Verizon follows AT&T into spaceVerizon follows AT&T into space

Verizon plans to use the same satellite vendor – AST SpaceMobile – as AT&T in order to link its customers' phones to satellites.

Under Verizon's new agreement with startup AST SpaceMobile, Verizon will pay the company a total of $100 million in order to ensure AST SpaceMobile's satellites can make use of Verizon's 850MHz spectrum. That will allow all of Verizon's existing customers – regardless of what phone they have – to connect to AST SpaceMobile's satellites in areas where there is no Verizon coverage.

"We will now be able to use our spectrum in conjunction with AST's satellite network to provide essential connectivity in remote corners of the US where cellular signals are unreachable through traditional land-based infrastructure," explained Verizon's Srini Kalapala, the operator's SVP of technology and product development, in a release.

AST SpaceMobile inked a similar commercial agreement with AT&T earlier this month, after years of working with the company.

Verizon's new deal with AST SpaceMobile represents a major vote of confidence for the satellite company, considering a wide range of other satellite vendors – from Ligado Networks to Omnispace to SpaceX to Viasat to Lynk Global – are also offering phone-to-satellite technologies.

Verizon's announcement today could also be viewed as a swipe against Amazon's Project Kuiper satellite effort. Verizon in 2021 said it would connect some of its rural cell towers to Amazon's planned Project Kuiper satellites, a deal that led some in the industry to speculate that Verizon could expand that agreement to include direct-to-device (D2D) connections between Verizon's phones and Amazon's satellites. But Verizon's new deal with AST SpaceMobile would appear to check that box.

Finally, AT&T doesn't appear to be concerned about sharing AST SpaceMobile's satellites with Verizon. "Together with AST SpaceMobile we have agreed to welcome another mobile operator in the US to bring in more spectrum and more coverage to create an even better solution and enhance service capabilities," said AT&T's Chris Sambar in a statement.

Steps forward and back

AST SpaceMobile for years has been promising to offer phone-to-satellite connections using terrestrial operators' spectrum holdings. Today, the company touts agreements with more than 45 mobile network operators globally – from Verizon to Vodafone – that collectively serve over 2.8 billion existing subscribers.

But AST SpaceMobile's growth hasn't been smooth. In 2020, amid its efforts to raise cash through an initial public offering (IPO), the company forecast it would have 9 million customers on its satellite network by the end of 2023. Today, though, AST SpaceMobile is still working to launch its first batch of commercial satellites.

Indeed, some investors appear to have tired of the company's delays. AST SpaceMobile's shares plunged in April after the company said its initial commercial satellites would not be ready for launch until at least July, following another production delay. The warning generated a proposed class action lawsuit against the company.

Earlier this month, during AST SpaceMobile's quarterly conference call, company officials said AST SpaceMobile remains on track to launch its first five commercial satellites on a SpaceX rocket in July or August.

AST SpaceMobile has said it needs 45-60 total satellites for continuous services in the US.

AST SpaceMobile has also hinted at a separate phone-to-satellite contract with the US government, but the company hasn't provided many details on that deal.

A US race to space

Broadly, there are three main players in the US that are participating in the 5G industry's race to space: AST SpaceMobile, SpaceX and Lynk Global. Those are the companies that promise to use terrestrial operators' existing spectrum holdings to connect phones to satellites.

Other companies, such as Viasat, Omnispace and MidWave Wireless, promise to support phone-to-satellite connections using their own spectrum holdings.

Lynk, for its part, is already offering some commercial services in Solomon Islands, Cook Islands and Palau using a handful of operating satellites. But the company's services are generally only accessible a few times a day, as its satellites pass over users. Lynk is also working to go public in order to raise more cash to grow its satellite constellation to one that can provide continuous services.

SpaceX, meanwhile, inked an agreement with T-Mobile in 2022. That agreement calls for the satellite vendor to add T-Mobile's spectrum into its Starlink satellites. According to one tracker, SpaceX has so far launched more than three dozen "direct to cell" satellites. It's not clear when T-Mobile might launch commercial phone-to-satellite services.

Hurdles and obstacles remain. First, phone-to-satellite services still require US regulatory approvals, though the FCC is moving forward with a process that would address that topic.

But, perhaps more importantly, operators must also generate revenues from phone-to-satellite connections. That might be harder to find, given the apparent lack of interest in such offerings from phone vendors like Apple and Bullitt. Indeed, Qualcomm backed out of its phone-to-satellite agreement with Iridium amid apathy about the technology among some Android smartphone makers.

T-Mobile, for its part, has suggested it will offer SpaceX-powered phone-to-satellite services as one of the perks in its more expensive service plans. AT&T and Verizon haven't yet indicated how they might offer AST SpaceMobile's connections, though AT&T has hinted it might be added to the operator's FirstNet services.