The question of satellites replacing cell towers is the latest debate in the wireless industry, and for landowners weighing a cell tower lease sale or buyout offer, the answer carries real financial stakes. Cell site lease aggregators sometimes raise satellite competition as a reason to move quickly on a sale, but a close look at what satellite direct-to-device (D2D) service actually entails tells a different story.
Direct-to-Device Service Is Already Here, but It Has Limits
T-Mobile was the first major U.S. carrier to commercialize D2D satellite service, partnering with SpaceX’s Starlink to launch T-Satellite. That arrangement included an exclusivity window for T-Mobile that industry analysts expect to expire sometime this year, which would open the door for SpaceX to negotiate with AT&T or Verizon as well. AT&T and Verizon have taken a different path, investing instead in AST SpaceMobile, a competing satellite operator building large antenna arrays designed to connect standard smartphones without any hardware modification. Both approaches aim at the same goal: filling coverage gaps where no terrestrial tower exists, a different proposition than replacing the towers already in place.
MVNO or MNO? A Distinction That Matters
Understanding the satellite debate requires understanding two acronyms. A mobile network operator, or MNO, such as AT&T, Verizon, or T-Mobile, owns and operates its own physical network, including towers, spectrum licenses, and the infrastructure connecting them. A mobile virtual network operator, or MVNO, owns none of that and instead leases network access from an MNO to resell service under its own brand. For Starlink to compete directly with the established carriers, rather than simply supplying a supplemental satellite layer, it would most likely need an MVNO agreement, or it would need to build a terrestrial network of its own.
None of the three major carriers has agreed to that arrangement, and all three have publicly said no to an MVNO with Starlink. Elon Musk addressed the topic directly in a past interview, stating that the established carriers are not going anywhere because, in his words, “they’re still going to be around because they own a lot of spectrum”. Whether Musk could eventually buy one of the carriers outright is a separate question he has not ruled out, but it is a far different proposition than satellites quietly displacing the cell towers that exist today. Cutting against potentially buying one of the three existing carriers is SpaceX’s historic record-setting IPO. SpaceX currently relies on Starlink as its only profitable division, meaning that acquiring a legacy terrestrial telecom company may risk dragging the company down to a traditional telecom multiple and destroying its unprecedented and unexplainable premium growth valuation.
A New Joint Venture
AT&T, T-Mobile, and Verizon recently announced plans to form a joint venture aimed at pooling spectrum resources to help close remaining wireless dead zones across the country. The announcement is significant, but it remains an agreement in principle rather than a signed deal, and any final structure will likely draw scrutiny from the Department of Justice, since three competitors coordinating in this way raises collusion concerns. Many observers read the venture as a defensive move designed to keep satellite providers in a supporting role rather than letting any single operator, including SpaceX, gain outsized leverage.
What the Carriers’ Own Numbers Show
T-Mobile has disclosed that based on May 2026 usage, satellite traffic accounts for roughly 0.0002 percent of its total network usage, a figure its leadership has called proof that D2D service is a fundamentally complementary category rather than a substitute for terrestrial coverage. Verizon’s leadership has estimated that around 5 million U.S. homes might be better served by satellite than by a terrestrial connection, but for the remaining 95 percent or more of customers, terrestrial networks remain roughly 100 to 1,000 times more efficient at delivering capacity in urban and suburban environments. AT&T’s finance leadership has framed the math similarly, noting that fiber, cable, fixed wireless, and terrestrial wireless infrastructure already reach about 99 percent of the U.S. population, leaving satellite to serve the remaining 1 percent in areas where building traditional infrastructure is not economical. For now, most real-world D2D usage remains concentrated in places like national parks and other remote areas where no terrestrial signal reaches at all.
Satellite Shortcomings
Satellites face several technical limitations that make them unlikely to replace traditional cell towers even in rural markets. Direct line of site between the handheld device and a satellite is typically a requirement for the service to function, which could impose severe limits on its usefulness indoors or in urban areas. Latency remains a persistent issue, as low-earth orbit systems have improved on geostationary predecessors but still introduce delays that degrade voice quality and real-time applications compared to ground-based infrastructure. Cell towers, by contrast, typically backhaul traffic over fiber or microwave links, delivering low-latency, high-capacity connections to the core network that satellite return links cannot match. Capacity is also constrained, as satellites must share bandwidth across wide footprints, meaning congestion grows as subscriber density increases. Satellites serve as a useful complement in truly remote areas where tower buildout is economically infeasible, but they are not a substitute for the coverage, capacity, and device compatibility that terrestrial infrastructure provides.
Remember, part of the thought behind the idea of SpaceX/Starlink potentially taking over one of the existing carriers in the United States is because a full-fledged competitor would still need terrestrial infrastructure to realistically compete, even if they also provide services via satellite. Building an independent terrestrial network to compete with the three major carriers is enormously expensive, a lesson DISH Wireless learned firsthand after its own buildout effort to become a fourth national carrier fell short.
Companies like Starlink also lack direct contractual relationships with handset manufacturers and has not built the mobile distribution, billing, and roaming systems for mobile phone services a true competing carrier would need. Spectrum depth, indoor coverage, and handset radio compatibility continue to favor terrestrial networks, particularly in the dense areas where most people live and work. Some financial analysts believe an eventual MVNO agreement between Starlink and one of the major carriers is inevitable, but inevitability on that front is not the same as satellites making ground-based towers obsolete.
What This Means If You Own the Land Under a Cell Tower
None of this is a reason to dismiss satellite competition entirely, but it is a reason to question anyone using satellites as leverage in a buyout or lease negotiation. A pitch along the lines of “take the cash now, because satellites are coming for terrestrial towers”, does not match what the carriers are telling investors and analysts. And one should ask themselves, “Why would an infrastructure company or lease aggregator want to make a significant investment and buy out a cell tower lease for decades, or even in perpetuity, if they think that infrastructure is going to become obsolete in the near term, which would evaporate the revenue stream they are acquiring?” They likely don’t actually believe that, and they know there is still long term value in existing terrestrial infrastructure.
Before accepting an offer built on that premise, property owners should have the underlying lease and the offer reviewed by someone who understands both the technology and the legal terms at stake. If you have questions about a cell tower lease, a buyout offer, or a renewal affected by these developments, contact Coastal Tower Law to discuss your options.