AT&T wants to turn every smartphone into a satellite phone by no later than 2030

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Why it matters: Dropped calls and dead zones may soon be a thing of the past if AT&T can keep its promises. Along with its commercial partner AST SpaceMobile, it will provide satellite coverage to ordinary cell phones. The partners will launch five satellites this summer as part of a space network offering coverage anywhere in the continental US.

On Wednesday, AT&T and AST SpaceMobile announced they entered an official commercial partnership extending to 2030. The two companies have worked together since 2018 under a “Memorandum of Understanding.” Their goal is to bring satellite connectivity to standard 5G phones.

Last year, the partners reached their first milestone by completing a satellite call from Texas to Tokyo using an unmodified Samsung Galaxy S22. It subsequently demonstrated text and video communications in the latter part of 2023. The next step is to launch AST’s first five commercial satellites into low-Earth orbit sometime this summer. The collapsible vehicles measure almost 700 square feet when unfolded.

As part of their commercial agreement, Chris Sambar, AT&T’s network head, will take a seat on AST’s board of directors. The telecom giant will work closely with its satellite provider to test, troubleshoot, and further develop its space-based network, initially targeting the continental US.

“Working together with AT&T has paved the way to unlock the potential of space-based cellular broadband directly to everyday smartphones. We are thrilled to solidify our collaboration through this landmark agreement,” said Abel Avellan, AST SpaceMobile Founder, Chairman, and CEO. “We aim to bring seamless, reliable service to consumers and businesses across the continental US, transforming the way people connect and access information.”

SpaceMobile and AT&T are not the only ones in the direct-to-cell space race. SpaceX and T-Mobile are also working on a similar network using the existing Starlink satellite swarm. They completed their first satellite-to-smartphone call last October, just months after AT&T/AST’s milestone.

While AT&T promises that its network will eradicate dead zones in the “not-too-distant future,” it cannot provide a window for when the service will launch. However, you can bet it will not be free or cheap. The cellular provider is well-known for nickel and diming its customers. Until recently, it charged $25 per month for customers to use their phones as a hotspot, essentially double charging for data they already paid for. Now, tethering is free, so long as customers keep their usage under 5 GB.

The best case scenario is that satellite coverage will be an à la carte charge based on how much you use it. In the worst case, it will be an expensive add-on service that customers will pay for regardless of how much they access the satellites. Optimistically, AT&T will try to find a middle ground to accelerate its ROI while making the service affordable enough to attract subscribers.

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