C (3:39)

When your company is thinking about the larger and larger rockets that are going to be fully operational online, is that, is that part of the scaling challenge for your company right now? Which is that a lot of the rockets going into low Earth orbit can only hold like 3 to 600 pounds worth of payload?

A (3:54)

Yeah, well that's one of the cool things about our company is, you know, even four years ago people were calling this challenge cold fusion impossible. And through a number of technology and business and just simply strategy approaches, we've been able to conquer that challenge with today's technology, with today's rockets. So yes, as rockets get bigger, as they get cheaper, that's a win, win, win for us and our customers and users. But we work with today's rockets. You mentioned a few payload numbers there. There are many heavy rockets today. We've flown on SpaceX, we've flown on Israel, out of India. We just recently signed an agreement with New Glenn Blue Origin for their New Glenn rocket. So we work with today's technology, we're agnostic to the rocket size and we work within the regular. You know, essentially today they're 5 meter fairings, which is you know, almost 20ft. So we collapse within that and we're able to deliver our payload orbit with today's tech.

C (4:51)

And for someone like me, who, who is less savvy on how, you know, how can I connect to space Internet, for someone listening, the layperson, how is connecting WI fi on my cell phone in my home to, to my modem, how does that work with, with your satellites? How am I connecting to the Internet from space?

A (5:09)

Right. Well, it sounds like an incredible challenge, right? But we, we, we know that radio waves just, just travel, right, because we listen. We're actually listening for aliens today. And we know our transmissions go very far out. So radio waves propagate very well, particularly the radio waves that we work with, which is the low band frequencies that our phones use. So it's a matter of very, very complicated radio frequency stuff. And that's where the company started, is our specialty in that. And that's why we're partnered with the wireless operators, because that's their specialty. But essentially putting cell towers from space down to the ground, creating fixed cells that you can wander into, which is the same thing that towers do on the ground. We do that from space. And the challenges that arise from that, of course, are distance, which we manage with our large array because it can be very precisely, it can be very precise over long distances and deliver it with a lot of power. Because we've got a big solar panel and two, we're able to do a lot of these at once. So it's a very efficient way to deploy it. It's not just one big satellite, serves a small amount of cell phones. And, and so the challenge is multiple. It's how do you not disrupt terrestrial networks? How do you deliver all this capability from so far away? Precisely. And importantly, at the founding of the company is a patent that makes the cell phone wait. Because cell phones are used to looking for a signal that's very close, only a couple miles away at most. And that's actually very far for the speed of light. That's not very far, but 500 miles is actually kind of far for the speed of light. So at the core of our company and its founding very early was a patent to make the phone wait a little bit longer. Not so long that you and I will tell. But phones that do things on the order of 5 to 10 milliseconds, this patent makes the phone wait and that was foundational for us.

C (6:56)

So what's that mean in the next few years with your satellites, would we be able to record like the video call we're having right now using your Bluebird satellites, or is that something where it would be. There would be a lot, a lot of lag in there?

A (7:12)

No, no lag. So one of the cool things about what's happened in last 10 to 20 years is really the development of low Earth orbit in a meaningful way. And the low Earth orbit, just so you know, that is a shell around the Earth that's very close. That's where the International Space Station is. It's only about 500 miles away. It's very different from geosynchronous orbit, which is about 30 to 50 times farther. That's where satellites sit in one place. And you can have cable, you can have TV and whatnot. So Leo, it's all about Leo. And with Leo, the latency is 20 to 40 milliseconds. And that means essentially, you know, 1 25th or 1, you know, 20th of a second. So human beings don't notice that. Really very, very, very few applications do. The one application that notices it is the phone. And that's why we had to come up with this patch. And it doesn't sit on the phone, it sits back at the core, because at the core of our technology, we don't touch the phone. The phone in your pocket works. It's backwards compatible. And you don't have to make any changes to the phone. You just have to sign up for the service through your operator today and what that means for us and when you can get the service. We actually have this capability in orbit today. Those first five satellites, plus the six that we launched two years ago, that was a test satellite. These six satellites can do this today. I've done video calls like this. There's some embarrassing video of me on the Internet being surprised that it came on and moving quickly. But we can do this today. It's just a matter of how much. So as we launch more satellites, we can expand this capability today. It's not going to be a service we roll out broadly because it's only 30 minutes of coverage a day. We need to get closer to 24 hours a day and then you'll be able to experience it as a user. But the satellites in orbit today, they can do video calls just like this one.

