SpaceX Buys Grain Management Spectrum Explained

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[00:00:59] Speaker A: Everyone, thanks for joining. I was looking at the FCC order today, and then of course this news hit that SpaceX is buying Grain Management. And so I wanted to fire up a space and share some initial thoughts about it. But, um, yeah, this is, this is game-changing. This is gonna absolutely shift the landscape. Uh, this is a— for the carriers, this is bad news. For AST, this is actually Amazing news. I know it doesn't seem like it, and the stock price is going to have this knee-jerk reaction, and people aren't going to know what to do. And there's probably short sellers who are like, oh, this has got to be bad, and they're shorting the stock. But let's unpack this and think about this from a strategic perspective, what this actually means. Okay? So as some of you already have read, SpaceX announced a transaction to acquire Grain Management. They have 800 MHz spectrum, which is low band. It's 7 MHz by 7 MHz nationwide. And so this gives SpaceX the ability to essentially launch a mobile phone service. And so they have already announced that they are going to launch a full-fledged mobile network operator to compete with AT&T, Verizon, and T-Mobile. And With this spectrum, I guess there's a number of ways that they could potentially deploy it. One, with their mid-band spectrum that they're buying from EchoStar, they are gonna use their next generation V2 DTC satellite to light that up. And then for this spectrum, in areas that are, you know, you have dense urban environments or suburbs, my guess is they could potentially launch another satellite that does low band, But obviously that's gonna take quite some time to do that. They've got a backup of orbital satellites and fixed wireless satellites launched, and then D2C, and now another D2C satellite, a totally separate one, but they probably will use towers and hang radios to try to deploy the spectrum. And maybe they can buy some of Charlie Ergen's assets the failed DISH wireless experiment. Maybe they could buy some of the assets from there to light up the spectrum. But make no mistake about it, they're going to try. They're going to go for it, and it's going to be a really expensive endeavor. Now that I've said they've crossed the Rubicon, the die is cast. These guys are going all in. And so this is a historic day. Make no mistake about it, the executives at Verizon, AT&T, and T-Mobile, they're calling an emergency board meeting. And actually, they probably already knew that this was coming since Grain Management was talking to AST and others. And so they probably knew that this deal was happening. But this pretty much now has set the field, right? So it's AT&T, Verizon, and T-Mobile. working with AST versus Starlink. And so while the headlines and some people look at it and they're like, oh my gosh, this is bad, for their carriers, this is bad. This is absolutely bad. There's no qualms about it. If Starlink is able to get 3%, 4%, 5%, 10%, whatever percent market share, this is bad news for the carriers. There's no way around it. For AST, this is very good because it locks the carriers into needing satellite service to counter Starlink. So the carriers, when they talk about population coverage and, I cover 96% of the population by terrestrial network, well, Starlink's going to be able to say, I have 100% coverage of the country. And so you're going to need to work with not just where people live, but absolute 100% coverage. And so you're going to need satellite to make up the gap. This is like the whole wireless was back in the day where Sprint used to— or was it Sprint? Yeah, that engineer would say, can you hear me now? AT&T and Verizon and T-Mobile are going to have to deploy satellite service in order for them to say, we have 100% coverage too. It's table stakes, like the CEO of T-Mobile just said recently. this locks them in to AST SpaceMobile, right? And so, you know, there might be some people are like, well, you know, what about Amazon? Uh, what about Globalstar? What if they develop a D2D network and couldn't some of the carriers, uh, work with Amazon? We've already seen that story, guys. T-Mobile worked with SpaceX and then they, they birthed this, this being that they couldn't control. And then eventually that, that, you know, SpaceX is now, and Starlink is out to eat their lunch. You don't think Amazon's gonna have that same propensity to, oh yeah, I'll work with you as an MNO, and then eventually I'm coming to eat your lunch. We've already seen that. So for the carriers, hopefully they've wised up here, and now they know that there's no tiptoeing around, is Starlink going to compete? They absolutely are competing. They are looking at the entire revenue and profit pool of the carriers, and they're going for it. And so what does that mean for AST? Well, that means that the strategic value of this little company out of Midland has gone up once again. And so someone might say, well, I thought, wouldn't GRAIN have been a good deal for AST to lease that? Yeah, it would've been great. But now that it's gone, one of the interesting things that today's FCC order just showed is that now the rest of the cellular spectrum from the carriers, so under