Satellite/Telecom: Market Considers EchoStar D2D Possibilities as Apple Reportedly ‘Explored Investments’ Amid Active 3GPP D2D Role, Proprietary Chip Rollout

After EchoStar CEO Hamid Akhavan’s February declaration that the company is “hard at work” on providing “the most capable offering” in direct-to-device, or D2D, market participants continue to await an announcement on the company’s broader plans to unlock the value of its global S-band spectrum rights.

Further validating Octus’, formerly Reorg’s, expectations around EchoStar’s partnership opportunities, the Wall Street Journal on March 30, citing unnamed sources, reported that Apple has “explored investments” in EchoStar to “provide more satellites and spectrum to support iPhone connectivity.”

This comes as industry participants interpreted MDA Space CEO Mike Greenley’s March 10 comments at the Satellite 2025 conference as indicative of an impending announcement of an EchoStar D2D constellation deal. MDA is the prime contractor manufacturing Globalstar’s expanding D2D constellation in partnership with Apple, ideally positioning MDA to lead construction of an EchoStar-Apple constellation.

At the conference, Greenley commented:
 

Industrywide, the D2D ecosystem continues to advance, with a number of operators recently announcing mobile satellite service, or MSS, spectrum related alliances and SpaceX continuing to advance its market access approach, leading the industry with more than 550 direct-to-cell satellites launched while forming partnerships with MNOs in nine countries to access their spectrum rights.

As Apple expands its early-mover Big LEO Band partnership with Globalstar, it is directly leading efforts at the 3rd Generation Partnership Project, or 3GPP, to drive the telecom industry’s standards for nonterrestrial networks and D2D, as shown HERE, with its efforts on a number of work items at the 3GPP’s meeting next week in Wuhan, China.

These actions, paired with Apple’s rollout of its proprietary modem chips, which incrementally disintermediate its longtime supplier Qualcomm, demonstrate its desire to further control its technology stack and likely portend the competitive importance and disruptive power of the convergence of the telecom and satellite industries.

Amid this backdrop, additional factors give EchoStar rationale to move forward expeditiously with its broader D2D plans, including:
 

• EchoStar must coordinate the long supply chain-related lead time necessary to design, manufacture and launch a large constellation. In our view, this component is essential, as recent geopolitical factors are driving a renewed push for sovereign constellation access, creating redundancy and driving additional demand throughout the supply chain.
   
• The company must position itself to maximize the amount of spectrum it retains as the European Commission considers the future allocation of EchoStar’s 30 MHz of S-band licenses, which expire in 2027.
   
• The Federal Communications Commission is focused on using spectrum resources “as intensively as possible.” The announcement of an EchoStar constellation would align well with this renewed focus.
   

Given EchoStar’s role as both a holder of scarce international S-band authorizations and the only terrestrial MNO with its own, albeit emerging, nonterrestrial network, we believe it is in a unique position to leverage terrestrial-satellite network convergence. The company’s strategic assets position it for partnership and/or transaction opportunities with the likes of Apple, SpaceX and/or Amazon in developing the emerging space, in our opinion.
 

(Click HERE to enlarge.)

Standards, Supply Chain, Apple Proprietary Chips All Align for Robust D2D Offerings Late This Decade

As the industrywide ecosystem continues to develop, pieces are falling into place for D2D connectivity to flourish toward the end of the decade.

On the standards side, the 3GPP, which coordinates compatibility of equipment and services across the telecom ecosystem, first introduced support for nonterrestrial networks in release 17 in 2022, but release 19, set to finalize at the end of 2025, is in line to further integrate the satellite and terrestrial network ecosystems.

Apple is taking an active role in release 19, directly addressing MSS spectrum matters beyond those directly affecting Globalstar’s Big LEO band, including a new nonterrestrial network, or NTN, band, band n252, aligned with EchoStar’s AWS-4 U.S. spectrum authorizations.