C (8:50)

I want to get to the scaling opportunities and challenges in a moment. When you think about the purpose of AST Space Mobile and essentially eliminating coverage gaps across the United States and hopefully later in developing parts of the world, what are some use cases that drive you in your work that your team is excited for?

A (9:10)

Yeah, I mean, it's exactly the right question. And the cool thing is it's a hard one to answer because there's so many places to use this tech from a capability perspective, being able to put large arrays like this in orbit, which we can basically cover half the US with one satellite as it's moving overhead and create 2,000 different cells that people can roam into. So it's basically deploying digital towers for the operator. So anything that a cell phone can do or cellular operator can do, we're going to be able to do because this is a native cellular platform. This is not a bolt on, add on through an app. You basically just wander onto the network like you would a tower. So anything in the cellular world that you can do, you can do with us. The one variation on that that's very important is that we solve the coverage gaps, right? So what can you do that's new now that your phone works all the time? You know, some of our partners, the wireless companies have said, you know, over a third of their customers are interested in being connected all the time and willing to pay more for that. So for us, we solve all the coverage issues and that facilitates new use cases. You know, one of the critiques of 5G is that there's no killer app for it because it provides better service and, you know, you're able to build in densification of the network. But at the end of the day, we as users have the world's information in our pocket and it works 95% of the time. And we're upset about that and it's crazy. But at the end of the day, that last 5% that we can deliver allows the operators to remind their customer, us, the users, why we love connectivity and fall back in love with connectivity. And so that's moving around as we live, work and travel. That's dead zones where it's not lit up in certain frequencies or any frequencies with any towers. It's gray zones where your phone just doesn't work so great. As you start getting out of the suburbs of the U.S. many of us know and experience that one or two bars that does limited or poor service. Being able to solve those sorts of issues is the killer app for, for us. And at least in the developed world, in the developing world, you know, this is a global business. There's all kinds of other applications there too.

C (11:16)

When you get to, you're looking to get to, I believe, 45 to 60 Bluebird satellites in order to, to eliminate these, these coverage gaps. I'm gonna, for the Purpose of this conversation, skip ahead through the operational challenges of getting those online. If you turn these on full blast for, for, for the listener trying to understand this, how much Internet traffic can they, can they handle?

A (11:40)

So each of our satellites independently can offer about a million gigabytes per month of usable sellable capacity. And the reason I qualify it is because I'm not counting stuff delivered at 2am or 4am because there's less usage. I'm counting when it's over useful territory like the US we estimate with the spectrum that we have available with our, through our partners that we can do about a million gigabytes per month of usable sellable capacity. So what that means is we can have a million gigabyte plan users, we can have 10 million 100 megabyte users, and that is scaled by that 45 to 60 number you talked about. So in the U.S. for instance, being able to deploy millions of gigabytes per month of capacity in places that doesn't exist, that allows you to bring on many users of Internet, many, many, many users of voice and almost an unlimited users of text. So this is a real native cellular application that allows us to scale in a meaningful way and deliver that kind of number of users and fulfill our business plan goals. We think that, you know, a single digit penetration rate of our partners with this type of service is, is a very good outcome for the company and very useful for the market. But we can go up from that and build with scale over time. But that's how to think about the scale of this operation. This is not a limited service. This is not an emergency service. This is something that we believe is going to be mainstream and we believe is going to be very exciting for the wireless companies and then also the users which we see in some of our retail investing community.

C (13:17)

Of course you have a very passionate retail investing community and you know, our, our, our friend of the show, he's, he's an AST Space Mobile investor. He wanted to go by Florida man Omar for the purpose of this question. He wants to know, he's very excited about your technology, but he, he does see some of it being held up by FCC regulatory filings. And he wants to know, he's excited, he wants to be able to use this and test this on his phone. So what's, what's the holdup? Is this waiting for the FCC to review your technology or is this largely in your court? Are you ready for beta testing among the general population on like AT and T services right now?