the supplemental coverage from space, there was only a few nationwide bands that were allowed to be used for satellite. Now that's being opened. Now the entire spectrum band for all carriers is being opened up for direct-to-device connectivity. So that means that AST working with carriers can light up all that spectrum, right? And on top of that, you don't need to have a contiguous geographic swath of spectrum. You actually, in that new order, you can just do segments of it. And so it brings to bear, what, 480 megahertz of additional terrestrial spectrum from the carriers that AST can use. And so on the one hand, the FCC said, hey, we're going to give— by letting SpaceX buy this, buy Grain Management, we're going to give them the tools to go fight against the MNOs. On the other hand, the FCC also said to the MNOs, hey, if you want to go deploy all of your spectrum in areas where you're not using it, to counter Starlink, then go ahead. And so tip the hat to Brendan Carr. He's opening up competition, which is great for those who have good technology. And so here now, let's talk about the telco JV. So the telecom JV was formed in May, and that was clearly done, although some industry consultants would say, hey, the telco JV was developed to better negotiate against Starlink. No, you idiots. That JV was put together to form a consortium to better compete against SpaceX, and to pool the resources, pool spectrum, pool terrestrial gateways and network integration, pulling that together so that they can more effectively coordinate and compete against SpaceX. In particular, I'm talking about Not, you know, terrestrial networks. I'm talking about satellite, right? Because satellite's hard to do.
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[00:09:46] Speaker A: As we know, clearly, AT&T and Verizon have been working with AST, and T-Mobile has been talking and negotiating with AST SpaceMobile. That's going to absolutely come to fruition now. I mean, if there was any doubts, right? And sometimes when I would go to bed, think, oh, am I missing something? What if the telco JV, maybe my read is wrong? Well, today, make no mistake about it, this is absolutely happening. The telco JV is working with AST. What I had originally put maybe a few months or quarters out that T-Mobile would sign a definitive agreement with AST, that definitive agreement can come way sooner. I thought Hook was crazy. It's like, why are you why are you trying to do some voodoo and make this definitive agreement get announced between T-Mobile and AST for this week? Yes, they scrubbed the website last week, but whatever. I still think we're far ways off. Today's news actually accelerated. So we may not be— we may be days away or weeks away from T-Mobile announcing definitive agreement with AST. Now, this actually puts the Starlink and T-Mobile relationship in a very interesting place, because Starlink, it's like, what's a good analogy? Let's say you have a married couple and the man is often cheating with somebody else. The married couple stays together for convenience or whatever, just to show appearances. So in that instance, Starlink is the man, the woman who's in the marriage is T-Mobile, and everybody knows that guy is cheating. It's very public, he's cheating. The woman is The unfortunate wife is looking awful in that situation. That's kind of what we're in right now. Starlink has said, we bought this low-band spectrum, we're going to go compete against these 3 guys. Now for T-Mobile, what do they do? They should, as quickly as they can, end that relationship. If I was them, I would totally take back my spectrum and end that they can terminate the relationship and so end the satellite connectivity, because the longer that you have this thing running, the worse it is for you. That's a really odd predicament for them to be in, but I do think now that they're hung out to dry, they really do need to sign a definitive agreement with AST, and I think that happens much sooner than later than I had previously thought. What's interesting is that Now that the FCC has enabled Starlink to become an MNO, and Starlink has pretty much said, we want to become an MNO, we want to compete, and the incumbent 3 providers are like, we're not going to enable you with an MVNO, they now have a leg to stand on. So the telecom JV, John Stankey had said before that maybe the in the Department of Justice, the antitrust review, the telco JV will get a second request, and it likely will get a second request before it gets approved. But now they can say, well, hey, look, we're just forming this on the satellite side, but you've got Starlink who's creating a 4th competitive carrier. This is not anti-competitive. You've got a $2 trillion market cap company that has mid-band spectrum assets. It's just acquiring low-band spectrum assets. So it's going to be able to compete. If there's any tech company out there that competes, it's SpaceX. So it's going to be hard for the DOJ and the FCC not to approve the telco JV. So yeah, it's really interesting times. There was also this pushback from people of the JV, maybe it's going to pressure pricing for AST. No, it's not. In this case, if Starlink, which is what it touts is being a maverick MNO and it's going to push 100% coverage