoStar is currently suing the FCC in the U.S. Court of Appeals for the Tenth Circuit to block the rules governing the upcoming re-auction of these very AWS-3 licenses. The lawsuit stems from a decade-old issue where Dish Network (now EchoStar) defaulted on winning bids from the original 2015 auction. EchoStar is now potentially liable for any shortfall if the re-auction fails to generate at least $3.3 billion. EchoStar argues that the FCC’s updated, more restrictive auction rules for small businesses will suppress bidding, making a shortfall more likely and unfairly exposing the company to billions in penalties.

This litigation creates a strategic dilemma that directly impacts the competitive balance. The lawsuit introduces significant uncertainty around the timing and final cost of the AWS-3 spectrum, which Congress has mandated must be auctioned by June 2026. Any delay in the auction directly harms Verizon’s ability to close its mid-band capacity gap with AT&T, which has already secured and can begin deploying its new spectrum. Every month the AWS-3 spectrum remains in legal limbo is a month that Verizon’s network risks falling further behind in critical urban markets, eroding the very foundation of its premium brand and value proposition.

The AST SpaceMobile Gambit: A Unified Front Against a Common Threat

Faced with the powerful and vertically integrated T-Mobile/Starlink alliance, Verizon and AT&T have been driven to adopt an unprecedented counter-strategy: a joint, non-exclusive reliance on satellite partner AST SpaceMobile. Both carriers have signed commercial agreements with AST SpaceMobile and are providing it with access to their licensed terrestrial spectrum—primarily in the 850 MHz band—to power its D2C service.

This move represents a fundamental shift in the competitive dynamics of the U.S. wireless market. AT&T and Verizon are historically fierce, zero-sum competitors that have rarely, if ever, collaborated on a core strategic technology platform. Their decision to both partner with AST SpaceMobile, rather than each seeking an exclusive satellite partner, is a clear signal of the profound disruptive threat they perceive from Starlink. This “co-opetition” is a defensive alliance born of necessity. By pooling their spectrum resources and committing their vast subscriber bases to a single satellite platform, they can help AST SpaceMobile achieve the scale, funding, and regulatory momentum necessary to build a viable competing constellation more quickly. This strategy effectively transforms the D2C battle from a three-way free-for-all into a two-sided war between distinct technology ecosystems: the T-Mobile/Starlink bloc versus the AT&T/Verizon/AST SpaceMobile bloc.

Comparative Analysis: Starlink D2C vs. AST SpaceMobile

The two emerging satellite-cellular ecosystems are built on fundamentally different strategic and technical models.

  • The Starlink Model: This is a deeply vertically integrated approach. SpaceX controls the rocket manufacturing, the launch services, the satellite constellation, and now, the dedicated MSS spectrum. This provides significant advantages in terms of cost control, deployment speed, and the ability to optimize the entire system—from satellite to spectrum to handset—for maximum performance. Its primary challenge is the immense capital required to build and maintain this integrated system.
  • The AST SpaceMobile Model: This is a partnership-based approach. AST SpaceMobile relies on its carrier partners (AT&T and Verizon in the U.S.) for access to terrestrial spectrum and their subscriber bases. Its key technological differentiator is its satellite design, which features exceptionally large phased-array antennas. These massive antennas are designed to be powerful enough to connect directly with standard, unmodified smartphones using conventional terrestrial spectrum bands from hundreds of miles in orbit. This model is more capital-efficient for the satellite operator but introduces complexities in coordinating with multiple carrier partners and managing potential interference with terrestrial networks.

The race is now on to see which model can achieve scale and deliver a compelling service to consumers first. Starlink has the advantage of an existing LEO constellation and now, superior spectrum. AST SpaceMobile has the backing of two of the world’s largest carriers and a novel satellite architecture. The outcome of this technological and strategic competition will define the future of ubiquitous connectivity. Alternatively, AT&T and/or Verizon could abandon their AST SpaceMobile partnership and throw in their lot with Starlink. This might be a technically superior solution, but puts them at the mercy of Elon Musk.

V. Navigating the Regulatory Gauntlet

The final approval of the EchoStar-SpaceX spectrum transfer is not a foregone conclusion and must navigate a complex regulatory environment. However, the deal has been skillfully structured to address the primary concerns of the FCC, while the most likely challenge will come from state-level actors seeking consumer protection concessions.

The FCC’s End Game: Why Approval Is the Path of Least Resistance

The FCC is highly likely to approve the spectrum license transfer with minimal friction. The entire transaction is framed as the solution to the very problem that prompted the agency’s investigation in the first place: EchoStar’s perceived “spectrum squatting”. For years, and with increasing public pressure from figures like Chairman Carr, the FCC’s primary objective has been to see EchoStar’s underutilized spectrum put to more intensive use for the benefit of American consumers.

This deal achieves that objective in the most direct way possible. It transfers the licenses from EchoStar, a company that proved unable to deploy them effectively, to SpaceX, a well-capitalized and highly motivated entity that has publicly committed to building a next-generation satellite network on these exact frequencies. For the FCC, approving the deal is the path of least resistance; it allows the commission to declare victory in its campaign against spectrum warehousing. The preservation of Boost Mobile as a “hybrid MNO” with access to this new D2C service provides the necessary political and regulatory justification to bless the transaction.