A (13:57)

Yeah. So we launched our five Commercial satellites, as you said back in September. So it's been about two months. That's a normal time frame for us to calibrate and get things going. We've put some cool videos online of these things unfolding, which is very exciting for those of us who are geeks about this stuff. But we're getting very close to be ready to be doing our beta service, and that's what we filed with the fcc. So I'm gonna. I'll take the alternative approach here and give the FCC a pat on the back. We've been working with them for years to develop this new service. And in fact, they developed new rules about a year and a half ago that they ratified in May of this year to essentially cover the. The industry that we've created. So they. They work with us, you know, in time for when we need the rules and regs that we get in, the approvals that we get. In fact, we reflagged in the US In March because the US had taken such great steps, these new rules, staffing up a whole new space department, a sixth department. And. And so we had great comfort there with the FCC and also with our defense pipe contract pipeline. And then just a few months ago, we got our commercial license. So that commercial license covers these first five satellites about halfway. We need to make some modifications to that license, which is what we're waiting on right now. But as we grow, we have full expectation that they'll grow with us. And in fact, the commissioners there, you know, we have good relationships with all of them, and they're very supportive. So the fcc, you know, we got to remember what the FCC does, they protect the integrity of our wireless networks, which is everything, because we don't want our phones to not work right. There's 300 million users in the US it's very, very complicated to manage the airwaves. It's a very densely trafficked set of airwaves, and. And really, only someone with technology like us can manage that without disrupting it. So they need to protect that. They need to be careful. But we're expecting temporary approval for service on our satellites very soon. And then early next year, we'll be going for commercial approval.

C (15:50)

So hopefully we'll be talking again in December of 2025 when I check in with my friend, Florida man Omar. Do you think by that point he will have been able to test out your technology on his phone? Or is this a case where you don't want to give, understandably, maybe not give a prediction?

A (16:06)

Sure. Well, our. Our plan today is to roll out several thousand beta users in the US under the sta, the temporary authorization we've asked from the fcc. So we expect to be doing that early next year. But in terms of a broad rollout, I don't want to get ahead of our partners. We, you know, one of the cool things we haven't talked about yet is how close we are to the wireless companies. Almost 50 agreements signed globally covering almost 3 billion subscribers amongst them. So we do everything very closely with them. They are the customer owner, they are the ones who have our service plan through which you'll get billed. So they are the ones that we'll be doing these rollouts with and talking more about. But they've already started talking about us publicly. They're big supporters, you know, our retail community is big supporters of them as well and convey the interest in this connectivity solution, which is fantastic. It's a very positively reinforcing circle that shows the end user demand. But yeah, I'll hold off on any announcements on the go to market more broadly, but we'll be doing that with our customers.

C (17:07)

Let's talk about the relationships with telecom companies. How have you been able to build those relationships with now at&t Vodafone and several others?

A (17:18)

I mentioned that this challenge was considered cold fusion for a long time. And that was not just a technology issue, that was also a, a business issue. You know, the satellite industry is from a communications perspective, tens of billions of dollars a year. You know, relatively small, very niche, very competitive. But the wireless industry is a trillion dollar TAM. This is the 5 billion users, it's all of our service plans. This is, this is the world's information in our pocket everywhere we go. Right. And so it's very powerful. And those companies are behemoths. They've changed the world for us. And so from the very beginning we had to convince them that finally satellite could deliver on the promise of being useful to cellular. And we've done that with native cellular technology, which I can talk more about. We've done that by putting a go to market strategy that is aligned with their objectives in a meaningful way around growth and retaining their customers. And we've done this consistently. We've done this through equity investments, through board representation, through exclusivities with key customers and through approaches with regulators that we were just talking about. So really we are aligned with our customer partner Investor M&OS, the mobile network operators. We could not be more aligned and we love them and we've had great success with them. And you see that in how they talk about us publicly and how they've supported us along the journey.

C (18:44)

One thing that's interesting about these agreements is that there's, you know, one of your competitors and I would like to get to SpaceX's offering at some point in the conversation is SpaceX right now is just with T Mobile and your company is across different wireless cellular carriers. Was that difficult? Were the telecoms wanting exclusivity with your technology ever?

A (19:05)

At the core, and this is common in the telecom world, you have those who own the customer and we know that in the US as the three big operators. But every country has those three or four different three or four big operators. But behind them there's been a move to pull infrastructure out. So as those industries have matured, you have tower companies that are separate. American tower is an investor of us to the largest tower company in the world. You have data center companies that are separate, you have fiber companies that are separate. So this infrastructure has been carved away and sold off over time. And, and it's for the benefits of traditional outsourcing. Right? The benefits of outsourcing, whether it's infrastructure or services, is that you can scale your offering in a way that one operator expands to two, three or many. And so our solution, that's called carrier neutral strategy, that's always been our approach and that's what we expect in the end state is that will be useful to all the operators in the markets we want to participate in. And so what does that mean? Of course we've been on a seven year journey to build the business. Early on being able to be partnered exclusively with folks like Vodafone, who is the largest operator outside of China, is in 24 countries, is in many more partner markets, has more spectrum than any operator outside China. It's a very impressive company to be partnered with and we've been very privileged in that regard. And that was revalidated with our agreement that we just signed up with them, a 10 year agreement with Vodafone. So we've been able to build this out over time and with many operators. And then in the U.S. of course, we brought Verizon on about the middle of this year in addition to AT&T, who's been our longtime partner. And that was very important for the company. I think it gives us clearly much more breadth to offer our service in the United States and benefit more Americans. And bringing those two together was made possible because they jointly want to achieve this objective.

