$ASTS: Table Stakes = Sovereignty

years, but it's a good summary of where the industry came from, where it is now, and the competitive, the competition that it faces from Starlink. And so that's a really good article, definitely recommend reading it, and it's also pertinent to basically all the MNOs globally. But as I was saying before, the political and regulatory backdrop, I think it's just getting better and better raised here as time goes on. And what is pushing that is this desire for countries to have a sovereign solution, to have control over broadband networks that are in space, that are serving their countries, they don't want somebody else to have the ability to make decisions whether to turn it on, turn it off. They want to have data that has security that's not floating around on someone's network. They want all the data to that originates in their country to also end in their country, so originate and land in their country. And that's something that when you look at satellite architectures is a big difference, right, where Starlink is its own separate and roaming network, your data, once it goes to the Starlink network, it could go across any number of satellites that could go into different countries. You don't only have control over that. Similarly, your radiums built that way. Your radium has optical intersatellite links and that data, if you're making a call in Dubai, it could end up landing in the US. You don't really know. However, for AST, it's a Ben Pipe architecture where the satellite gets a signal and it sends it back down to the originate country. There's no cheering of data across satellites or any of that, right? And so that's a very specific choice that a Bell made in terms of working with M&O partners and making sure that your data is going to be your data and no one else has the ability to control that, right? And so I'll talk a bit more about that in a little bit. But, but, you know, we're seeing these issues flare up. So clearly the front and center issue has been Ukraine where over the weekend, you saw the Trump administration kind of, they disavowed any control over the decision to throttle Ukraine or cut off Ukraine's service. And then Laund Mus kind of he disavowed any suggestion that he had something to do with it. But then of course the telegraph of the weekend talked about how it was Laund Mus. I mean, this is just journalists, so you just take it with a grain of salt. But supposedly he was the one who had recommended it to Trump as a potential stick to get Ukraine to come to the table to eventually, you know, agree to some level of peace. And so right now that's a bunch of, it's like that Spider-Man meme where each of the Spider-Man are pointing fingers at each other like no one really knows. But I think it just underscores Europe's you know concern around having a broadband network that ultimately is under the whims and control of somebody else, right? And I kind of made this point before, I have a tremendous amount of respect for Laund Mus and SpaceX. But as time goes by, that company which is getting its fingers into everything ultimately is going to be and you know, and it's controlled by one person, it is the most powerful, it will be the most powerful company in the history of human civilization, right? Like once I merge with Tesla, I mean, it's going to have its fingers in pretty much everything. And when it comes to launch, it currently has pretty much a monopoly, you know, that's eventually going to change to a degree. But I guess the key question is if you're a consumer, do you want a company with that much control over your data, you know, military decisions, all kinds of things, right? And these are all ethical questions that people have to figure out. But then also, I think from a regulatory perspective and also for society, I think you need options, right? You need multiple options for any given market because you want competition and you also want the ability to have options if, if for example, there are, for example, political, you know, political motivations behind certain certain decisions, right? Or on X, for example, I've learned just like all of you, that by pushing narratives and messages, it's easily, it's easy to sway people one way or the other, right? Like you if you want to discriminate against a certain ethnic group, you can put all these messages out there and believe it or not, it works. So these are all important questions, you know, to think about as we, as these markets are, you know, these are markets that are at their nascent stages, but they're quickly forming. And I think it's important for companies like AST who are working with multiple partners and are an alternative to Starlink. I don't think the market really understands that, like everybody kind of simplifies AST as a direct competitor to Starlink and how can they compete financially versus, okay, well, what's the ecosystem around that? And what is the desire of an alternative? And for this company that has a technological lead today, you know, is that do they have an ability to be a viable alternative solution? Right? And so we're kind of seeing that play out. But let's go back to the news. So today, the big four of Europe announced that they're forming a joint venture to explore a bid on MSS spectrum in Europe, which is coming up for reallocation in May of 2027. And they're doing this because they want to develop a advanced D2D service. And so that consortia includes Deutsche Telekom, Orange Telefonica and Vodafone. Now, it's important to put this in context. Orange Telefonica and Vodafone currently have MOUs or partner or definitive agreements with with AST currently. Orange Telefonica, MOUs, Vodafone has a definitive agreement. Vodafone is a strategic investor and has worked with a company for many years and also sits on the board. But those three companies already work with a company with AST. And now today, Deutsche Telekom is joining those four to put forward a their desire to get an allocation of MSS spectrum in the upcoming S block reallocation process in Europe. And so what they're saying here is that they're forming this to strengthen your European sovereignty. They were, you know, security and resilience and critical connectivity infrastructure. And so if you think about what they're doing in the context of how regulators are setting the table there, currently, there's a, there's 30 megahertz, two, two bands of 30 megahertz that are allocated one to biasat and then one to Echo Star. For biasat, biasat uses that 15 megahertz by 15 megahertz allocation to provide airline connectivity, which by the way, that that business is, is getting demolished by Starlink because Starlink has been winning a lot of the carriers business in Europe. And so biasat, you know, that business, I think, I talked about this before, but I think it's probably on the order of maybe $50 million in size a year. And then Echo Star has an Internet of Things