DOJ and State AGs: The Inevitable Price of Consolidation

While the FCC’s path seems clear, the view from antitrust enforcers is more complex. The Department of Justice is unlikely to block the transaction outright. The “failing firm” doctrine, which was a key rationale in the approval of the T-Mobile/UScellular merger, applies directly to the collapse of EchoStar’s wireless ambitions. With EchoStar having effectively exited the market as a facilities-based competitor, the DOJ lacks a strong basis to argue that this specific spectrum transfer further harms terrestrial competition. The more salient antitrust questions, as noted, relate to vertical integration, which may result in behavioral remedies or oversight rather than a full blockade.

The most probable challenge will emerge from a multi-state coalition of Attorneys General, particularly from Democratic-led states. This is the same playbook used during the T-Mobile/Sprint merger, where state AGs filed suit to block the deal on consumer protection grounds, arguing it would reduce competition and raise prices. A similar legal challenge is almost inevitable. The AGs will argue that allowing the last major independent block of mid-band spectrum to be absorbed into an ecosystem controlled by one of the top three carriers’ partners permanently cements a three-player oligopoly to the detriment of consumers.

However, the most likely outcome of such a challenge is not a complete blockade but a negotiated settlement. Precedent suggests that the carriers will be forced to the negotiating table to offer tangible consumer concessions in exchange for the AGs dropping their lawsuit. These concessions could include multi-year price locks for low-income plans, specific buildout commitments for the D2C service in underserved rural areas within their states, and robust protections for independent Mobile Virtual Network Operators (MVNOs) to ensure a competitive wholesale market. The deal will proceed, but not without a price.

VI. Conclusion: Winners, Losers, and the Future Trajectory of U.S. Connectivity

The great spectrum reshuffle, culminating in the EchoStar-SpaceX transaction, has irrevocably altered the competitive landscape of the U.S. telecommunications and satellite industries. It has created clear winners and losers, solidified a new market structure, and set the strategic trajectories for every major player for the remainder of the decade.

Scoring the Reshuffle:

The definitive terms of the recent deals allow for a clear assessment of the strategic outcomes for all involved parties.

  • Biggest Winners: The clearest victors are Charlie Ergen and SpaceX. Ergen successfully monetized decades of spectrum speculation for a massive profit, deftly navigating operational failure to achieve a stunning financial success. SpaceX acquires the “golden band” of MSS spectrum, the single most critical and previously unobtainable asset needed to realize its global D2C ambitions and establish a commanding technological lead.
  • Primary Beneficiary: T-Mobile emerges as the primary strategic beneficiary among the mobile network operators. Its exclusive partnership with a newly empowered Starlink provides it with a powerful and asymmetric “ubiquity moat”—a unique value proposition of near-total coverage that will be a potent tool for customer acquisition and retention in the years to come.
  • Forced to React: Verizon and AT&T are now firmly on the defensive in the new D2C battle. While their terrestrial network positions are solidified—particularly AT&T’s after its own spectrum purchase from EchoStar—they have been forced into a reactive alliance with AST SpaceMobile to counter the first-mover advantage of the T-Mobile/Starlink bloc. Their success now depends heavily on the execution of a third-party partner in a race where they are starting from behind or they might join the Starlink camp under the premise of “If you can’t beat them, join them.”
  • Biggest Losers: The most significant casualty is the concept of a fourth facilities-based U.S. wireless carrier. The collapse of EchoStar’s effort, despite government mandates and access to spectrum, proves that the economic and competitive barriers to entry are now insurmountably high. EchoStar, the company, also fits this category. While financially solvent, its grand ambitions are dead. It survives as a shell of its former aspirations, relegated to the role of a hybrid MVNO presiding over a satellite TV business in terminal decline.

The Evolving Battlefield: Key Milestones and Strategic Outlook for 2026-2028

The U.S. wireless market now revolves around three titans engaged in a two-front war. The coming years will be defined by their execution on both the terrestrial and satellite fronts. The key milestones that will determine the future trajectory of the industry include:

  • The timeline and outcome of the regulatory review for the SpaceX/EchoStar transaction, including any potential concessions demanded by State Attorneys General.
  • The resolution of EchoStar’s lawsuit against the FCC and the subsequent timing and results of the AWS-3 spectrum re-auction, which will be critical for Verizon’s 5G capacity strategy.
  • The initial commercial launch and real-world performance of Starlink’s enhanced D2C service operating on the AWS-4 spectrum, which will be the first major test of the technology at scale.
  • The successful launch and operational performance of AST SpaceMobile’s first block of commercial BlueBird satellites, which will determine the viability of the AT&T/Verizon counter-strategy.
  • The marketing, pricing, and consumer adoption rates of the competing D2C offerings, which will ultimately reveal whether ubiquitous connectivity is a niche feature or a mass-market demand driver that can reshape carrier loyalty.