C (21:03)

I had a question from our message boards, our premium message Boards with user TMF built to last. And this was something I am curious about as well, which is that SpaceX is also looking to build a direct to smartphone business. Granted, I believe it's at a much lower Internet traffic capability than what your company is capable of. But how are you thinking about the competition right now in terms of low earth orbit Internet?

A (21:30)

I'll answer that in a few ways. First, there's not a lot of constellations, you know, there's not a lot of service providers in orbit or low earth orbit. And that's because there's this phrase called space is hard. So there's very few folks who have gotten to orbit and very few that have gotten to the orbit in a meaningful way. And so that's why these five large satellites we just put up and many more to come on top of it is quite an impressive feat when you look at what other companies have been able to do. So at its core, we don't expect there to be a lot of companies who do this sort of thing because it's really hard. The technology is hard, the funding is hard, the regulatory is hard. Building a global company is hard. These are really lofty goals and to do it five or six or seven times over is rarely done. So I think for us, you know, you got to apply that lens first and we're on a great run here. We have a lot of benefits, a lot of partners, and we're getting built. But others will run into challenges for sure. And then you got to think about the user side. You know, in every country, like I said, there's three to four operators. Each of those operators have different frequencies. They might compete with each other in ways that doesn't facilitate partnerships. And there's government angles. So we think that this is an industry being built from zero that will support multiple healthy players over the 10, 15 year period. And that we have a great go to market advantage based on inventing the industry, bringing the technology to bear, being vertically integrated, having all these partners, having funding. Of course we're publicly traded on NASDAQ today, so we're getting built as fast as we can. We think we're in a race against ourselves, our partners and our customer. And the end users I think want the service now. So every day that goes, you know, we got to push harder. But in the end state, I expect there to be multiple operators like with all these carrier neutral companies that I mentioned earlier. And that's okay. But today we have the only cellular broadband solution based on the technology that we're Bringing to bear, do you think.

C (23:29)

Later in the future, 5, 10, 15 years from now, is someone who pays an Internet bill and you usually just have one sort of option in your area. Maybe you have two options for fiber, Internet or broadband. Do you think space based satellite Internet will ever compete with that traditional, just regular usage, not just the coverage gaps?

A (23:54)

Well, it's a fascinating question, right? And it's totally the right question, but I don't think so. And here's the reason why. You know, physics is physics. So today you have WI fi to your home and you have a cell phone in your pocket, right? And those are different. Both are giving you bits and both allow you to do very similar things today. But the economics from the provider are very different. And that's because fiber is by far the best solution for home WI fi. Of course there are areas where fiber is not built out and that's where you see satellite today being successful, successful. And then with towers, you know, we have tens of thousands of towers in the United States that are hung with radios. This literally, I don't know if users appreciate this. Every tower, it's like a Christmas tree with radios on top. And whenever you roll out a new frequency or a new G, are the operators AT&T Verizon, et cetera, need to go and hang new equipment. And so it's very capital intensive, long scale effort. And so once that's built, that's super valuable, right? However, now that we have the capability to essentially drop down a digital tower in up to four frequencies anywhere at any time, within a user's footprint, within the MNO's footprint, that's an incredible technology to bring to bear and that allows them to curate their network over time and to work with ours closely. And so we are very tightly connected with the operators. That is our strategy, that is one of our main benefits. And we want to be very useful to them. And ultimately they need to deploy fiber, they need to deploy towers, and they need to deploy us. And putting all those together is the solution. Another thing is we know that the demand for connectivity today is ubiquitous. It's overwhelming people, you know, you do customer surveys, people turn that off after they turn off other things in their household. List of costs, you know, it's almost as important as water. So what we find is that anything that gets that solution better or to 100% is very valuable. And that's the niche that we fulfill for them. A very valuable, a very well marketed niche that again makes that phone that works 95% of the time work all the time and that last 5% might be the difference between life and death.