We expect these developments to be implemented into terrestrial and satellite hardware and systems in the coming years, aligning with Apple’s planned continued rollout of its proprietary modem chips, potentially uniquely positioning Apple to seize the opportunity in the emerging space.

Detailing Apple’s yearslong development of its proprietary modem chips, which first debuted in its iPhone 16e in February, Bloomberg reported at the end of last year that Apple intends to pursue a three-year rollout of its technology. This rollout is expected to culminate in the company’s 2027 launch of its third-generation chip, which it hopes will exceed Qualcomm’s performance and “build in support for next-generation satellite networks.”

Meanwhile, news directly from EchoStar on its S-band constellation ambitions has been limited since its late February earnings release, but the company’s historic commentary and, perhaps, satellite manufacturing capacity-related catalysts appear in line to drive similar later-decade timing for its planned S-band constellation.

New MDA Orders Face ’27-’28 Production Timeline

SpaceX and Amazon’s Kuiper are both pursuing a vertically integrated low-Earth orbit, or LEO, constellation approach: designing, manufacturing, launching (in Kuiper’s case, to a degree) and operating their systems. However, others, such as Apple (via Globalstar) and EchoStar, must, by necessity, rely more heavily on the capacity of third-party suppliers to deliver a constellation.

MDA Space, the company many industry participants expect EchoStar to contract with for its S-band constellation, is also manufacturing Telesat and Globalstar’s LEO constellations while in the midst of an expansion intended to double its Quebec manufacturing facility’s satellite manufacturing capacity.

Speaking to the limitations of the company’s production capacity on its fourth-quarter earnings call in early March, Greenley commented, “If we got a new order now, then you’re probably talking about 2027 and 2028 production.” He added, MDA would spend “all of 2025 and most of 2026” finishing “designs, ordering … long lead items, building up … inventory of components,” so “you’re probably not building a lot until you get into 2027.”

Upon the completion of its expansion, MDA expects that it will be able to deliver two AURORA digital satellites per day.

At the Satellite 2025 conference, in illustrating the path to bringing a future constellation order into production, Greenley said that he anticipates that MDA’s new production line will be operational in the second half of 2025 and will “scale up production” entering 2026, eventually allowing the company to generate, “without too much overtime,” about 400 satellites a year. The company’s Telesat Lightspeed and Globalstar orders consist of 198 satellites and “more than 50” D2D satellites, respectively.

Late-Decade Launch of Advanced EchoStar System Aligns With Historic Timeline

In May 2023, indicating an ongoing, yearslong planning process for a robust D2D constellation, Akhavan disclosed that EchoStar is in the “design and engineering phase” of a “much larger” D2D system compared with its planned 28-satellite Lyra constellation. At the time, the D2D system was expected to provide 5G wideband service “in the second half of this decade,” with the “first impacts” of the constellation beginning in “2026, 2027.”

EchoStar has reported limited specific updates on its D2D plans since. The company stated in June 2024, that via its EchoStar XXI geosynchronous orbit satellite, in the European market, it provided “the world’s first” long range-based, or LoRa-based, “real-time, two-way satellite IoT service and, in partnership with Skylo and Bullitt, the first 3GPP-NTN compliant direct‐to‐smartphone and IoT service.”

Separately, in the same FCC filing, the company said that “to complement EchoStar’s MSS GSO services and extend them globally” it intended to launch its Lyra S-band MSS LEO system at year-end 2024. The company disclosed “the successful launch of the Lyra 1 satellite” in its annual letter to shareholders on March 21.

SpaceX Looks to Infrastructure-Led Market Access as Apple Focuses on Key MSS Rights

Leveraging its vertically integrated structure, SpaceX began launching its Starlink direct-to-cell satellites in January 2024.

SpaceX’s approach to D2D differs from Apple’s – the company prioritizes country and regional market access, leveraging its more than 550 direct-to-cell satellites to quickly stand up operations and deliver connectivity upon reaching necessary approvals. Once the company gains initial market access, it seeks to rapidly grow its operations in the market.