The era of four-player competition is definitively over. The war for the future of American connectivity—a war fought simultaneously on the ground and from orbit—has just begun.

by Roger Entner

As you are likely aware, Recon Analytics runs the fastest, largest, most flexible customer insights service in the market. We survey over 200,000 mobile consumers, over 200,000 home internet consumers, and more than 20,000 businesses every year about their experiences and intentions. With our consistent set of questions and our massive sample size, we do not only pick up on small nuances in the changes around how large operators are perceived. Over time, we also pick up enough data to get a read even on the smaller providers.

Starlink has grown significantly over the last few years, and we now have enough respondents on a regular basis to report on this growth as part of our comprehensive data set. Over the last year, we found over 1,300 Starlink respondents who tell us with robust statistical significance about their experiences. *

What do customers tell us?

85% of the respondents are in rural areas, 5% live in suburbs, and 10% in zip codes classified as urban areas. They are mostly white, as we would expect from a predominantly rural population.

Who did they use before Starlink?

Unsurprisingly, the largest groups of customers for Starlink are either coming from small rural providers or have never had an internet provider before.

A full 11% of Starlink’s customers are new to home internet, as they often live in very rural areas. The largest individual contributors to Starlink’s growth are CenturyLink, Spectrum, and Frontier.

How about service issues?

Starlink customers tell us that they experience fewer service outages than cable customers, but more than fiber customers. Starlink customers also tell us that they experience near industry-leading speed consistency with the most reliable router.

Customer-reported Issues in the last 90 Days (arithmetic average of providers)

 Internet connection went downInternet was slower than usualI had to reset Wi-Fi routerDevices disconnected from the network
Starlink30%24%20%19%
Major Fiber24%31%27%25%
Large FWA25%27%27%25%
Major Cable39%34%33%28%
Major DSL33%32%28%26%
153,770 Respondent from 7/7/2023 to 7/5/2024 (Starlink, AT&T Fiber, Verizon FiOS, Comcast, Charter, Cox, Optimum, Frontier, AT&T Internet, Centurylink, T-Mobile FWA, Verizon FWA)

Considering that Starlink is a service that requires a direct line of sight to a passing satellite, these metrics are impressive. Starlink has been able to get 6,146 working satellites into orbit, providing significant capacity and reliability to its subscribers. It has also been able to manage bandwidth, even during peak hours. It is also clear that Starlink’s router is among the most stable in the market.

How satisfied are Starlink customers with their service?

We are also collecting component net promoter scores (cNPS)* by looking at the customer experience in 16 different dimensions. Starlink’s cNPS scores for all the metrics that do not involve interacting with a person are among the best we are seeing in our data.

Selected cNPS categories

 Complete ExperienceEasy InstallationStreaming VideoConnecting/Maintaining WiFi ConnectionGaming
Starlink+42+30+44+37+23
Major Fiber+18+18+22+18+12
Large FWA+40+52+39+36+29
Major Cable-2+8+6+2-7
Major DSL-10+5-6-8-20
149,625 Respondent from 7/7/2023 to 7/5/2024 (Starlink, AT&T Fiber, Verizon FiOS, Comcast, Charter, Cox, Optimum, Frontier, AT&T Internet, CenturyLink, T-Mobile FWA, Verizon FWA)

Starlink provides excellent scores when it comes to the technical delivery of the service. It is very similar to Fixed Wireless Access, in that when it works, it works very well and when it does not work, the service provider makes it easy to return the product within 30 days with either a total refund or only having to pay for services rendered. Furthermore, especially with Starlink, the rural alternatives are generally underwhelming. Most Starlink customers come from DSL providers or other satellite providers that are just not competitive when it comes to speeds and latency. Even though Starlink is $99 per month after $499 plus cost for the equipment, value for price cNPS is a very healthy +19. When you have no other options, even pricey internet looks like it’s worth it.

In all of our technical categories, we see constant year over year improvements of aggregate cNPS scores. The service providers are trying to provide a better service, and customers recognize it.

Starlink needs to improve in three categories: Billing support over the phone, technical support over the phone, and in-store experience.

More selected cNPS categories

 Billing SupportTechnical SupportIn-Store Experience
Starlink-1-3-17
Major Fiber+1-3-8
Large FWA+24+22+29
Major Cable-13-14-16
Major DSL-15-20-27
149,625 Respondent from 7/7/2023 to 7/5/2024 (Starlink, AT&T Fiber, Verizon FiOS, Comcast, Charter, Cox, Optimum, Frontier, AT&T Internet, Centurylink, T-Mobile FWA, Verizon FWA)

Fixed Wireless is the benchmark: Great in-store experience where customers can get the box, generally without an upfront cost, and take it home. Starlink’s in-store experience numbers are very similar to those of the mobile providers that predominantly sell through Best Buy, Target, and Walmart. It’s a channel where salespeople are not that educated about the product and its ins and outs. Fiber providers with a store are doing a much better job. The challenge for Starlink is that due to the heavily rural customer base, which implies a low population density, it is not cost effective to open its own stores. One solution is to invest in having its own salespeople in its third-party retail stores. The other challenge is support. While Starlink has a similarly great cNPS number for having an easy-to-understand bill like FWA, the billing support numbers are radically different. Generally, an easy-to-understand bill is correlated to billing support satisfaction, and while correlation does not imply causation, it is a necessary prerequisite.