connectivity, then for AT&T, Verizon, and T-Mobile, they're going to need a healthy partner to counter that. So in In countering that, the last thing you want to do is starve your partner of capital or profitability. So you're going to maintain the 50/50. I don't know, maybe it's 40/60, but yeah, you're going to support the strategic counter that you need to respond to SpaceX. So I think in terms of pricing, I don't think that's going to be an issue. Will the carrier's overall pricing get hurt? maybe, because now you've got a 4th player coming in. They're going to be looking to take share. So for the industry overall, that can't be good. But for AST, if you get 100% market share of the 3 largest carriers, and maybe, I don't know, let's be really aggressive. Let's say 20% of people choose to go with Starlink Mobile, which who knows how good that service will be, especially if you're a rural person, that might be— if you live in a rural area, that might be good. But if you live in New York or Boston or LA, or you live in any medium-sized city or suburban area, it's probably not going to be that good of a service, right? Because even grain manager at 7 by 7 megahertz of spectrum, even through a lot of reuse, that's going to be pretty tough to provide a decent amount of coverage. But this is SpaceX. They'll figure it out. They've got a lot of money. They're raising $40 billion to go buy AI processors. They can probably raise money to build out a terrestrial network. I guess one interesting thing is that they're getting pulled in a lot of different directions, and so I guess the question is how well can they execute, but we'll see. But the most important thing is that what originally was viewed as AST having AT&T, and then they have Verizon, AT&T. Now they've got T-Mobile. They're going to have T-Mobile. I'm 100% confident of that. This pretty much, the die is cast. There's no going back. Interestingly, if you look at where AT&T and Verizon and T-Mobile are trading after hours, they're getting absolutely clobbered, as they should, because what was a stable oligopoly may become a bit more unstable. And so as a result of that, they need to do something and there's a company out in Midland, Texas that helps them do that. And so that's a huge positive. I don't know how long it'll take. I mean, obviously, well, let's take a step back. So the macro environment is awful. Rates have been going up, oil's going up. And so whether you have positive news or fundamental positive catalysts, those things don't really move stocks right now. But once people digest this, and I don't know how good the sell side is, actually pretty awful. We'll see. I think there will be a few guys who get it from the sell side for AST that will say, wow, this increases their importance and relevance, and so this is good. But for the sell side that cover AT&T, Verizon, T-Mobile, they're going to be beside themselves. They're not going to know what exactly is going on and how these companies will react. So I think actually now for an AT&T and a Verizon T-Mobile, they've got to be more outward about it, because you have to get the messaging right, and you can't just say, well, we want to foster competition amongst satellite providers just to get regulatory review done with this telco JV. People want answers, right? And so they're going to want to say, well, what are you doing to counter SpaceX? And so I think the narrative is going to become more sharpened in the next few weeks, and people will start figuring out, oh, there's this company called AST that all the carriers are using. And so yeah, this is not just something that is here in the US. You can just copy and paste this across globe. Interestingly, I had written this post. It was actually in response to someone questioning AST's business model. So I posted it about the fact that putting aside technology and spectrum or whatever it is, the fact of the matter is that AST has a compatible business model with the way that foreign countries and regulators want, and MNOs want to deal with satellite. So for SpaceX, whether you're a bull or a bear or whatever it is, forget about politics, SpaceX is becoming a huge and influential company. So it's getting its fingers into everything, and it's going to try to become a global carrier, global mobile network operator, And that has real implications, right? Because the principal, Elon Musk, who runs the company, has a lot of interesting political views. And so those aren't necessarily compatible with the views of democracies around the world, right? And so whether you support him or you don't support him, the fact of the matter is that a lot of these countries and regions want to have a sovereign solution. And so you saw then, after I had written about the fact that when you have a company like Starlink that comes into a country, the country has its own national champions and operators. Those operators, the incumbents, will have invested billions of dollars in spectrum and infrastructure. They employ local people. They generate profits. They invest in the local country. Then you've got this foreign company coming in, that has its own agenda potentially, and it's going to compete with your incumbents. So as a regulator, how do you deal with that? Do you approve that foreign