A financial dustup between Globalstar and EchoStar could pave the way for a deal between Apple and Dish Network. That's just one of many machinations in the burgeoning phone-to-satellite market.

Mike Dano, Editorial Director, 5G & Mobile Strategies

February 9, 2023

6 Min Read
The race to space is getting pretty wild

The most interesting battle in the cellular industry is playing out across the sky. Apple, Dish Network, Viasat, AST SpaceMobile and Globalstar are among the many companies beginning to compete against one another in the race to connect mobile phones directly to satellites.

If you don't think that's interesting enough, one of the latest skirmishes in this rapidly evolving battlefield involves some of the richest men in the world – Charlie Ergen, Tim Cook, Jay Monroe and, potentially, Elon Musk.

At issue in this latest dustup is a loan to Globalstar (Apple's satellite vendor) backed by EchoStar (majority owned by Ergen). And though the details are very much in the weeds, the issues involved are significant.

The development also helps to reflect the significant opportunities and challenges involved in the nascent, burgeoning market for phone-to-satellite connections.

Exploring financing

Jay Monroe's Globalstar "cannot currently predict whether, and on what terms, any such financing will be available, but maximizing shareholder value is the driving consideration," the company warned in a recent SEC filing.

That obscure financial language hides a potential conflict between Ergen's EchoStar and Cook's Apple. Thankfully analyst Tim Farrar with TMF Associates offered an insider's guide to the situation on his website, explaining that Globalstar can't access the $450 million Apple plans to plow into the company until it refinances the terms of the $150 million it owes to Ergen's EchoStar.

"So what happens next? The statement in the 8-K [SEC filing] ... suggests that Ergen will soon (or perhaps already has) submitted a 'non-frivolous proposal' to acquire Globalstar, presumably at a very low price, given that Globalstar will soon be in breach of its obligations to Apple," Farrar wrote.

Figure 1: (Source: NASA) (Source: NASA)

Apple has an agreement with Globalstar to use the company's satellites for its new iPhone emergency messaging service.

Farrar continued: "The most interesting question is what Ergen would seek to gain from Apple, if he was to either enable Apple to buy Globalstar at a low price or buy Globalstar himself (presumably through EchoStar) and continue the partnership."

Farrar speculated that Ergen might pursue a transaction with Globalstar in part to encourage Apple to support Dish Network's 5G networking prospects (Ergen is also the chairman and majority owner of Dish Network).

Finally, Farrar argued that any movements between EchoStar and Globalstar could push Starlink (owned by SpaceX's Elon Musk) to pursue its own satellite spectrum via a purchase of Omnispace or even Ligado Networks. "Wouldn't that be fun!" Farrar writes.

Partnerships and acquisitions

Globalstar has a few more days to figure out its financing situation before dealing with Ergen.

But the gyrations among Apple, EchoStar and Globalstar are just a taste of what's likely to come. For example, Viasat CEO Mark Dankberg said he's open to pursuing the phone-to-satellite market through his company's satellites – either those in low orbit or those in high, geosynchronous orbit – or through some kind of partnership, including with a company like SpaceX. SpaceX has already pledged its interest in the phone-to-satellite market via T-Mobile's spectrum in the US.

Dankberg's Viasat is in the process of merging with rival satellite company Inmarsat, which owns valuable L-band spectrum that a wide range of companies are hoping to use for phone-to-satellite communications.

Analysts appeared enthused over Dankberg's remarks. "One of the more intriguing comments was about Viasat's ambitions to transform Inmarsat's L-band services with the possibility of direct-to-device (i.e., smartphones) service that could go beyond just emergency communications, and possibly involve cooperation between geosynchronous (GEO) and low-Earth orbit (LEO) satellite operators/spectrum holders," wrote the financial analysts at Raymond James following the release of Viasat's quarterly results.

"We're interested in the direct-to-device market," Dankberg said this week during Viasat's quarterly conference call, according to Seeking Alpha. (Officials in the satellite industry are increasingly referring to the phone-to-satellite market as the "direct-to-device" or "D2D" opportunity.)

Added Dankberg: "We do have ambitions to ... be able to deliver services that are much more interesting than just emergency services and that can be scaled to very large numbers of customers."

The regulatory angle

Of course, nothing happens in space without federal approvals from officials on the ground – at least in the US. Along those lines, Congress held another hearing this week to examine the satellite approval process.

According to some executives who testified at the event, regulators must hurry things up. "Under the aging regulatory regime currently in place, [FCC] commission decisions for satellite authorizations take 2.5 years on average," testified SpaceX executive David Goldman.

Goldman also reiterated SpaceX's loud objections to terrestrial 5G operations in the 12GHz band that his company uses for some satellite-to-ground communications.

Others at the hearing argued that the satellite industry needs more spectrum – a position that could put the satellite market at odds with the 5G industry, which is also clamoring for more spectrum. "Spectrum is the foundation of the space economy. The continued erosion of spectrum allocated to satellite services for decades now will significantly impede the ability of the US to lead in this critical sector," testified Peter Davidson, Intelsat's regulatory chief.

The hearing is the second in Congress in as many weeks to cover satellite industry issues.

A battle between startups

While massive companies like Qualcomm and Apple eye the phone-to-satellite market, so too are some relatively smaller companies. For example, startups Lynk Global and AST SpaceMobile are both racing to offer terrestrial mobile network operators the opportunity to connect their existing customers to satellites via their own terrestrial spectrum holdings.

And both companies have been making progress in recent weeks.

For example, Lynk said recently that it's building the ground stations necessary to receive signals from its small but growing constellation of satellites. And, according to SpaceNews, company officials reiterated Lynk's plans to launch commercial services in April.

Lynk has not yet announced any deals with major US mobile network operators.

Meanwhile, Lynk's rival, AST SpaceMobile, has been making progress too. Company officials have hinted that tests of the company's newest BlueWalker 3 satellite have been successful, and that AST SpaceMobile's partnership with US mobile network operator AT&T is moving along.

According to the financial analysts at B. Riley Securities, AST SpaceMobile is making headway. "We believe it will get increasingly uncomfortable for short sellers as AST SpaceMobile continues to execute on its remaining BlueWalker 3 technology hurdles and begins production of its commercial BlueBird satellites," they wrote in a recent note to investors.

The analysts also described Lynk as "undersized" and "underfunded." They argued the company would need to raise significant funds in the coming months to meet its satellite-launch ambitions.

"We also continue to believe there is enough room in the trillion-dollar global mobile wireless services market for multiple winners, with AST SpaceMobile, in our opinion, best positioned to make terrestrial to LEO links a broadband reality," they wrote in a recent note to investors.

Related posts:

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

About the Author(s)

Mike Dano

Editorial Director, 5G & Mobile Strategies, Light Reading

Mike Dano is Light Reading's Editorial Director, 5G & Mobile Strategies. Mike can be reached at [email protected], @mikeddano or on LinkedIn.

Based in Denver, Mike has covered the wireless industry as a journalist for almost two decades, first at RCR Wireless News and then at FierceWireless and recalls once writing a story about the transition from black and white to color screens on cell phones.

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like