Overall, Starlink’s mostly rural customer base is very satisfied. Customers like it despite the above average monthly cost and the high cost to purchase the satellite dish and router. Where things get interesting is that Comcast for Business just came to an agreement with Starlink to offer Starlink nationwide to businesses. In our business survey, where we speak with up to 800 businesses of all sizes, we find that fixed wireless access is making significant inroads with cNPS metrics that are similar to what we see in the consumer space. We are actively looking at the impact that the Starlink/Comcast for Business has on the market.

*We ask if they would recommend component elements of a product or service on a scale from 0 to 10 as a battery of questions and then calculate a net promoter score from it. We subtract the percentage of people who rate it 9 and 10 from the percentage of people who rate it 0 to 6, which gives us the net promoter score for this component.

by Roger Entner

5G fixed wireless access (FWA) is transforming how Americans are accessing the internet. In less than three years, 7.9 million customers signed up with FWA as their preferred internet solution. Recon Analytics interviewed more than 40,000 home internet customers in the first 12 weeks of the year and the results are clear: FWA customers are happier with their service than with service through any other technology. The only thing standing in the way of greater success is more capacity, which is why mobile operators are clamoring for more licensed full-power spectrum.

Chart 1:

FWA is the clear winner across the board

The ranking in Chart 1 makes sense, but is surprising at the same time. The mobile network operators built a very robust offering. FWA is not the fastest service, but under the current usage parameters it satisfies its customers not only on the traditional product side such as easy and convenient installation, a superior router experience, delivering an easy-to-understand bill, and online self-help customer service that people actually like, but also on the service side, ranging from the internet usage categories, to support over the phone and, most importantly, value for money.

It is important to keep in mind that there is a double bias going on with FWA customers. First, the vast majority of FWA customers have the same provider for their mobile service. Customers who are unhappy with their mobile service do not select the same provider and network for their home internet service. Second, there is a survivorship bias. Customers who sign up with FWA typically do this while they are still using a previous service with which they are unhappy. It is very easy and convenient to install and, if necessary, to return the FWA router and cancel the service, so prospective customers give it a try and take advantage of the cancellation poicy if it doesn’t work. We have a hard time finding  customers who try the service and are unhappy with it, but have not returned it yet.

Customer service and connectivity

Chart 1 also reiterates what we have known for a long time: cable companies have poor customer service and need to improve. Telecom providers who are phasing out DSL networks and focusing on fiber provide substantially better customer service. What might surprise people is the strong performance of satellite service. This is mostly driven by Starlink, which is getting successively better over time, as a provider of last resort for many of its customers.

Recon Analytics also asks its home internet respondents every week what kind of issues they experienced with their internet connection. Chart 2 is ordered top to bottom with how often respondents experienced an outage. The most common issue, which was internet connection going down, is at the bottom. Furthermore, it is also ordered from left to right by how often they experienced their internet connection going down.

Chart 2:

As we can see in Chart 2, most of the issues are in one of two groups: internet connection going down or slowing down, and router issues forcing people to reset their router or having devices disconnect from the network.

Cable providers had the most issues in all four categories. Up to 43% of respondents reported that their internet connection has been interrupted, while fiber and FWA customers reported the least problems in this category. The newer, better routers provided by fiber and FWA providers also caused fewer problems compared to the routers from cable companies and DSL providers. One fiber and DSL provider told me that once they went away from sourcing the cheapest router to providing an excellent router, it was a game changer for them. The change reduced customer service calls and churn and improved customer satisfaction, more than offsetting the cost of the better router.

How to create more and better home internet choices

As of right now, the Congress and the FCC have created meaningful competition through up to three new providers with up to four brands in the markets where mobile network operators have been able to launch their service. It is incredible that even though we have seen network speeds for some providers decrease from 200 and more Mbps to low 100s Mbps, cNPS scores have not declined. MNOs still have enough capacity to provide their customers with sufficient bandwidth for what customers describe as a superior experience. Verizon and T-Mobile said that they have enough capacity for 5 and 7 million customers respectively with their initial FWA build. They are two thirds to that goal and will probably reach it by the end of 2024. After that, it will become more difficult and expensive to find the necessary capacity to compete with cable and DSL providers as vigorously as they do today. FWA is the fastest growing segment of the home internet market, while cable subscriptions are decreasing.

The government has three options, but the choice is pretty clear: It can spend $80 billion on various fiber incentive programs (BEAD, RDOF, etc) to bring another provider to markets where there is no provider offering more than 100 Mbps speed. It can take $80 billion from the wireless carriers for more spectrum (C-Band Auction for 240 MHz yielded $81 billion) and get three new broadband competitors in the form of FWA providers. Or, it can do both and create more and better home internet choices for Americans with a net zero cost.

by Roger Entner

The launch of a new iPhone is still the most significant event in the wireless year. When consumers prepare to get their next iPhone, they are also undertaking a major financial decision and are often using that opportunity to evaluate new mobile service provider options. The different wireless carriers are engaging in different strategies for retaining and attracting customers who are getting a new iPhone. AT&T is offering the same deals for new and existing customers with almost every plan. T-Mobile requires customers to either add a line, upgrade their plan or be on their most expensive plan. Verizon is targeting only their best customers and new customers with the best offers.