entry, that foreign company to enter into your market and basically compete, or even in some cases maybe eviscerate your incumbents? No, you don't. You put some constraints on it at a minimum. So you want to look at the net benefit of it. So if there is no net benefit, then maybe you don't allow that company to enter. And so that's kind of what— it's one thing where if you have satellite internet that's fixed wireless coming into a country and no one else has coverage, then that's good. It can be good for your citizens and spread connectivity. But when it comes to mobile phones or mobile devices where you already have incumbent operators, that's a very different calculus, right? Do you let the foreign company come in and eviscerate your local companies, your national champions. This was a big deal back when the EU was started, and there was a whole bout of consolidation where some companies started acquiring national champions in Spain. This happened in steel. This happened in the mobile network operators. After a while, regulators stopped the consolidation because some of these companies that were very important to specific countries got acquired, and then their headquarters were moved, and they got cost savings ripped out, and basically a big economic driver of that particular country was moved to— it moved from Spain to the UK or wherever. These are actual real issues. I think when thinking about Starlink Mobile as a global operator, So the NTT Docomo, KDDI, and SoftBank in Japan, they're seeing this news right now and they're like, wait a second, we are working with Starlink Mobile and T-Mobile told us they're a great partner and now they're looking to eat T-Mobile's lunch. So maybe I need to rethink this partnership because ultimately Starlink is going to try to eat my lunch here. in Japan, or you pick a market, right? Deutsche Telekom's like, hey, maybe we'll work with Starlink. And then of course they saw the writing on the wall, they saw everything that was happening to T-Mobile, and they decided to start testing with AST because they know that ultimately Starlink's ambitions aren't— they don't stop with partnering with you. They end up wanting to become you. So that's the big issue. So I think the knee-jerk reaction is going to be negative, or it's negative right now, but I think as people digest this, this was going to happen. This was kind of the natural evolution. So on the one hand, for SpaceX, this is great. Some people have said, well, why doesn't SpaceX just acquire an M&O? The issue with acquiring an M&O is that your growth slows down and you become valued more like an MNO, which I guess maybe is not a bad thing because they're expanding rapidly into NeoClouds and NeoClouds, those multiples are somewhat low because of the high CapEx. And then of course SpaceX, their contracts with the AI compute companies that they're currently leasing with are only short-term, I think like month to month or whatever. But for SpaceX, if you're entering into a low-growth market, but you're looking to take share, then you can demonstrate a pretty significant amount of growth, which is great. So for SpaceX too, this goes beyond just mobile phones. There's ambitions for Internet of Things, there's robotics, there are cars, all kinds of things. So there's a there is a justification even beyond just going after AT&T and Verizon and T-Mobile, but they want to have connectivity for all their stuff. And so this is an area that they needed to get into anyway. And as a result, I go back to the folks that are not working with SpaceX. And so this isn't just the MNOs. It's not just AT&T, Verizon, and T-Mobile. Yes, AST becomes very important to them, but it's also everybody else. It's also Google, it's Apple, it's even Amazon. Does Amazon— they're way behind on their current LEO project, and then they want to do a D2D network and they want to somehow light up Globalstar spectrum, but they'll need new satellites for that. AST all of a sudden becomes a much more interesting partner because we can light that spectrum up. And so there's OpenAI, there's Microsoft, there's all these players who are seeing SpaceX, this monolith, moving into every vertical and becoming completely integrated. How do you compete against that? So that's why when I tweeted earlier that our strategic value continues to go up, that's absolutely true because imagine a world where AT&T, Verizon, and T-Mobile did not have AST SpaceMobile, that would look pretty dire. Now, it's going to take time. It's going to take time for SpaceX to build out terrestrial capability and to build the infrastructure, which they have it to a degree, but they're going to have to go try to win over subscribers and they're going to have to one thing to serve a few million subscribers, but it's another to serve, I don't know, 40, 50, 60 million. They're going to have to build out all that infrastructure. So with that in mind, it's going to take time. It's going to take time to compete against the 3 carriers and everybody else as well, but the market doesn't care. It's going to price that in just like the carriers are getting smashed right now. it's going to start pricing in that overhang now. So as I was saying before, I do think the T-Mobile definitive agreement, well, first it'll