$ASTS: Telco JV, New CCO and B Riley

of CAPEX spend if they truly want to build a terrestrial network. And they'll have to get their hands on some low band spectrum if they do want to make that a true competitive alternative to the three carriers. So as a result of Starlink's positioning and SpaceX's ambition to go after the carriers, the carriers formed this joint venture. And so this joint venture has several aspects that it's putting forward. So previously, AT&T and Verizon came together in their own partnership. They contributed 850 mega-expectrum, which is the pooling of low band spectrum. And they put that forward to work with AST Space Mobile. They also made strategic investments in the company. And so this joint venture, if you think about it, AT&T and Verizon have already kind of laid the framework for this joint venture. Both companies have been testing with AST. They've been developing ground stations. And they've been doing the integration work with their network cores to the AST gateways and the satellites. And so this joint venture is really an extension of what AT&T and Verizon have already been doing. And they're just welcoming in T-Mobile. Now, the reason why you would create this joint venture is that, you know, there are, first of all, originally there were two parties, AT&T and Verizon, who dislike each other. But then they decided to work together with AST. Now you're welcoming in T-Mobile. And while that sounds really interesting and you know, a joint venture puts a better wrapper around the ability for the three carriers to work together because if you can imagine if you're a manager at AT&T and the manager at T-Mobile and someone higher up is like, hey, you guys need to work together and we're going to go launch this thing. That's really hard to do because you probably don't trust each other. In the framework of a joint venture where it has its own separate management and there's going to be people there, you would hope that that goes a bit more smoothly because a joint venture is governed in a different way. And so here, the first aspect of what the joint venture is doing is that they are pulling scarce terrestrial spectrum. And so what does that mean? If we're talking about scarce terrestrial spectrum, we're most likely talking about low-band cellular spectrum, 600 to 900 in MHz. And so I think it's important in the context of the joint venture to understand that when they say, hey, where you want to work with a bunch of satellite guys, we want to foster competition. Let's drill down. What does that actually mean? Like, if they're pulling together a terrestrial spectrum which is on the low-band side, 600 to 900 in MHz, there's only one player that utilizes that, that's AST space mobile. There's only one player that can reuse that spectrum in an efficient way that has a large phased array that can actually put down very accurate spot beams that does not interfere with the existing terrestrial network. That's only one player, when they talk about pulling scarce terrestrial spectrum, they're talking about AST and they're talking about something that they've already done, the AT&D and Verizon, which is pulled together 850 MHz spectrum. And so here, you're just formalizing that previous, hey, we're working together, we're going to enter into least spectrum leasing agreements with AST. Now we're going to do that on a more formal basis together. We're not going to do that independent. We're going to do it together, and we're going to bring in T-Mobile to do that. And so, you know, some might point out that Starlink does use T-Mobile's PCS G block, which is closer to MSS, it's 1.9 GHz. And yes, but when that agreement with T-Mobile ends, which I expect probably in the next few months, because I think T-Mobile, either that agreement will sunset or they will terminate it, then Starlink is going to lose access to the G block. And as a result, those first-generation satellites are not going to have access to any spectrum. Until EchoStar, that spectrum gets approved for satellite use, and then of course, phones actually incorporate into their chipsets, then maybe those first generations will be able to light that spectrum up. But T-Mobile will probably take that spectrum back, and guess where it's going to go? It will go most likely to be used for the Block 3 Luberts satellites, which can utilize midband spectrum. So that's adding on top of the Gautospectrum, which is 1.5 and 1.6, sorry, 1.7. And then this T-Mobile PCS block, and then we've talked about potentially AT&T contributing, I think it's their WCS band as well. But anyway, but yeah, so pulling together spectrum, scarce terrestrial spectrum, that kind of hints at where this is going. The players, the other players who might conceivably work with company don't need terrestrial spectrum. So that would be Amazon, because they already have Global Star Spectrum. If you're thinking about potentially a Rydium being a player here, a Rydium where he has their L band spectrum, it's just under a megahertz of total spectrum. It's within one band, there's no uplinked downlink, it's actually shared as one. And then there's Viasat, right? We're actually Viasat is not in the US market. And so I actually take that back. They have a little bit of L band spectrum in the market outside of Logato. But we'll talk about equitists and Viasat and I guess B-Rally's reaction to it. But but I think it's important that this JV seems to be focused on one particular area of pulling your spectrum. I mean, we'll find out more. And one player that will be leveraging that, right, which is AST. There is this discussion. So another point is that the JV wants to create opportunities for more satellite operators to compete and grow. And so that's good. That's good for the US consumer. Like, hey, let's let's open up competition over the long run and may the best technology win, right? And so from a commercial perspective, that makes a ton of sense. And by the way, like these carriers over the long run. And I mean, beyond the five years that AST has with AT&T and Verizon three years, they don't want to necessarily be locked into one player, right? And so with that said, obviously, from a competitive and regulatory standpoint, that's the language that you need to use, right? You can't go to the DOJ and say, hey, we're going to form this JV and we're going to use just one company. You have to say, hey, we're doing this to foster competition. We're going to open it up and this is going to be great for the consumer. Right? And so that's how they position it. But could they conceivably work with more than one satellite operator in the future? And the answer is yes. They absolutely can. Right? So we already have a model of that. And there could be tiers of service. Right? So the model that exists today is Verizon. You can look at