At Seraphim, we've been bullish on direct-to cell for some time, first investing in AST Space Mobile in 2022. We've remained confident that direct-to-cell could be a transformative tech with a huge market. So this year, we invested in Skylo, also focused on direct-to-cell. The two companies are taking a very different approach. AST plans to launch its own constellation of large, high-powered satellites to ultimately deliver broadband direct-to-cell. Skylo, on the other hand, uses it proprietary protocols to leverage underused GEO capacity to 3GPP Release 17 cell chips, the next generation of cellphone chips.

SpaceX has been making significant strides in the direct-to-cell arena. In January, they sent the first text messages using their Starlink satellites. Following this, SpaceX launched 90 direct-to-cell satellites and demonstrated direct-to-cell video calling over Starlink. However, regulatory challenges have emerged, as the FCC denied SpaceX’s request to use specific spectrum bands, including those owned by Globalstar and Dish. Early roll out of the tech to customers could come as soon as the end of this year.

AST SpaceMobile is advancing its mission to provide broadband coverage directly to mobile devices. The company recently secured a $155 million strategic investment from Google and AT&T, reinforcing its vision. Additionally, AST signed a definitive agreement with AT&T. 

Skylo is pursuing an innovative strategy by leveraging existing GEO satellite bandwidth and spectrum. This approach circumvents the need for new, expensive satellites and avoids spectrum battles. Verizon has indicated it prefers to use its own spectrum for terrestrial applications. Skylo's approach of leveraging satellite operators' spectrum could give it a competitive advantage. Skylo's approach gained significant support, raising $37 million from Intel Capital, BMW, Seraphim, and Samsung this quarter. The company also added Tami Erwin, former CEO of Verizon Business, to its board of directors, bringing valuable mobile network operator expertise.

Apple is also making moves in satellite communication. Building on its emergency SOS messaging, Apple will satellite messaging capabilities in iOS 18.

We think this sector is just getting started driven by fierce competition between tech majors, innovation, and strategic investments. With key players like SpaceX, AST, Skylo, and Apple pushing the boundaries, the future of global connectivity looks promising. As competition intensifies, we can expect even more groundbreaking developments in the near future.