network, which it runs the other 15 megahertz by 15 megahertz in Europe. And I think that's maybe a 15 to 20 million dollar business for them, which is very small. But that total 60 megahertz of S band spectrum is actually going to get reallocated in May 20, 27. And that's going to be split up likely into three buckets. There'll be a 10 by 10 allocation to the IRS squared European initiative, which, you know, we learned about last week that Pallies or Thales Airbus and I think we are an artist are putting together a new space joint venture and they're going to probably help be the ones who build the IRS consolation. And then there's a few satellite operators based off of Europe that are going to try to deploy that build satellites and deploy it sometime in 2030. Right. And so that's 10 by 10. Another 10 by 10 allocation is going to a European based operator. And that one originally was the highest likelihood and Bloomberg or the part of this, the player that was likely well positioned for that was satellite connect Europe, which is a joint venture between AST and protocol, which orange and telephonic are also a part of. However, with this new formation of the joint venture today, I think this joint venture is going to bid on that spectrum together. And then satellite connect Europe will continue its work. It might be rolled into that point venture. But the key point here is that AST they didn't say it in the announcement today. But AST is going to be that key satellite provider, which they provide the technology. And so that's going to be a European owned and operated entity, which as we know, the headquarters and network operation centers based in Germany and the headquarters, sorry, the network operation center and the constellation we flagged in Germany. And then the headquarters is actually based in Belgium. And so I think satellite connect Europe will take end up becoming part of that joint venture. And that will be AST's participation for the European sovereign solution. Right. Now what's interesting is the last 10 by 10 megahertz of spectrum allocation is earmarked for a foreign operator. And so that could go to Starlink. My guess the highest probability is it goes to Starlink. Or there also is this alternative where AST could decide to go run at that spectrum as well. Right. And this is not by the way, this is not a spectrum auction. It's actually a grant by the EU. And they will make a decision based off of various parameters, you know, what you put forward a package of what you're planning to do with the spectrum. And then they decide who gets it. Right. And so I think this new joint venture of MNOs, who AST is working with, is likely going to get one 10 by 10 allocation. Maybe, you know, to be candid, those roles are not fully set. There could be a world where iris 2 gets 10 by 10 or it might get 15 by 15. And then this joint venture with AST ultimately gets 10 by 10 or 15 by 15 or 20 by 20. Right. Like if iris gets 10 by 10 and the MNOs get 20 by 20, there is a world where Starlink doesn't get anything. And so is that a possibility? I think, you know, I would have told you before that the likelihood of Starlink not getting allocation was probably low. But then after the incidents in Ukraine and you have, you know, a bunch of blowback from European politicians. And then, you know, this, the recent, yeah, the political blowback. And then the US ambassador getting involved where I think he, he pretty much read the Europeans the right act and said, if you guys don't specifically allow Starlink, if you don't give them an allocation, then there's going to be like serious repercussions, which I think if you were, you know, from a political perspective, it's probably not the right approach. You probably want to do these things behind closed doors and doing that out in the public. I'm not really sure what that accomplishes. Like if it's a trial balloon, you got the reaction, like a lot of Europeans are pretty pissed off. And so if anything, that probably digs their heels in more. So I, again, I, I, it's most likely that Starlink will get an allocation. But if they don't, it wouldn't be a complete surprise to me, just given everything that's transpired in the last, you know, 48 to 72 hours. Because I think for the Europe, the US ambassador to Europe to come out so strongly, like that, it must mean like, he's getting some type of signal that Starlink is probably not going to get an allocation or it's going to take something extraordinary for them to get it. So the other thing I would say is that that someone did ask, well, if that, if they're doing that to US companies, is that considered a bad thing for, for AST? I mean, there is, you know, never say never, there is a probability that perhaps maybe they're targeting AST as well. Excuse me. But I would point out that AST from the beginning has been working collaboratively with the European MNOs. And so this has always been a hallmark of AST's business model, which is working in partnership with the MNOs and from a regulatory standpoint, that has a ton of benefits. And ultimately the MNOs are driving the, they're driving the economic decision, right? Like they actually own the customer. I think I have a list here. We just, it's your, yeah, it's their country, it's their data, their spectrum, and, you know, their customers, their security, and their sovereignty, right? And so it's a very different business model than a foreign player coming in and saying, hey, and this has always been the difficult pill to swallow for regulators, and this is what we're seeing in India to be quite candid. It's tough for regulators to say, okay, we're going to let this foreign company come in. And we're going to have them compete directly with our incumbents, right? Which are you know, large well-capitalized companies, and they're employing hundreds of thousands of people, they're utilizing spectrum that they purchase, you know, and they probably paid a lot of money for, and they're, they're generating profits, and they're keeping them here in the country. Whereas, okay, we're going to enable this foreign company to come in and try to eat, eat their lunch, and, you know, put people out of work and do all these things, right? And so from a regulatory perspective, it doesn't make sense, right? Now, obviously, you want competition, and that's good for ultimately the consumer at the end of the day, but if it's beyond just the pricing of the product, but also is this a national security matter? Do we need to build our own infrastructure? Do we need in situations where I don't know, the Russians attack, you know, just, if the Russians attack Poland is another country depending on the elections, are they going to turn off the network, right? Because someone wants oil to be lower. These are, it sounds crazy, and these are hypotheticals, but in, you know, depending on which way you view the news, it's actually, it could be pretty close to reality.