C (26:16)

It's an important mission and you still have a lot of satellites you want to deploy. Getting to that, the 60 number for the Bluebird satellites, you've already put five into low earth orbit. What's the path look like for that, for getting the rest of the satellites up there? What challenges is your company still facing in deploying those?

A (26:33)

We're vertically integrated, which means that we own and control 95% of the supply chain in the build of our satellites, which is very important because it allows us to move fast, means we're not subject to risks outside the company. We're not waiting to get a letter from a supplier that says quarterly, oh, sorry, we're delayed. So we own the build and the manufacturing. We have substantially completed the development of even our next generation satellites which are bigger and better than the ones that are currently in orbit. And we're building as fast as we can. We've talked about having the first 17 satellites in planning and production already in our Texas based factories. And getting those up as soon as possible is critical to the success of the company. And one bottleneck that we did observe that we were able to resolve a few months ago was long term agreements with Blue Origin, with ISRO out of India and with SpaceX to launch our satellites during 2025 and 2026 to complete that 45 to 60 satellite guidance. So we've organized our business around getting these first 45 to 60 satellites up. It gives us the ability to have 24, 7 coverage in the latitudes that matter around the world, I. E. Those that are like the U.S. europe and Japan. And so getting to that number with launch, with manufacturing, with capital, with regulatory and with our partners is critical. And that's why you saw the commercial agreement with Vodafone earlier this week, with AT&T earlier in the year, and the investment of Verizon this past summer. So bringing all those pieces together to operate in our initial markets and do that with today's partners and more to come is absolutely critical. And to drive success and to align around that 45 to 60 satellite goal to deliver capacity to millions of Americans and tens of millions, maybe hundreds of millions, others around the world.

C (28:24)

And thinking outside of your company, low earth orbit and the space economy is something that fascinates me, I think, about the manufacturing that can be done when you're outside of Earth. I was talking to earlier this year we had Tom Vice who runs a company called Sierra Space, and they're looking to do these space planes and these inflatable space habitats. And he pointed out that you could even 3D print organs in space. And that's something that solves the problem of gravity. You can't do it on Earth because the tissue layers collapse in on themselves and that creates a lot of problems. I'm saying this hopefully to get us thinking broadly about space and the opportunities there. But Scott, when you think about the opportunity in low Earth orbit, in the space economy, what storylines are you interested in? Which ones are you following outside of space based Internet?

A (29:16)

The thing to keep in mind is, as I started my conversation with, is relatively little development of space today. It's been an area where governments played and then billionaires. It's only very recently that we're finding a broad commercial and investment interest in the opportunities. Because remember, as strong, as much as we love our capitalist society, it's relatively short term thinking, right? So being able to think more than a couple of years away is hard. And so what you can read through with the fact that we have real investment interest in space today is that those opportunities are closer and more actionable and more real. And so I would challenge folks who are looking to think broadly, to think about, you know, basically what, what happens if we had discovered a new continent? Would you not invest in a new continent? A place where you can develop all the capabilities? It's essentially a land grab, right? So not only can you develop all the capabilities of that are normal, but then there's extra capabilities that you can do that are, that are not normal, you know, that are differentiated like you just described. So I think we got to watch for how that develops in terms of being able to invest in it. Today, the market for space based solutions is by and large connectivity, at least commercially, it's almost all connectivity based for the reasons that people like us, companies like us can bring to bear solutions on the earth that are differentiated than what can be done on earth. But going beyond, I think we really need to watch for being able to put people in orbit, keep them there for longer periods of time, do it at a cost that makes sense, and start to understand what these capabilities are that are differentiated in orbit. Because you described one, there's many, of course, general R and D investment is one of the best things we can do for our country, for our civilization. When you think about it from an economic perspective, the only real advancements come through technology. And so any new technology that we can bring to bear as a country and as a civilization is extremely valuable. And it's very exciting to do that. Whether it's in orbit capabilities, it's going to the moon going and beyond. Those are all super important. And anyone who moves the ball forward, like AST Space Mobile, I think is very valuable because there's going to be winners, and those will have incumbency in the decades to come. And we believe that we've got a really good, useful platform. Foreign.

B (31:51)

As always, people on the program may have interest in the stocks they talk about, and the Motley fool may have formal recommendations for or against. So don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley fool editorial standards and are not approved by advertisers. The Motley fool only picks products that it would personally recommend to friends like you. I'm Mary Long. Thanks for listening. We'll see you tomorrow.