Space Exploration Technologies Corp. (NASDAQ: SPCX) could pose a growing threat to terrestrial broadband providers, particularly in rural and lower-density markets, MoffettNathanson analyst Craig Moffett said Tuesday as Starlink begins deploying higher-capacity V3 satellites.

Starlink Poses Bigger Threat to Comcast and Charter

The analyst sees SpaceX's Starlink becoming a more credible competitor to terrestrial broadband as Starship enables higher-capacity satellite deployments, although he expects fiber and cable networks to retain important speed advantages.

Moffett told CNBC that Starlink presents a much greater competitive challenge to terrestrial broadband providers such as Comcast Corp. (NASDAQ: CMCSA) and Charter Communications Inc. (NASDAQ: CHTR) than to traditional wireless carriers such as AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ).

"The terrestrial broadband business where they deliver ISP service is a very credible product and will have a direct impact. It already is having a significant impact," Moffett said.

Investors are now trying to determine whether Starlink's impact will remain concentrated in rural and low-density markets or expand further into suburban and potentially some urban areas.

Moffett said the technology remains best suited to rural markets but can also serve some customers in denser areas.

V3 Satellites Strengthen Starlink's Offering

SpaceX's first Starship orbital flight marked an important milestone because the rocket deployed 26 V3 Starlink satellites, which Moffett said carry substantially more capacity and should improve the service.

However, he expects the transition to take time. Moffett said it will be after 2030 before most of the Starlink constellation consists of V3 satellites.

Even with V3 satellites, he does not expect Starlink to match the speeds offered by terrestrial fiber or cable broadband.

That leaves pricing and customer segmentation as major competitive factors. Starlink could compete more effectively for value-oriented customers who prioritize lower costs over maximum broadband performance.

Cable Providers Counter With Bundles

Moffett compared Starlink's challenge with the pressure Comcast and Charter already face from fixed wireless access.

The cable operators have responded by bundling broadband with wireless services, a strategy Moffett said has proven relatively successful.

The key question is how far Starlink can expand beyond its natural strength in rural markets and take customers from traditional broadband providers without matching the speed and quality of fiber and cable networks.

Price Action

SPCX Price Action: SpaceX shares were down 0.20% at $148.94 during premarket trading on Wednesday, according to market data.