Space Exploration Technologies Corp. (NASDAQ: SPCX) could pose an increasing competitive challenge to terrestrial broadband providers, particularly in rural and lower-density markets, according to a Tuesday note from MoffettNathanson analyst Craig Moffett.

Moffett told CNBC that SpaceX’s Starlink presents a more significant competitive challenge to terrestrial broadband providers like 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 analyst characterized the terrestrial broadband business as a "credible product" that is already having a significant impact.

The analyst noted that investors are currently assessing whether Starlink’s impact will remain concentrated in rural and low-density markets or expand into suburban and potentially urban areas. Moffett stated that while the technology is best suited for rural markets, it can also serve customers in denser areas.

The deployment of higher-capacity V3 satellites marks a key development for the service. SpaceX’s first Starship orbital flight 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, estimating that it will be after 2030 before most of the Starlink constellation consists of V3 satellites.

Even with V3 satellites, Moffett does not expect Starlink to match the speeds offered by terrestrial fiber or cable broadband. He suggested that Starlink could compete more effectively for value-oriented customers who prioritize lower costs over maximum broadband performance.

Moffett compared Starlink’s challenge to the pressure Comcast and Charter already face from fixed wireless access. To counter this, the cable operators have responded by bundling broadband with wireless services, a strategy Moffett said has proven relatively successful.

According to Benzinga Pro data, SpaceX shares were down 0.20% at $148.94 during premarket trading on Wednesday.