probably be a partnership and then it'll evolve into a definitive agreement. You can pull that forward. My best guess was maybe before the end of the year you might get it, but more likely sometime in Q1, Q2. But that definitive agreement, that could happen tomorrow. That could happen anytime. Because this is urgent. This is important. For T-Mobile, they've got to figure out, how long do I want to keep the car running with Starlink? They're making us look like idiots. We're partnered with them, we enabled them, and they just bought Spectrum and they said they're coming to eat our lunch. How long do I want to be on this ride before I get off? I think they've got to figure it out quickly. from a board's perspective, management as well, your shareholders are going to say, what are you guys doing? These guys are eating your lunch. Either you should enable SpaceX and let them become an MVNO and get something out of it, or tell me what you're going to do. So over the last 2 to 3 quarters of earnings calls, recall back in the day, no one thought direct-to-device was a real market. It didn't matter. Over the last 2 to 3 quarters, it's all analysts are talking about on the calls of these MNOs, their earnings calls. What are you guys doing about SpaceX? Well, those questions are going to be a lot tougher now because of this purchase of low-band spectrum, which we've harped on about for a really long time. You've had multiple people, people who support SpaceX say, well, they can roll out phone service. The biggest issue that we've always had is, well, they have no low-band spectrum. Well, now they do. So yes, they've got to deploy it and they got to figure out how they're going to build out a terrestrial network, but for AT&T and Verizon, they have a solution. But for T-Mobile, they're still in no man's land and they're still— they're like the wife who's being abused by the husband who's cheating publicly with these others. They're sitting there And people are wondering, what are you guys going to do? And so, yeah. So I think, as I said before, it's going to take some time for the market to digest this. Unlike other, I guess, people who maybe you're not feeling too good and it's uncertain for you, I'm ecstatic. This just pretty much sets the playing field and tells me that We've locked up, we are going to lock up T-Mobile. That's going to happen sooner. I was always confident of that, but it's going to happen sooner. Yeah, that's an amazing spot to be in. Blue Origin, they're getting back to the launch pad, and we've got another launch provider that's ready to go. That will happen probably in, for us, maybe January, February. We're already booked on Falcon 9s. By the way, people are like, well, what if SpaceX doesn't allow you to fly on Falcon 9. Well, we already have launches booked, and we're also working with other providers as well. But that's space too. Like, you work with some of your competition in some areas, and you compete against them in other areas. And so just like in the tech industry, that happens all the time. But anyway, yeah, those are my initial thoughts. I did, as I said before, Even outside of this news, the FCC is making huge, huge, huge moves in enabling a very competitive and robust direct-to-device market in the orders that were released today, and that happened to also go along with this grain management news, where, as I said before, the carriers' MNOs, the MNOs' cellular spectrum, all of that, or a lot of it, will be able to be deployed by satellite. And so that's just more capacity for AST, and it doesn't have to be contiguous spectrum across the country. It can be just portions of it, which, as we know, with the Bluebird satellite, you can light up portions. You don't have to— it doesn't spill noise everywhere. And by the way, this grain management spectrum, which is 7 by 7, this is good for Starlink because Their satellites don't have the ability to put down very exact spot beams, but when you have contiguous spectrum across the country, you don't have to worry about that. So this is a good win for them. So yeah, it's an exciting time. I mean, I think this is a huge game changer, and eventually, I don't know exactly when, maybe it'll be before the open tomorrow, it could be a week from now, or it could be a few weeks from now, when people kind of get figure it out and the aha moment goes off in their head. But yeah, this is good. So I'm going to pause there. Let me just see if there's questions. I'm sure there are some people who think I'm crazy. Let me go through these comments. This does more than just lock the 3 MNOs with AST. This forces their hand to provide AST service to every single one of their customers as soon as possible. Yeah. I think that's right. That is correct. So satellite will become a required feature because when you're competing against Starlink, which is a space company, you're going to have to be able to tell your customers that you have a comparable solution, which today, once the satellites are up, you're providing broadband. SpaceX does texting right now, but eventually when Starship goes up and is able to take 50 version 2 D2C satellites up to space at a time, their service is going to get better too. All right. So let's see. Doesn't this mean that AT&T, Verizon, and