In January 2025, a farmer in a dead zone outside Midland, Texas, sent a text message from a stock Android phone with no cell tower in sight. The signal traveled roughly 500 kilometers straight up, bounced off a Starlink satellite, and landed on T-Mobile’s network. It was not a stunt arranged in a lab. It was one of thousands of connections logged during early direct-to-cell testing, and by mid-2026, the implications are forcing the largest carriers on Earth to rethink how they spend tens of billions of dollars a year building networks on the ground.
Two American companies, SpaceX and AST SpaceMobile, have crossed from prototype demonstrations into binding regulatory and commercial milestones. A European Union sovereign constellation is funded and moving toward procurement. And chipmakers like Qualcomm are shipping satellite-capable modems inside mainstream handsets. Taken together, these developments are redrawing the competitive map for an industry that has operated on the same basic model, build towers, sell subscriptions, for four decades.
Starlink’s conditional green light and what T-Mobile’s customers can expect
The Federal Communications Commission granted SpaceX a Supplemental Coverage from Space (SCS) license in late 2024, authorizing Starlink to transmit cellular signals directly to unmodified handsets in partnership with T-Mobile. The approval came with conditions: power levels are capped below what a nearby cell tower would deliver, and SpaceX must coordinate with existing terrestrial operators to avoid interference, as Ars Technica reported at the time of the FCC decision.
Those constraints matter. They mean Starlink’s direct-to-cell service will initially handle text messages and low-bandwidth data rather than video calls or streaming. But for the estimated 500,000 square miles of the continental United States where no terrestrial signal exists, even a text-only lifeline changes the value proposition carriers can offer.
Independent researchers have begun measuring what the service actually delivers. A preprint published on arXiv in early 2026 documented crowdsourced measurements of Starlink’s satellite-to-device radio access network. The study found usable, if modest, throughput during short contact windows, enough for messaging and basic data but not for bandwidth-heavy applications. Because the data came from ordinary users with standard handsets rather than controlled lab setups, the results reflect real-world conditions. The contact windows were intermittent but predictable, appearing as satellites passed overhead on known orbital tracks.
The preprint has not undergone formal peer review, and a single crowdsourced dataset cannot establish long-term performance benchmarks. No published study has tested these signals in dense urban canyons where building interference and spectrum congestion would stress the system far more than open rangeland. Still, the directional finding is significant: the physics of the satellite-to-phone link work as advertised under field conditions.
AST SpaceMobile locks in carrier contracts
AST SpaceMobile, the other major contender, has moved beyond testing into binding commercial arrangements with some of the world’s largest mobile operators. The company’s annual report (10-K) filed with the SEC for the fiscal year ended December 31, 2024, references definitive agreements with AT&T, Vodafone, and Rakuten, among others, structured around revenue-sharing models. A separate Form 8-K filing confirms the existence of these contracts, though exact revenue-share percentages and minimum-revenue guarantees remain redacted in publicly available exhibits.
SEC filings carry legal weight that press releases do not. Companies face securities fraud liability for material misstatements in their 10-K reports, which makes these disclosures reliable indicators of where AST SpaceMobile’s commercial relationships actually stand. What the filings make clear is that the company’s capital allocation now hinges on regulatory milestones and partner commitments, not speculative technology bets. AST SpaceMobile’s first commercial BlueBird satellites are designed to provide broadband-class speeds to standard smartphones, a more ambitious technical target than Starlink’s initial text-and-data service.
Europe bets on sovereignty with IRIS-squared
The competitive pressure extends well beyond American companies. The European Union has committed roughly €6 billion in combined public and private funding to build its own sovereign satellite connectivity system. The European Parliament adopted the IRIS-squared (Infrastructure for Resilience, Interconnectivity and Security by Satellite) program in February 2023, and the Council of the European Union gave final approval the following month. The budget blends direct EU funding, European Space Agency contributions, and private-sector investment.
Brussels framed IRIS-squared explicitly as a matter of digital sovereignty and secure government communications, not just commercial broadband. That framing signals the satellite connectivity race now carries geopolitical weight: European policymakers do not want critical communications infrastructure dependent on American or Chinese constellation operators. Operational satellites are targeted for later this decade, though specific manufacturers and ground-segment contractors for the first constellation tranche have not been publicly named as of mid-2026.
The question carriers cannot dodge
For telecom executives planning multi-year capital expenditure cycles, the strategic dilemma is immediate. A single rural cell tower can cost $250,000 or more to build and requires ongoing backhaul, power, and maintenance. If a carrier can fill that same coverage gap with wholesale satellite capacity purchased from SpaceX or AST SpaceMobile, the business case for building in low-density areas weakens sharply.
No major carrier has publicly disclosed a shift in tower-build plans tied to a satellite partnership, and capital expenditure data covering the relevant decision periods is not yet available. But the logic is straightforward, and Wall Street analysts are already modeling scenarios in which carriers redirect portions of their rural infrastructure budgets toward orbital wholesale agreements.
The flip side of that logic is risk. Regulatory timelines can slip. Technical performance at scale, with millions of users competing for limited satellite capacity, remains unproven. And the redacted commercial terms in SEC filings leave outside observers unable to model whether wholesale satellite pricing will actually undercut the cost of a new tower over a 10-year depreciation cycle. Carriers that commit too aggressively to satellite partnerships could strand capital if the technology fails to scale; those that commit too little risk watching rivals advertise coverage in places they cannot match.
Where the chipmakers fit in
One development that often gets overlooked in the satellite-versus-tower debate is happening inside the phones themselves. Qualcomm’s Snapdragon satellite-capable modems now ship in flagship Android devices, and Apple has offered satellite emergency SOS since the iPhone 14 in 2022. The hardware layer is no longer a bottleneck. When carriers and satellite operators finalize their network-side agreements, hundreds of millions of handsets already in consumers’ pockets will be ready to connect without a hardware upgrade.
That installed base changes the adoption curve. Previous satellite communication services required specialized, expensive terminals. Direct-to-cell eliminates that barrier, which means uptake could accelerate faster than historical precedents for new wireless technologies would suggest.
What the next year of disclosures will reveal
The old assumption that orbital connectivity would remain a niche backstop for hikers and maritime crews no longer holds. Direct-to-device links have moved from concept to conditional FCC approvals. Revenue-sharing contracts bind satellite operators and mobile carriers in relationships that will show up in quarterly earnings. Governments are treating space-based networks as instruments of national security.
The next 12 to 18 months will be decisive. T-Mobile is expected to expand its Starlink direct-to-cell beta to a broader subscriber base. AST SpaceMobile’s first commercial satellites face their real-world performance test. And IRIS-squared procurement decisions will reveal whether Europe can field its constellation on schedule. Each of these milestones will produce hard data, in SEC filings, FCC reports, and independent measurements, that will determine whether satellites become a core layer of the global mobile stack or remain a specialized tool for the places towers cannot reach.
For the carriers writing the checks, the uncertainty is uncomfortable. But the direction is not ambiguous. The network is moving upward, and the strategies built around ground infrastructure are being rewritten to account for antennas that orbit at 550 kilometers.
More from Morning Overview
*This article was researched with the help of AI, with human editors creating the final content.
