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Satellite

Did Elon Musk just upstage Tim Cook's big iPhone 14 surprise?

The world's richest human being – Elon Musk, worth an estimated $265 billion – yesterday said he plans to start launching new satellites next year that can connect directly to existing mobile phones on Earth.

Separately, the world's most valuable company – Apple, with a market cap of $2.7 trillion – is widely expected to introduce a new iPhone next month that can directly connect to satellites.

(Source: NASA)
(Source: NASA)

And the fortunes of some of the world's biggest wireless network operators have become caught up in this gamesmanship. For example, T-Mobile yesterday said it will support Musk's satellite plans in the US by allocating a slice of its PCS spectrum holdings to the offering and by rallying messaging providers to the service. Potentially as a result, T-Mobile's market capitalization passed that of Verizon for the first time ever. As noted by the Wall Street Journal, T-Mobile's market cap reached $183.68 billion in trading Thursday, just above Verizon's $183.40 billion.

However, it's still very early days in the 5G race to space. But the technology's potential is clearly as tantalizing to investors and company executives as it is to backcountry travelers keen to stay connected in the event of an emergency.

Tim Cook's Globalstar surprise

Apple CEO Tim Cook has reportedly been working on a satellite gambit for years. For example, at the end of 2019, Bloomberg reported that Cook was personally interested in an Apple research project that would use satellites to bypass terrestrial wireless networks.

Those rumors gained steam last year when TF International Securities analyst Ming-Chi Kuo issued a note to investors speculating that Apple's iPhone 13 would feature a "customized" X60 chip from Qualcomm that could connect to Globalstar's low-Earth orbit (LEO) satellites.

The rumor mill went into overdrive earlier this week when Apple officially announced an iPhone event on September 7 with a space-themed invite teasing something "far out."

For its part, Globalstar recently announced better-than-expected second quarter results, and its stock continued to climb. The financial analysts at B. Riley Securities believe rumors of a Globalstar deal with Apple are driving investors to the company's shares. "We attribute ... Globalstar's outperformance to the mystery 'potential' wholesale satellite capacity customer – which we suspect is Apple – which comprised $8.8 million of Globalstar's $9.5 million engineering and other service revenue in the period ... Globalstar is marching forward steadfastly with this customer."

According to analyst Tim Farrar with TMF Associates, Apple will likely use Globalstar's Band 53 spectrum holdings – an 11.5MHz slice of the 2.4GHz band – to offer free messaging services on its new iPhones. Considering Globalstar already operates satellites with that capability, complete with the necessary regulatory approvals, Farrar believes Apple's satellite-based iPhone messaging service "should begin as soon as the new phone is released."

Musk's showmanship

So why would Musk announce his own satellite-to-phone service now? After all, he has neither the regulatory approvals for Starlink's second-generation satellites nor the launch vehicle necessary to get them into orbit. And it's not clear whether he'll get that by next year, as he hopes.

"It's just that at a valuation of $130 billion, you need to keep coming up with new opportunities before it becomes clear what the limits to growth are for the existing business," Farrar wrote of Musk's SpaceX and Starlink businesses.

Indeed, Starlink recently suffered a major setback when the FCC rejected the company's application for almost $900 million in government subsidies. The agency ruled that Starlink's service likely wouldn't be able to meet the agency's speed and service requirements.

Of course, Musk has been known to make outsized promises during media events for his various companies. For example, he promised to operate 1 million robot taxis by the end of 2020, but that hasn't happened. Musk also promised to sell the Tesla Cybertruck in 2021 but now expects to do so in 2023.

AT&T and Verizon waiting in the wings

For better or worse, T-Mobile is now tied up with Musk's latest Starlink gambit. Meanwhile, Verizon and AT&T each have their own satellite plans: Verizon plans to use Amazon's planned Project Kuiper satellites to connect its rural cell towers to the Internet, and AT&T is planning a similar setup with OneWeb's own growing constellation of low-Earth orbit (LEO) satellites.

And those aren't their only options. As Light Reading first reported in 2020, AT&T agreed to let startup AST SpaceMobile use its Band 5 spectrum to test transmissions from its BlueWalker 1 satellite to devices on the ground. AST SpaceMobile is now hoping to launch its new BlueWalker 3 prototype later next month. However, as reported by SpaceNews, supply chain issues delayed the launch of AST SpaceMobile's first operational satellite by about six months, to late 2023.

But AST SpaceMobile is working to maintain a positive outlook. "Elon [Musk] and Mike [Sievert, of T-Mobile] helped the world focus attention on the huge market opportunity for SpaceMobile, the only planned space-based cellular broadband network," AST SpaceMobile CEO Abel Avellan wrote on LinkedIn yesterday. "BlueWalker 3 ... is scheduled for launch within weeks!"

AST SpaceMobile is relying on SpaceX's rockets to get its satellites into orbit, having pivoted away from a plan to use Russian rockets after Russia's invasion of Ukraine.

Meanwhile, AST SpaceMobile's main rival, Lynk, already has one operational satellite in orbit for phone connections. As noted by Ars Technica, the company is hoping to receive FCC approval to offer satellite-to-phone services across 35 countries by the end of this year.

"Elon said it's hard, and it's only been done in the lab, but Lynk has done it in space already," Lynk's Charles Miller told the publication yesterday. "We're the only company in the world that has done that."

Lynk hasn't yet announced an agreement with a major US operator, though it has agreements with a number of international operators. However, as Light Reading previously reported, Lynk tested its services in the US with Smith Bagley, a tiny wireless network operator offering services under the Cellular One brand in East Arizona.

Broadly, according to the financial analysts at Raymond James, all the recent developments on the satellite front indicate that progress is slowly but surely being made. "There are significant regulatory hurdles to clear, as the FCC is reviewing SpaceX's request to launch a constellation of 30,000 Gen2 satellites, while other LEO proposals including Amazon's Project Kuiper (with whom Verizon is collaborating) and AST SpaceMobile (financial backing from Vodafone and a commercial agreement with AT&T) are also working DC as well as international agencies to put some rules in place for this latest chapter of the Space Race," they wrote in a note to investors.

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Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

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