T-Mobile need to just package satellite coverage into most customers' existing plans versus more of a slow rollout? As thinking for customers would be, why would I just stay with my provider when Starlink does sat coverage by default? Yes. That's absolutely right. So this is one of the positives, right? The satellite coverage, unless it's like the absolute bare bones plan where it's like an entry-level plan and you're offering it for really cheap, satellite coverage is gonna be given to everybody, right? So if you're signing up for AT&T or Verizon or T-Mobile, it's pretty much going to be given to you as part of the package because the competition offers it by default. Right? And so from a marketing perspective, they're gonna say, hey, we are offering, we're gonna give you satellite coverage, and then, but if you don't really care for it, you can pay less for one of these lower plans that doesn't have it. Let's see. Isn't this a massive strategic blunder by T-Mobile? Why would they have given the spectrum to Grain? Seems like a huge miss. I don't think T-Mobile saw far down the road. So, okay, let's— I like beating up on T-Mobile, but that's because they deserve it. And I guess this is maybe one of the last times I'll try to beat up on them, or I'll willingly beat up on them. But grain management, doing a spectrum swap with them was a strategic blunder. I agree. They did get something out of it. So they got cash and they also got, I think it was like 600 megahertz licenses that helped them consolidate certain bands. But then giving it to a private equity firm who is only interested in selling to the highest bidder, that may have been a problem, but they didn't really have a choice because the FCC, as part of the Sprint transaction, I believe they were forced to divest this particular spectrum. So I don't know if they had a choice, but If you wanna talk about strategic blunders, as I was saying before, the fact that T-Mobile started working with Starlink back in 2022, that was the ultimate strategic blunder. But for AST, it all worked out really well, right? 'Cause for SpaceX, getting into the direct-to-device market, it pretty much helped educate the world about the possibilities, even though they were a fast follower to Bell. And so AST trades probably where it does now because everyone's like, oh, this is an attractive market. SpaceX is trying to get into it. But I think also that strategic blunder by T-Mobile back in 2022 is what led Verizon to start working with us as well as AT&T, and then what ultimately is leading T-Mobile to work with us very soon here. So in the end, that's probably good for us. Let's see. What do you think the grain asking price was? Well, We did have some speculation, was it a few weeks ago? So the bankers at GRAIN, they got paid their fees. And so let me just take a look. I think the speculation was what, a few billion dollars, maybe it was like $6 billion at a minimum. And so if you guys recall, there was an article in Bloomberg talking about how GRAIN was looking to potentially receive offers for their spectrum. Back then I thought, well, the grain management bankers are trying to get AST or SpaceX to up their price. I don't think AST was ever looking to buy the spectrum because they already have low-band spectrum through the carrier partnerships. So that arc was basically to get Starlink or SpaceX to bid it up, which is what they did ultimately. So I think the asking price, was probably around $6 billion or more, and that they probably transacted somewhere there. It's not disclosed by SpaceX because it's not material for SpaceX, but I'm sure we'll figure it— we'll see the number at some point from reporters. Okay, let's see. John Cougar. Isn't this bearish for AST because it shows SpaceX can launch low band pretty fast, number one? Number two, SpaceX has more low band spectrum than what carriers have given AST. And then 3, potentially some testing failure with AST testing with grain. Okay. So number 1, shows that SpaceX can launch low band pretty fast. Well, they've got 3 years to do this, right? So, and they can develop a new satellite. There's going to be speed requirements for it, which are pretty low, right? So they can actually get it deployed and then they'll start building a terrestrial network around it. They could also go to EchoStar and acquire some of their tower assets or whatever. I guess maybe they bail out EchoStar from some of the leases that they're trying to break with American Tower and some of the other guys. But yeah, they're going to have to invest in it to truly compete with the incumbents. Let's see. SpaceX will have more low-band spectrum than what carriers have given AST. That's correct. That is correct as of today. The 850 MHz spectrum that AT&T and Verizon have given to AST is not as wholesome as this. However, as we saw with the FCC's order today, they specifically are freeing up, what, 480 MHz of terrestrial spectrum for use for D2D? So you tell me, like, if the MNOs who own the vast majority of low-band spectrum and, of course, some mid-band spectrum, they have a war chest, right? And they're not using all of it in the areas where satellite is going to be prevalent. And so AST is going to have access to— pardon my French— but a shit ton of spectrum. On top