In contrast, in partnership with Globalstar, Apple initiated its D2D approach by gaining access to globally harmonized Big LEO MSS spectrum rights and, through its efforts at the 3GPP and with its proprietary chip development, appears to be positioning itself with optionality to gain further control of these key bands. At the least, it is optimizing its equipment for use in these bands, regardless of who controls the rights in a particular jurisdiction.

Although SpaceX does not directly hold MSS licenses, as highlighted below, it has entered into partnerships with MNOs in nine countries to use their terrestrial spectrum rights for D2D services. In the United States, SpaceX is only authorized to operate its direct-to-cell services in T-Mobile’s PCS G block (1910-1915 MHz UL; 1990-1995 MHz DL).

A list of Starlink’s global direct-to-cell partners is shown below:
 

SpaceX’s FCC filing for its direct-to-cell satellites provides for uplink and downlink beams capable of operating in the L-band and S-band, across the 1400-2700 MHz band. The FCC authorized SpaceX to operate direct-to-cell services internationally within the 1429-2690 MHz band, but the company must adhere to local laws, regulations and requirements.

In international jurisdictions, the FCC requires that SpaceX, when not operating in line with the International Table of Frequency Allocations or ITU’s regulations, operate on a non-interference basis with operations following ITU regulations. The key MSS spectrum rights held by EchoStar, Globalstar (Apple), Viasat/Ligado/Space42, Iridium and others are allocated for MSS use on a primary basis by ITU.

Domestically, SpaceX continues to seek access to EchoStar and Globalstar’s S-band and Big LEO MSS bands. The company’s applications to the FCC for use of both bands were denied in March 2024, but the commission sought comment on SpaceX’s parallel rulemaking petition to revisit the MSS licensing and spectrum-sharing framework for the bands. These efforts have continued, with SpaceX recently challenging Globalstar’s plans to launch its C-3 extended MSS network system, from which Apple would utilize 85% of the capacity.

EchoStar’s Unpaired AWS-3 Uplink, H-Block Potentially Add to D2D JV, Transaction Optionality

As Octus previously discussed, we believe EchoStar could look to create a D2D-focused joint venture, comingling its international S-band authorizations with certain of its domestic licenses, including licenses that currently serve as collateral for $9.55 billion in topco spectrum secured notes.
 

To move spectrum collateral to such a joint venture, the company would look to the “Spectrum Joint Venture” construct under its notes. Under this construct, EchoStar is permitted to transfer up to $9.5 billion in appraised value of spectrum collateral in aggregate to nonaffiliates, subject to applying 37.5 % of net proceeds to redeem its 6.75% spectrum secured exchange notes or 10.75% spectrum secured notes.

On Feb. 27, EchoStar disclosed that independent appraisals determined the value of these spectrum collateral licenses to be $33.1 billion, implying that a maximum of 29% of the spectrum collateral value could be transferred to a “Spectrum Joint Venture.”
 

Under Octus’ prior example of a D2D spectrum joint venture, for illustrative purposes, we proposed that the company could contribute the following spectrum rights to a joint venture:
 

• Its various international S-band authorizations;
   
• 5 MHz of upper H-block U.S. licenses; and
   
• 5 MHz of band 70 AWS-4 U.S. licenses into such an entity.
   

However, this spectrum selection represents just one of a multitude of possible configurations for a hypothetical joint venture.

In selecting the spectrum bands for a joint venture, a variety of factors are at play, including:
 

• Trade-off economics, such as the relative value of spectrum as a terrestrial versus satellite resource;
   
• Covenants in EchoStar’s debt documents;
   
• Technical factors, including spectrum adjacencies, power limits, etc.;
   
• 3GPP standards; and
   
• Regulatory considerations.
   