The results are telling: AT&T’s John Stankey said during AT&T’s Q3 earnings call that AT&T “saw the strongest iPhone preorders we’ve had in many years.” Meanwhile, Verizon’s Hans Vestberg said during Verizon’s Q3 earnings call that “we continue to see muted upgrade levels.” T-Mobile’s Mike Sievert said customers don’t feel they need to take advantage of the device upgrades.

We can see in near real time how the respective carrier strategies materialize in the marketplace. We collected around 30,000 respondents between the iPhone 15 launch and last weekend, giving us faster and more in-depth data on what is happening than anyone else. Based on our data ending, 10/22/23 AT&T has the most iPhone 15 upgrades of any carrier despite being the smallest of the nationwide mobile network operators (MNO). Followed by T-Mobile, who had the lowest upgrade rate in the industry but it’s iPhone sales were buoyed by the highest net adds. They were trailed by Verizon, who is the largest MNO, with the second lowest upgrade rate and the lowest net adds. As one would expect, Xfinity and Spectrum are trailing the MNOs as they are offering significantly less generous device promotions.

iPhone Model Distribution by Carrier
Mobile Make ModelAT&TT-MobileVerizonXfinity / ComcastSpectrum / CharterOtherTotal
iPhone 153%4%6%<1%1%1%16%
iPhone 15 Plus3%1%3%<1%<1%<1%8%
iPhone 15 Pro11%10%8%2%<1%1%33%
iPhone 15 Pro Max15%14%10%1%1%2%43%
Total33%29%27%4%3%5%100%
Source: Recon Analytics Device Pulse   

The premium iPhone is becoming a super-premium product. We can see this with the heavy skew towards the iPhone 15 Pro and Pro Max, Apple’s most premium products. More than three quarters of all iPhone 15s are the two premium versions of the iPhone, with the Pro Max outselling the Pro. This shows the pricing power that Apple possesses as the cheapest iPhone 15 Pro Max was $100 more expensive than the iPhone 14 Pro Max but received a storage upgrade.

by Editorial Recon Analytics

By Daryl Schoolar

During the last week of September, GSMA, along with its partner CTIA, held their annual North America conference in Las Vegas. Given the regional focus of the conference, the news and activity coming from it pales in comparison to the Barcelona version. However, that does not mean MWC Las Vegas is without value. We had several meetings that alone made the event worth attending. Plus, some companies still use the conference as a platform for announcements, while the exhibit floor provides guidance on the state of mobile communications in North America.

Of the major U.S. mobile network service providers only T-Mobile and AT&T had a show floor presence this year, but that did not mean other mobile providers didn’t make their presence know. Some of the operator highlights and messages from MWC Las Vegas 2023 are as follows:

AT&T: The company’s booth was dedicated to enterprise solutions, with connected vehicles occupying significant space. This is fitting given that Hardmon Williams, SVP, Connected Solutions for AT&T, used his keynote session to announce the company is now the connectivity provider for electric car manufacturer Rivian. Hardmon also discussed the frequent software updates of electric cars, which in turn increases the importance of network connectivity to support those updates.

MobileX: The competitive outlook for the U.S. prepaid market should intensify with the announcement by MobileX that it will launch a prepaid service exclusively through a retail partnership with Walmart. The driving force behind MobileX is Peter Adderton who has a track record of launching successful prepaid brands with Boost in the U.S. and Australia. Walmart’s interest in working with MobileX appears to be a competitive move against its online rival Amazon and its recently announced sales partnership with Dish’s Boost offering.

NTT DoCoMo: On the first day of the show the Japanese mobile operator announced it will be deploying an Open vRAN solution using NVIDIA GPU for hardware acceleration. NVIDIA will be supporting both the X86 and the ARM architecture. This is significant, as it not only gives NVIDIA a major Open RAN win, but will help overall create more Open RAN deployment options.

T-Mobile: The established U.S. mobile operator T-Mobile captured the most attention at the show with its announcement of a SIM based SASE offering using network slicing. This marks the first commercial service offering using 5G network slicing in the U.S. T-Mobile’s slicing will go commercial later this year. This is an important step in 5G evolution, helping to prove commercial viability of slicing. To help grow slicing, T-Mobile CTO John Saw announced that the company has made network slicing available nationwide to application developers. T-Mobile also took full advantage of the exhibit floor to show multiple wireless enterprise solutions and to host public sessions inside its booth. It was one of the liveliest spots on the floor.

Verizon: Verizon did not make any specific service announcements at MWC Las Vegas, but it did release a statement at the start of the conference highlighting its progress in transforming its network and the subsequent benefits. Those highlights included fiber network investments, mid-band and mmWave spectrum coverage, 5G fixed wireless access, and cloud-native network transformation. Verizon Business CEO Kyle Malady used his time on stage at MWC to push back against FCC’s plan to reintroduce Net Neutrality, as a solution looking for a problem that does not exist. b

Of the three largest RAN suppliers in the region, only Nokia was on the floor. However, that doesn’t mean the conference lacked an infrastructure presence. Some of our vendor observations from the conference are as follows:

AWS: The company had a substantial presence on the show floor. Booth space was primarily dedicated to meetings and educational conversations regarding AWS’ telecom service provider and enterprise solutions. Digital transformation, and the role AWS can play in helping mobile operators with their transformation remains a strategic interest. Supporting that strategy, Sameer Vuyyuru, head of WW business development for communication service providers, gave a keynote presentation about how mobile operators are using GenAI to improve operations and customer experience.