of that, the telco JV specifically talks about pooling together valuable spectrum for use by satellite providers. So they've already hinted at what's to come. Let's see. So number 3, potentially some testing failure with AST testing with grain. No, I don't think that's likely. I mean, I think, so we do know that AST has been testing low-band spectrum with the carriers in the 700 and 800 megahertz range. They've been happy with what they've seen. You know, you've had Verizon make a decision to go with AST back in 2024 based off of, no, 20, yeah, 2024 based off initial testing results. And of course we saw that the company achieved with just the Block 1 satellites almost 100 megabits per second. So I don't think there's any testing failures there. It was really, I mean, SpaceX wants to get into mobile network operating business and they bought spectrum and that's pretty much the story, right? Let's see. I know in the past you have said AST will eventually get there, but do you think they'll be too late given that Starlink will soon have low band by the end of 2027? I'm not sure what you mean by that, but yeah, Starlink eventually will get to a reasonable MNO service, a competitive service. Now, it's at 2028, 2029, probably maybe 2029, because they've got to go launch their V2 D2C satellites, and then they also have to deploy this spectrum. I mean, there's a lot of steps to get there. So with AST, the infrastructure's already there. You just have to launch the satellites and then than use the MNO spectrum. And so the other point that I would make, which is pinned on my profile, is the business model. For AST, you already have an install base, the phones already exist, and so you just turn it on. For SpaceX, they're going to have to get the mid-band spectrum integrated into your handsets. I'm actually not quite sure if Grain 800 MHz spectrum is supported by handsets currently. That's another thing for us to research. And so it's going to take time, but as we all know, markets like to price things, discount them to today, and so you're going to see movements in all these stock prices. Let's see. What is the biggest loss and win of this agreement for AST? Okay. So the biggest loss is that originally, Grain Management, if this spectrum if they had entered into a leasing agreement to leverage the spectrum, it would've made AST service somewhat better. If it was contributed to the joint venture, then the carriers wouldn't have had to contribute as much terrestrial spectrum. But now with SpaceX looking to eat their lunch, they will be looking to contribute more terrestrial spectrum to make the service more whole. But the biggest loss is that, yeah, it would've been nice to have the grain management spectrum, but Was it a nice to have? Yes. Was it a need to have?
[00:41:22] Speaker D: No.
[00:41:22] Speaker A: So the biggest win of this agreement is it squarely puts T-Mobile into the camp for AST, right? And so all the MNOs have been very adamant about not enabling a SpaceX MVNO. And so this pretty much tells you like when SpaceX went to all the MVNOs to say, hey, can we become a virtual network operator and use your network? They told SpaceX to go pound sand. And so SpaceX is now buying range management spectrum to go compete directly with them. And so now, as I was saying before, the structure of the market is now locked in. So now SpaceX is becoming a 4th player. It's going to take time, a lot of money to get there. But in the meantime, AST is now the strategic counter. It's the satellite service that will enable AT&T, Verizon, and T-Mobile to compete. So, yep. This is a good one. SpaceX likes to front-run AST announcements. Maybe T-Mobile is coming soon. Yeah, I think that's actually a decent possibility. I mean, I don't know if we're talking days or weeks, but let's just— I'm just making something up. Let's say AST and T-Mobile were talking and they were planning to announce something 3 months from now, you'd probably pull that forward. You'd probably pull it forward and announce it in the next few days or weeks because this is important. For T-Mobile, you look pretty stupid. You have an egg on your face. You enabled a competitor to come after you, and investors and industry people, everybody's going to be asking, what are you doing? Like you're still selling T-Satellite, you know, Starlink service on your website, and they're coming to eat your lunch, and they have access to all your customers' information. What are you doing? So let's see. Who is this? Okay. Someone's saying, get screwed for trying to spin this as a positive for AST. All they've done this year is ignore shareholders and fail to launch satellites. Abysmal performance. Abysmal guidance. Okay. Well, hey, Jesus, yeah, you're more than welcome to sell the stock. No one's putting a gun to your head. You can sell it. Let's see. Someone's saying this grain news is bearish for AST. If you listen to the entire space, I recommend if you've come on late, you should go back and listen to the replay. This just pretty much sets the market, right? The die is cast where T-Mobile, AT&T, and Verizon are locked in with AST. So take, take you know what you will from that. But that's to me that's very positive. Let's see here. Get some more of these questions or statements.