EchoStar is a vocal proponent of a standards-based approach to D2D, supporting the development of band n252, which aligns with its U.S. AWS-4 terrestrial and MSS spectrum rights. Last November, Akhavan emphasized that the company is “focused” on 3GPP standards, which are “the best way to drive the economics for everyone,” with chipset manufacturers benefiting from the economics of “regular mobile business volume.”

Similarly, at the Satellite 2025 conference, Greenley, CEO of potential EchoStar satellite partner MDA, asserted, “We’re living in the 3GPP world.”

While EchoStar’s D2D operations and systems are expected to be standards-focused, given the realities of its debt covenants and certain economic trade-offs faced when contributing licenses to a D2D-focused joint venture, it is unlikely the domestic licenses in such a JV would fully align with the 3GPP’s planned band n252.

As Octus previously stated, to the extent it is technically feasible, because EchoStar could be a common network operator for both the D2D constellation and U.S. terrestrial 5G network using its licenses, it might be possible for the company to provide access to certain MSS capacity from its AWS-4 licenses to a joint venture while retaining the licenses in the legacy structure and using the same bands on a terrestrial basis. Similarly, the joint venture might be able to provide certain terrestrial capacity from its bands back to EchoStar.

In our view, the value of the spectrum licenses comprising the planned band n252 exceed the spectrum secured notes’ $9.5 billion transfer cap. Additionally, contributing the AWS-4 licenses representing the 20 MHz of spectrum (2180-2200 MHz) aligning with the 3GPP’s terrestrial band 66 to such a JV might present too steep of an economic trade-off. AT&T, T-Mobile and Verizon have deployed band 66 in their networks, minimizing the deployment costs of this spectrum and enhancing these licenses’ value.

Alternatively, in our view, if EchoStar were to contribute certain terrestrial mid-band spectrum licenses that comprise terrestrial 3GPP bands exclusively used by the company, such as its paired H-block bands (1915-1920 MHz UL; 1995-2000 DL) and unpaired AWS-3 uplink bands, it could potentially enhance the value of these licenses rather than face an economic trade-off.

Overall, because EchoStar currently uses its lower AWS-4 band (2000-2020 MHz) for downlink operations under terrestrial band 70, rather than as uplink as proposed under band n252, questions remain on how EchoStar would technically implement the current 3GPP proposal.

It appears EchoStar retains the authority to use the band for either uplink or downlink operations, but this spectrum is adjacent to the company’s 5 MHz of H-block downlink spectrum. The H-block abuts the T-Mobile G-block uplink spectrum that Starlink uses for SCS services, potentially requiring that EchoStar use a portion of the H-block as a guard band.
 

Ultimately, the path that EchoStar pursues in implementing its D2D network and in forming a potential D2D-focused joint venture remains unclear, but its H-block and unpaired AWS-3 uplink spectrum holdings provide it with certain optionality beyond the licenses that are currently designated for MSS use.

Importantly, from a D2D perspective, the H-block licenses provide coverage of the entire continental United States and are included in the FCC’s frequencies permitted to provide supplementary coverage from space, or SCS. The lower H-block licenses might be helpful in providing the company with another uplink option for D2D.

Regarding EchoStar’s unpaired AWS-3 uplink licenses, the FCC declined to designate these bands for SCS service, noting they do not satisfy a “requirement that there are no primary, non-flexible-use incumbent operations, federal or non-federal,” in a band. Likewise, the band is not designated for MSS use on an international basis. However, the bands’ previous incumbent federal operations have largely been transitioned to other frequencies, with the transition “scheduled to be complete by 2025, leaving only a small number of legacy systems in the band,” the FCC said in March 2023.

With the FCC under Brendan Carr’s leadership focused on using spectrum resources “as intensively as possible,” it might welcome the use of these bands for D2D. As shown below, a handful of other companies, mostly notably MidWave in the 1700-1710 MHz band, also hold licenses in these bands.