Dell Technologies: From Dell’s hospitality suite overlooking the show floor the company promoted itself as the best option for operators looking for an IT hardware partner for building cloud-native networks. This includes servers to support Open RAN. Dell also participated in a private network demonstration with Airspan, Dish Networks, and Druid.

Nokia: As a sign of the shifting nature of network infrastructure, hardware specialist Nokia used its time at MWC Las Vegas to talk about software. Its message at the conference was “Network as Code” and participated in the open developer gateway conference held at the show. Nokia was also found at the GSMA booth demoing virtual reality to help drive interest in the mobile API opportunities.

Pivotal Commware: Pivotal Commware continues to focus on how to improve 5G mmWave economics through coverage extension and network planning and management tools. The company continues to make progress in this area indicating an increase in its U.S. deployments and that it is seeing its commercial opportunities expanding beyond the U.S.

Qualcomm: The company showed together with Quectel a 5G cellular module for laptops that can aggregate cellular and Wi-Fi signals. This is a nifty capability that focuses on the best performing link. In addition, Qualcomm continued its tradition of educating analysts about new market developments and technological innovations.

Beyond the specific vendors listed above, a significant percentage of vendor booth space remains dedicated to IoT, FWA, private networks, and indoor coverage solutions.

Realistically the U.S. version of MWC will never rival the Barcelona one. The U.S. version is mainly for North American operators and vendors while the one in Spain is global. That focus reduces participation. Vendors can bypass the show and still meet with customers and prospects. However, this does not mean the show should be written off. It remains a good source for one-on-one interactions and as a mid-year gauge of industry growth since Barcelona.

by Roger Entner

The world’s largest retailer created a unique partnership with Peter Adderton’s MobileX, making the new mobile provider an instant player in the prepaid business.

Walmart is the largest distribution channel for prepaid in the United States. At a minimum, due to its unique partnership, one would expect that MobileX will get appropriate exposure in Walmart stores and placement on Walmart+.

MobileX comes in two flavors: It is using AI to create a personalized plan for every customer or they can sign up for a very competitively priced unlimited plan. The AI plan starts at $4.08 per month with 1 GB of high-speed data, making it the lowest priced plan in the market. The $14.88 5G high-speed data plan is aimed at Mint Mobile, whereas the $24.88 30 GB plan – including Canada and Mexico – is aimed at Straight Talk and Boost Infinite.

The rivalry between Amazon and Walmart is as intense as it gets. Both companies – one being the largest online retailer, the other the largest physical retailer – are colliding. Amazon pushes into physical stores with Whole Foods, Walmart pushes into online retail with Walmart+. Both are eying the mobile market as a market of critical importance.

After Amazon struck a deal with Dish for Boost Infinite for Prime customers, it was only a matter of time – two months to be exact – before Walmart struck back with its exclusive MobileX deal.

Furthermore, one can imagine that Walmart, as the largest prepaid retailer in the United States, needed to broaden its product portfolio. Walmart’s long-standing partner TracFone has languished ever since the legendary FJ Pollak got sick and passed away. Now that Verizon has acquired TracFone, things have gone from okay to worse. TracFone’s share has shrunk and Total, a brand that was launched in Walmart, has been repurposed to be a standalone brand with more than 2,000 retail stores.

Mint Mobile, another up and coming prepaid brand with more than 1.5 million customers, is being acquired by T-Mobile. Boost Mobile, due to Dish’s close relationship with Amazon, has a sudden onset of the bubonic plague in the eyes of the folks from Bentonville, Arkansas. This makes the prepaid market suddenly a consolidated market whereas Walmart is looking for a large number of independent choices for their customers to choose from.

Just in time, Australian maverick Peter Adderton enters the stage with a new way of offering wireless and creating a new choice that is not owned by one of the three mobile network operators. Getting an independent brand like MobileX is a smart move from Walmart as it gives its customers more choice and strengthens its bargaining position vis-à-vis all other partners.

Adderton rose to fame in the United States by launching Boost Mobile. While he sold Boost Mobile in the U.S. to Sprint, he kept Boost Mobile in Australia, where it is the largest MVNO. Being a loud and boisterous voice gives him an outsized social media presence and his operational chops give him the credibility to successfully launch another mobile brand – if he’s done it twice before, he can also do it a third time.

When scouring for hints in the press release the word “unique” stands out. Knowing the players in a market personally allows us to better understand the motivations and actions. Numbers and facts tell you some of the guard rails, but they don’t make decisions; people do with their idiosyncrasies and personal values.

