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The cost and time required for SpaceX to build a nationwide action network on its own may be too high and too long. But major wireless telecom carriers can only hope that their competitors won’t betray them. Musk’s SpaceX has been heavily promoting its grand telecom market blueprint. Since T-Mobile and Sprint merged in 2020, the U.S. wireless communications market has maintained a stable oligopoly structure. But recently, investors have been worried that Musk’s SpaceX plan could upend the market’s previously stable order for telecom services. SpaceX (SPCX)’s Starlink business currently mainly targets rural areas. However, the company’s May initial public offering prospectus shows that its Starlink mobile plan also aims to massively penetrate suburban and city markets, with the goal of providing better network connectivity than ground-based cell towers. Building such a network sounds easy but is difficult in practice: it requires a great deal of time and spectrum resources. And this also assumes that SpaceX is willing to carry out extensive procurement and construction work itself. Its other option is to reach an agreement with one of the existing major operators to buy network capacity. Such an agreement is likely to trigger a fierce industry-wide price war and a customer battle—which is also the main reason the three major operators have vowed not to sign such cooperation deals.

Senior executives at traditional wireless telecom providers generally dismiss the threat from Starlink. T-Mobile US (TMUS) CFO Peter Oswaldic told MarketWatch earlier this week: “SpaceX’s neighborhood-focused satellite constellation will never be an effective competitive threat to a mobile network.” Verizon Communications (VZ) CEO Dan Schulman added during the company’s quarterly earnings call on Friday: “That’s basically impossible, because of the limits of physical law.” “It’s very difficult for a satellite provider to offer services comparable to our broadband services.”

Even so, investor unease has been evident in recent months. Since SpaceX filed its IPO application publicly in May, AT&T (T)’s stock price has fallen 8%, Verizon’s has dropped 8% in the same period, and T-Mobile’s has fallen 10%. SpaceX is not the only threat facing these wireless operators—they also have to deal with higher interest rates and intense price competition among carriers. But a Morningstar analyst says they doubt SpaceX’s threat is the primary reason behind valuation pressure.

Telecom companies aren’t afraid. The wireless industry is dominated by a small number of large companies for good reason. Effective competition is costly: it requires ongoing participation in spectrum auctions and continuous investment to strengthen network competitiveness. According to MoffettNathanson analyst, the path to SpaceX’s grand connectivity vision is filled with multi-billion-dollar hurdles and will take decades to catch up. Their recent research highlights that Starlink’s satellite spectrum capacity still falls far short of what’s needed for terrestrial connection speeds. Even if SpaceX spent $19.6 billion last fall to buy 65MHz of spectrum from EchoStar (ECHO), its low-band and mid-band spectrum capabilities still lag far behind the three major operators. MoffettNathanson estimates that the three major operators’ spectrum capacity is still 10 times that of SpaceX. Low-band spectrum can transmit over long distances and penetrates well, but it is slower. Mid-band is faster and supports more data transmission, but it covers shorter distances and has weaker ability to penetrate thick walls. Wireless operators need a balanced spectrum portfolio in order to effectively meet customer needs.