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USDOT Criticizes Verizon’s Progress on $2.4 Billion FAA Telecom Contract

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U.S. Transportation Secretary Sean Duffy expressed concerns on Tuesday that Verizon is “not moving fast enough” on its $2.4 billion, 15-year telecom contract with the Federal Aviation Administration (FAA). Duffy’s comments come as he plans to request tens of billions of dollars from Congress to reform air traffic control systems.

“I want companies that want to move fast,” Duffy stated at a press conference. “I can’t wait 10 years… The American people can’t wait 10 years or 12 years to lay fiber.” The remarks followed last week’s announcement from Elon Musk’s Starlink, which denied media reports suggesting it sought to take over the Verizon FAA contract.

In response, Verizon assured it is working closely with the FAA to create an advanced, safer national air traffic control system. The company emphasized its willingness to collaborate with other firms that could offer complementary services to the new communications network, and noted that their solutions are ready for deployment.

Duffy stressed the urgency of addressing aging air traffic control systems, saying, “It’s not going to be one company. We’re going to need a lot of companies to buy in and help build up the system.” Last week, SpaceX clarified that Starlink had no intention of overtaking any existing FAA telecom contract. The company explained that Starlink could serve as a partial fix to the aging system, but emphasized it was not seeking to assume control of the contract.

The Government Accountability Office (GAO) has warned that the FAA must urgently act on its outdated air traffic control systems, with one-third deemed unsustainable. There are also suggestions among some Democrats that the FAA could cancel the Verizon contract and offer it to Starlink due to Musk’s close ties to President Donald Trump. Musk, leading a federal cost-cutting operation, has previously criticized the current FAA telecom system.

The FAA has recently tested three Starlink terminals at a government facility in Alaska to improve weather information access for pilots and the FAA.

Verizon’s Warning on Slow Subscriber Growth Triggers Telecom Selloff

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Verizon Communications issued a warning about “soft” wireless subscriber growth in the first quarter, citing off-season promotions by competitors that have continued despite the typically slow post-holiday period. The announcement caused Verizon’s shares to plunge more than 7% on Tuesday, sparking a broader selloff in the U.S. telecom sector.

Chief Revenue Officer Frank Boulben, speaking at Deutsche Bank’s Media, Internet & Telecom Conference, noted that Verizon pulled back on customer incentives after an aggressive December quarter, while rivals maintained their promotional strategies, intensifying competition.

AT&T shares fell 5.3% as the company also reported elevated subscriber churn in January, while T-Mobile US saw a 4% decline. Analysts point to a shrinking pool of potential new mobile subscribers in an increasingly saturated market, with broadband giants like Comcast stepping up competition by targeting wireless customers.

Verizon also flagged a “slow start” for phone upgrades in the first quarter, attributing it to economic uncertainty and a lack of major new smartphone features. However, the company reaffirmed its annual target for single-digit growth in phone upgrades and expects a stronger rebound later in the year. Verizon anticipates adding more monthly-bill paying wireless subscribers in 2025 than the 900,000 it gained in 2024, supported by its customizable myPlan offerings.

Minimal Impact from Immigration Crackdown

Verizon and AT&T downplayed concerns about potential customer losses due to tighter U.S. immigration policies. President Donald Trump’s administration has intensified immigration enforcement, raising concerns about a reduced pool of new telecom customers. However, Boulben stated that any impact would be minimal, primarily affecting the low-end prepaid market rather than postpaid contracts that require formal identification.

Limited Threat from Satellite Internet

Both Verizon and AT&T dismissed concerns over competition from satellite internet providers like SpaceX’s Starlink, emphasizing that traditional wireless services remain more reliable and cost-effective. AT&T CFO Pascal Desroches acknowledged the potential of satellite-to-cell connectivity but described it as a limited business opportunity at present.

Meanwhile, T-Mobile has announced plans to launch its satellite-to-cell service with Starlink in July, priced at $15 per month.

Musk’s Starlink Denies Intent to Take Over FAA Air Traffic Contract

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SpaceX, the rocket company owned by Elon Musk, has denied media reports suggesting that its Starlink satellite unit intends to take over any Federal Aviation Administration (FAA) telecommunications contract. On Wednesday, SpaceX clarified that Starlink’s role is to potentially serve as a partial solution to the FAA’s aging system.

“Starlink is a possible partial fix to an aging system. There is no effort or intent for Starlink to ‘take over’ any existing contract,” SpaceX stated on X (formerly Twitter). The company further explained that it is working alongside L3Harris Technologies and the FAA to explore how Starlink could enhance aviation safety by upgrading infrastructure.

The FAA confirmed it is testing Starlink systems at various sites as part of a broader effort to modernize the U.S. air traffic control infrastructure, which has been deemed outdated. The Government Accountability Office (GAO) has warned that about one-third of the FAA’s air traffic control systems are unsustainable and in need of urgent replacement.

The FAA emphasized that it is testing Starlink and other technologies through its Telecommunications Infrastructure program, managed under a contract with L3Harris. While reports have suggested that Starlink could potentially replace Verizon’s existing $2.4 billion contract, the FAA has stated that no decision on the contract’s future has been made yet.

The testing of Starlink at FAA facilities, including those in Alaska, Oklahoma City, and Atlantic City, is part of efforts to improve communication systems and restore reliable access to weather information for pilots.

Transportation Secretary Sean Duffy also highlighted that while Starlink could be a part of the solution, it is not the sole answer to the FAA’s modernization needs.