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[00:45:23] Speaker A: With SpaceX strengthening its satellite position, AT&T open to multiple partners, do you view AST SpaceMobile as a preferred long-term partner? What competitive advantage keeps AST in that position? Well, the technology and the patents, right? Once the constellation is up, which costs billions of dollars to deploy, it's hard to replicate that, right? And so I think the only other credible technology partner would be an Amazon, with Globalstar, when they eventually replace those satellites. But I think the carriers have learned the hard lesson through what T-Mobile did with SpaceX, which is if you enable a supposed partner, which has grand ambitions, which is what Amazon has, ultimately they're going to come back, put a knife in your back, and try to eat your lunch. AST is not that. It's a partner that is looking to enable— it's a super wholesaler looking to enable MNOs. So yeah. Now, I guess some people might ask, well, what about Iridium? Iridium, I've talked about the limits about their spectrum, which is about 8 megahertz in width, and it's shared uplink and downlink. You have to do it by time division duplexing. And so that one will never be a broadband service, right? Like it will have some reasonable ability to support voice, but not in large numbers, but that's what Iridium is. That's why it's not, that's not what it's about. It's where it gets its value. It's in serving military customers, doing PNT and other things, but on the commercial side, I don't really see it as a competitor.
[00:47:01] Speaker D: Let's see.
[00:47:05] Speaker A: I think that's pretty much it. We can hear your lisp and what you type now. Led all these sheep to slaughter, told ya. Rocket Lab is a better play. Okay, all right, sure. Anyway, let me— I'm gonna refresh this to see if there's any more questions or comments. Let's see. If you were the JV, why wouldn't you buy into AST at this point and insist that a sale be conditioned on leasing further spectrum? I think the key thing is for AST to remain neutral. And so yeah, you could take strategic investment from the joint venture or you would take strategic investment from T-Mobile because AT&T and Verizon have already invested in you. But Yeah, for the joint venture, I mean, you could see it get capitalized by the 3 partners, and then they make another investment in AST. I guess that's possible. But I think there was always this question about why wouldn't AT&T or Verizon or one of these guys just buy AST? You want to keep AST neutral. You want AST to become a multi-tenanted provider of a constellation that works with all MNOs globally. You amortize the costs and you get scale benefits from that. And so you wouldn't want one party to own it. Now, there are some natural parties that could own it, like a Google who already worked with all the MNOs through its handset, Android, or Apple for that matter. But overall, yeah, I guess the JV could— I guess in my mind, what will likely happen with the JV is that more terrestrial spectrum will get contributed beyond just the 850 MHz from AT&T and Verizon and also 700 from FirstNet. There'll be other spectrum assets that get contributed there that will then work with AST. Then, of course, there'll be network integration, a whole host of things that go into that, gateways, so that there's no redundancy. And in this way, the JV also gets T-Mobile up to speed because they're behind. They've been working with Starlink this entire time. I think that's it. Yeah. So anyway, that is all I had. I would— yeah, I'm going to think about this more, but I do think it'll be interesting to see the press overnight and then sell-side reactions. But yeah, for the people who understand the story and who have been in the name for whether it's 5 years or a few months, this pretty much for me sets the playing field. So it's the 3 carriers with AST versus Starlink and SpaceX. That is something that is— that dynamic is going to be repeated globally. So the big 4 in Europe, where you have AST working with Vodafone, Telefónica, and Orange, you can pretty much— it's fait accompli that Deutsche Telekom is going to join Satellite Connect. I mean, this is how the strategic landscape starts to form. So for those that understand what they own, this is good. So for those that don't, I don't know what else to tell you. Maybe listen to the replay. But in the meantime, I'm going to continue to think through this and I'll have more to write and say about it. But yeah, this is a huge day. For me, I'm looking to actually add to my position this evening. So with that, I'll end the space and hope everyone is doing all right and making it through this brutal macro environment. But hopefully when things do settle down a bit and when that T-Mobile definitive agreement comes, that will be something that changes the picture. Anyway, thanks everyone for joining and talk again soon.
[00:51:02] Speaker B: Bye.
[00:51:02] Speaker D: Thanks for listening to the AST SpaceMobile Podcast. If you enjoyed this episode and you'd like to help support the podcast, please share it with others, post about it on social media, or leave a rating and review. To catch all the latest news about AST SpaceMobile, Make sure to subscribe. Thanks again, and I'll see you next time.
[00:51:36] Speaker C: Listen.
[00:51:38] Speaker B: Mmm, waffles.