I am finding it hard to believe that Adderton would give up exclusivity, even to Walmart, for a distribution partnership. Such an exclusive retail partnership created an almost 10 million subscriber Straight Talk brand and was the backbone for the remaining 11 million TracFone customers. I personally believe there is more to the story than what is in the press release, but only time will tell the exact terms of the deal between Walmart and MobileX.

With all three mobile network operators increasing prices for their legacy customers, with Verizon and T-Mobile even increasing headline prices, there is an opening for lower price options. The success of Charter and Comcast taking significant share in postpaid is a testament that price is the largest purchase decision factor. Not everyone is willing or able to pay $95 per month for a single line.

At the same time, not everyone lives in the Charter or Comcast territory or has persistent heartburn from past exposure to their customer service on the fixed side. This creates significant opening for independent fighter brands like MobileX, especially when they have the backing of a large retail organization like Walmart. Ninety percent of the U.S. population is within 10 miles of a Walmart store. It instantly solves the physical distribution problem that most wireless brands have as online is just not enough.

Despite a more than a decade push by the carriers, the share of online sales of wireless stubbornly stays below 20%. The percentage of online sales of mattresses is roughly twice as high. At the same time, physical retail is expensive, with the average store costing between $1 million and $2 million to open. When you multiply that by a thousand or more stores, you suddenly are talking about real money.

by Roger Entner

Recon Analytics recently conducted the largest survey run to date to assess whether consumers eligible for the Affordable Connectivity Program (ACP) are actually enrolling and if so, what they are using their ACP funds for.  

We conducted nationwide consumer surveys among ACP-eligible Americans from April 28 – May 5, and August 18 – 27, 2023. We asked 29,141 ACP eligible Americans if they use ACP, and if so for what. 

We were not at all surprised with our survey findings, but some policymakers might be.

Recall that ACP is a program that provides “eligible” Americans $30 per household for internet connectivity.  Who is eligible?  Figure 1 sets forth the categories of citizens eligible for ACP.  These “categories” of low income individuals are from existing federal government subsidy programs.

Figure 1

Of the almost 53 million ACP-eligible households, more than 20 million have signed up. The states with the highest number of consumers receiving ACP subsidies are “red” states Louisiana, Ohio, Kentucky, and North Carolina.  

The program is currently set to expire in early 2024 absent additional funding by Congress.The big question inside the Beltway is whether funding the ACP is a good use of taxpayer dollars.  The ReconAnalytics survey indicates that if Congress is interested in seeing itself reelected, extending the ACP funding might be a good idea.

The Data Says ACP is Working to Close the Digital Divide … Among Republican Voters

When we compare ACP enrollment across red states and blue states (defined by the party who won the last senatorial election in the state) , we observe that the percentage of households which would lose access to the internet is higher in red states than in blue.  39% of ACP enrollees live in Red States and  34% live in blue states.  Members of Congress ignore this reality at their peril.

But what about the enrollees, what are they using their ACP subsidy for?  Consider that the largest proportion of households at risk of losing ACP are ones with school-age children.  No surprise then that our survey reveals that these same households use their ACP subsidy for school work online.

In aggregate, about 55% of respondents who told us they would be unable to access the internet without ACP were white, 16% Hispanic, 12% black, 9% Asian, 6% Native American or Pacific Islanders and 2% were of another race.

Figure 2 – ACP Enrollees by Race, Ethnicity, Age and Income Distribution

Full Time Period     
Income$0-10k$10-25k$25-50k$50-75kTotal
Not able to access the internet w/o ACP36.2%39.2%34.8%28.4%36.2%
Race & Ethnicity Distribution     
White47.9%59.2%57.5%48.9%54.5%
Hispanic18.8%14.1%17.5%15.3%16.3%
Black15.8%10.6%11.0%13.4%12.3%
Asian9.2%7.4%6.7%15.3%9.1%
Native American & Pacific Islander5.4%6.9%4.4%5.3%5.5%
Other2.9%1.9%3.0%1.9%2.4%
Age Distribution     
18-2931.0%15.9%20.5%22.5%21.5%
30-4426.4%21.2%33.6%45.0%31.0%
45-6034.3%40.5%32.9%25.6%33.9%
>608.3%22.5%13.0%6.9%13.6%

In Figure 3, we are looking at the activities that ACP households in general and in Figure 5, ACP households that would lose internet access but for ACP, are engaged in.

We show the data for both survey waves to highlight the consistency of the results over time. The two most used applications for their ACP connections are personal communications and banking, payments, investments and personal finance. In other words, ACP subscribers are using their subsidy to allow them to connect to the Internet and engage in the digital economy, whether it’s paying their bills or buying school supplies for their children.  Almost a quarter of ACP recipients use their internet connection for purchases, more than one in five (22%) need their internet connection for work, one in five (19%) for online education, and one in 8 (12%) to access government programs.

Figure 3: Behavior pattern of ACP-eligible Americans regardless of ACP participation

Figure 5 shows the impact of losing ACP. It also shows what applications really matter to people who critically depend on ACP for their broadband connection.  Banking and financial transactions, education and access to government programs are priorities for these citizens.

Almost half of ACP recipients would lose internet access altogether if ACP were to go away. 