Verizon. They're working with AST on broadband. And then they have a interim solution, which is Skyloh for texting, right? And so Skyloh aggregates capacity on geo-satellites and they've been able to provide some level of texting service similar to what Global Star does for Apple. And so Verizon offers two tiers of service. I mean, they're not offering anything yet for AST, but for emergency texting, they provide Skyloh, right? And so the key question, though, is in the future, what could that look like? And so could the MNOs provide multiple satellite services? It's possible. But I think the key question is, you know, what for your customer, you might provide them with the menu options like, hey, you can have broadband or you could have texting. But, you know, what level or what quality of service do they really want to push forward to customers? Like, and the premium plans, you're not going to incorporate just texting. You're going to offer broadband, right? And then maybe for low-end plans, you would give them a choice, hey, you can add broadband for, I don't know, $12, $15, you can add texting for $3. But I think over the long run for the MNOs, they will try to keep things simple, right? And so maybe offering two tiers of service and leave it at that. For AT&T and Verizon, for particular in AT&T, it's just going to be AST for some, you know, that five years. For Verizon, they can continue to offer Skylo and AST. And then for T-Mobile, that's where it gets interesting, right? Because there's no exclusivity there. And so I've argued that for once AST launches service, and you know, they sign their definitive commercial agreement with T-Mobile, T-Mobile will likely offer both AST and Starlink for some period of time, right? Because I think from a regulatory standpoint, in order for this JV to get approved, you wouldn't cut off Starlink early, because you're going to say, hey, we're giving customers the choice. And maybe T-Mobile will continue to do that. But the key question is, and this is what part of the JV is trying to address is, how do you maintain the ability to service two satellite systems, right? And so, and that's key question. I don't know if that's going to be possible, but you know, we can dig into that a little more here. So one of the things that JV talks about is pushing forward common technical standards covering satellite integration, devices, operating systems, apps, apps, you know, when discussing that, as we know, Meta is working with AST, but they also did some level of optimization with Starlink because Starlink is the Gen1 satellites is low band, or sorry, narrow band data. So they had to optimize what's up for that. And so, you know, when it comes to standardization and optimization, it makes sense that this joint venture is going to try to work with AST and conceiving maybe another satellite operator to make sure that there's common technical standards, right? And that's easier to do with AST because that's already happening with AT&T and Verizon. And so, here, if you're bringing on T-Mobile and you're saying, hey, we're going to circle wagons here, we want you to work with us, T-Mobile is going to say, well, hey, I'm behind on integration, this is not fair. With the joint venture, it's like, hey, okay, we will share IP with you based off of all the integration work that we've done to date. We'll get you up to speed. By the way, you can tell us like what the pains were in the learnings from integrating with Starlink. And then we're just going to create this like open standard for everybody to leverage this system. And so that's the aim of this JB, right? They want to have open standards. And interestingly, what company works with open standards? That's AST, right? Because the architecture is a spent pipe. There's no processing that happens on the satellite itself in terms of their signal processing, but there's actually no processing of writing calls and things like that. That actually happens on the ground. The E-Node B is actually the brains of the network are on the ground versus Starlink where the brains are in the satellite itself. Right? And so when the customer is using the AST consolation, the MNO actually keeps control of the customer and all the traffic stays on their network. It doesn't go anywhere else. It doesn't go to a different region. It doesn't go between satellites. It goes from the phone up to the satellite and back down to the network core of the MNO. Right? And so there's only one player doing that right now, which is AST. Now, equitis, which Be Rylee brought up today, equitis is actually, which is the joint venture between Biasat and Space 42, which Space 42, I'll talk a bit more about some interesting aspects of that company. But equitis is actually proposing the same architecture, right? Because they saw the writing in the wall. They saw what AST, the amount of commercial traction they're getting, they're like, hey, we're going to go do that too. So at least in theory, that's the way that they want to approach the market, right? More of a bent pipe, the MNO controls, the routing, the customer, and we're just here as infrastructure. The folks that are not doing open standards are Starlink. Starlink has its own proprietary network. It's everything happens on the Starlink network. The ENOB is out on satellites. There's there's inter satellite links. Your traffic can go between satellites. It could go to a different country for all you know. And what happens is Starlink actually operates as a separate roaming network. So if you can imagine having like an ESA on your phone, once you're out of coverage for T-Mobile, then you would roam on to the Starlink network. And so Starlink takes the customer from that point. And that's, yeah, that's obviously a big risk for T-Mobile, right? Because T-Mobile currently, their customers do roam on the Starlink network. If that network gets better over time and Starlink starts pushing its own service, then who's to say that your customer won't leave first Starlink? And so when talking about the JV and the context of the JV about pushing over standards, Starlink doesn't fit that. Amazon, interestingly, as we learned in FCC filings over the last few months, is pushing the same architecture. They will run a proprietary network. It'll be separate. And I think Amazon's okay with that because I don't believe Amazon is looking to start their own service, but they have a whole host of reasons why building an Amazon ecosystem via satellite, you have a lot of Amazon devices, drones, you know, delivery trucks, whatever it is. There's a whole host of reasons of why Amazon was interested in buying GlobalStar and they can run something in terms of their consumer business. There's a lot of things that they can do with that. But they are going to be a separate proprietary network. And so when it comes to...