This potential outcome presents a Catch-22: the government has pushed many programs online as a cheaper way to deliver services to low-income Americans.  Due to ACP,  22% of the targeted beneficiaries of this policy are receiving those services.  If ACP goes unfunded, 22% of the the very Americans Congress says it wants to help out of poverty will be stranded.

Seems like ACP is working but perhaps will be so effective, Congress will kill it, but at their peril.

by Roger Entner

One of the key questions around the happiest and unhappiest home internet counties is where they are and what the driver is behind the happiness and unhappiness. Every week, we ask our respondents a battery of questions around how satisfied they are with the service they receive. After surveying more than three hundred and thirty thousand respondents later, we have respondents from 2,368 counties out of 3,142 in the United States telling us are telling us where the happiest and unhappiest broadband customers in the United States and allows us to determine the root cause behind their experience.

Questions that we aim to answer include: Why is home internet service in some places better than in others? Will the famous opening lines of Leo Tolstoy’s book Anna Karenina – “All happy families are alike; each unhappy family is unhappy in its own way” –  be applicable here? Are the larger observable trends, where fixed wireless NPS outperforms Fiber – which outperforms cable, which beats DSL and WISPs – be consistent in a granular county-by-county perspective? Does it matter if a county is in a blue state or a red state? Is the size of a provider any indication that the home internet customers in a county are happier or unhappier? Let’s just say that counties do not show the same behavior as Tolstoy’s families: it all comes down to local execution.

Let’s get politics out of the way first: Five of the ten unhappiest and five of the ten happiest counties are in states that are considered “Republican” and “Democratic”, respectively. Neither party’s approach to how they interact with home internet providers has had an impact on the distribution of the ten happiest and unhappiest counties.

Below is a map of the ten unhappiest home broadband counties in the United States with at least 100 respondents to ensure statistical veracity.

Interestingly, all the counties where the unhappiest home broadband customers are residing are rural counties with one exception: Indian River County, FL, the home of Vero Beach. This county, which is largely suburban, has the fourth highest concentration of millionaires on the United States. The population range per county is between 25,000 and 180,000 people. They are being served by between two providers in Barnstable County, MA and 14 providers in Jasper County, MO, which tells us that limited or significant choice is not a driver of unhappiness, especially when all of the counties are served by all technologies from fiber to DSL. Even if we controlled for coverage, we had some counties where there was fiber coverage in every ZIP-code (we did not check if every physical address was covered) like Georgetown County, South Carolina, Indian River County, FL, or Crook County, OR to where almost none of the ZIP-codes in a county, like Barnstable County, MA, were covered by fiber. These type of systemic, technology-driven or industry structural reasons are not providing the answer, despite being commonly accepted truths. In four of the ten unhappiest counties, membered own co-operatives which are typically non-profits were active.

We then looked at the happiest home broadband counties in the United States. The map confounds the expectations of many.

Who would have thought that four of the happiest broadband counties are in the rural South of Tennessee, Alabama and West Virginia? Nine of the ten happiest counties are rural. In six of the ten happiest counties, coops are active, but not in the happiest broadband county, Mercer County, WV. The poster child for municipal broadband, Chattanooga, TN, comes in as the 9th happiest home internet place in the country. The happiest county, Mercer County, WV does not have any coops providing telecom services there. In six of the happiest and four of the unhappiest broadband counties, coops are providing service. The mere presence of coops is providing better services, as the feedback we receive from customers ranges from terrific to terrible. Fiber or Cable coverage is also not playing a determining role.

The other fascinating insight is what is missing from the list: major urban markets. The idea that urban markets get all the investment because they are densely populated and cheaper to service, and therefore have the happiest broadband customers, is just not reflected in the data. At the same time, the rival argument that urban areas are dystopic wastelands with horrible broadband service is equally not supported by the data.

In the end, we found that what really matters is the individual performance of a provider in a given county. Below are the NPS scores for the providers with at least 20 respondents in each county where we had at least 100 respondents overall.

Almost all the providers displayed uneven performance. The same provider that performed very well in some counties performed poorly in others. Cable providers like Comcast and Charter performed very well in some counties. Comcast’s exceptionally good performance made Mercer County, WV the happiest broadband county. Equally, its poor performance in Barnstable County, MA and Whatcom County, WA made them the second and third unhappiest broadband counties. Only AT&T Fiber performed consistently well in the ten happiest counties and was not present in the unhappiest.

Additionally, 5G fixed wireless service did not make an impact on the happiest and unhappiest broadband counties. While in some of the counties there is 5G fixed wireless service, the adoption numbers were so low that they didn’t make an impact on the overall happiness of broadband customers.

Our research shows that every provider is able to do excellent work and make their customers happy. Considering that the nationwide providers engage in nationwide standard pricing, the satisfaction score differences are not driven by low price, but by actual performance. Technology helps, but the key is local execution.  Providers could improve their performance in markets by internally benchmarking their performance and extending best practices throughout the entire organization. Regulators should look at how satisfied the customers of applicants are before the allocate their broadband subsidies to expand services. If they have multiple applicants for subsidies, they should be given to the providers who deliver for the taxpayers, who provided the funds through taxes in the first place.