In the past few years, if a phone could send messages in areas without base station signals, it would have been a major feature at product launches. Now, this capability is rapidly becoming available in ordinary smartphones.

Chinese consumers are no strangers to this. The Beidou satellite messaging service allowed many to send messages without ground networks for the first time, while the Tiantong satellite communication service further supports satellite calls and text messages. The overseas market is also accelerating, with Apple continuously expanding the satellite communication capabilities of its iPhones, and SpaceX advancing ordinary phone connections to low-Earth orbit satellites through Starlink.

The industry scale is expanding accordingly. By the end of June this year, 123 collaborations between satellite direct-to-phone services and mobile operators had been publicly disclosed globally, with 23 already offering services. Starlink alone is involved in 99 of these collaborations.

When direct phone-to-satellite connections were still in the technical verification stage, the focus was on who could connect first and make the first call. As more participants join, another question arises: If operators in various countries want to increase satellite coverage in the future, will each need its own independently built satellite network?

On September 14, Space42 of the UAE and U.S. satellite communications company Viasat signed a binding agreement to formally establish a joint venture, Equatys. The two sides plan to invest up to $1 billion in equity to build shared infrastructure for direct phone-to-satellite services.

The name Equatys may be unfamiliar to Chinese readers, but its business model is easy to understand.

Officially, it is described as a Tower Company.

China's telecommunications industry already has a ready reference—China Tower. The only difference is that the shared infrastructure has moved from ground-based communication towers to orbit.

01

Satellite communications are not new. For decades, sailors, fieldworkers, and emergency rescue teams have used satellite phones, but the high cost and bulkiness of terminals have made them difficult to enter the general consumer market.

Today's wave of direct phone-to-satellite connections aims to let users continue using their original smartphones. Normally connected to ground base stations, when users enter mountainous areas, deserts, oceans, or disaster zones where ground networks disappear, satellites will provide coverage.

Technological progress has accelerated significantly in recent years. Low-Earth orbit satellites are closer to the ground, and satellite antennas, beam control, and terminal capabilities continue to improve. After 5G, satellite networks have also begun to be integrated into mobile communication standards, enabling satellites and ground cellular networks to collaborate under unified standards. Equatys adopts a similar satellite-ground integrated architecture based on 3GPP standards.

Satellites are not suitable for replacing 5G base stations in cities. In densely populated areas, a single base station can serve a large number of users simultaneously, offering clear advantages in capacity and cost. Satellites are truly suited for mountainous areas, deserts, oceans, highways, and regions where ground communications are disrupted by natural disasters.

As this capability becomes available in more ordinary phones, the market for satellite communications expands from limited professional terminals to a vast user base of smartphones.

02

However, building a satellite communication network is not cheap.

Beyond satellite manufacturing, costs include launches, ground facilities, testing, frequency coordination, and long-term network replenishment. Satellites must also be continuously replaced after their lifespans end. If different service providers each build their own network and seek operator clients independently, redundant investments will rise.

Direct phone-to-satellite connections also face a unique contradiction: The areas most in need of satellite coverage often have the fewest people.

A base station in a city center can serve a large number of users, while deserts, mountains, and oceans may have only a small amount of communication demand over hundreds of kilometers. Satellites must still fly over these regions to achieve continuous coverage.

Therefore, network utilization directly affects D2D costs.

The ground communications industry has already undergone a similar process. In the early days of mobile communications, operators typically found sites, built towers, and constructed supporting facilities themselves. Later, specialized tower companies emerged, with one company responsible for construction and maintenance, leasing the same sites to multiple operators, and sharing fixed investments among more clients.

Adam Smith famously opened The Wealth of Nations with a description of a pin factory. A single worker performing all steps—wire drawing, straightening, cutting, and pointing—is far less efficient than assigning different steps to different people.

Modern industries are far more complex than an 18th-century pin factory, but the principle of deeper specialization as markets expand has not disappeared.

Towers can be leased, fiber optics can be leased, and data centers can be leased.

Space42 and Viasat are now betting that satellite networks will follow the same path.

03

Equatys's planned network can expand to up to 2,800 satellites distributed across 60 orbital planes and three altitude layers.

This number may cause misunderstandings.

The 2,800 satellites represent the maximum scalable size of the system in the future, not the number already ordered. The first batch of satellite contracts will only be awarded after Equatys is formally established, and the transaction itself remains subject to regulatory approvals and other closing conditions.

Beyond satellite quantity, two other types of resources in its hands are worth noting.

One is spectrum.

Space42 and Viasat state that the system has the capability to use over 100 MHz of globally coordinated satellite communication spectrum. Spectrum is crucial because a satellite flying over a country does not automatically mean it can provide services to local phones. Radio frequencies involve international coordination, national licenses, and interference control with ground networks.

The other is operator relationships.

The two companies disclose that they collectively have commercial agreements with over 400 mobile operators worldwide. This number does not mean Equatys already has 400 clients, but at least it is not starting from scratch in finding telecom operators.

This also makes operator resources critical to whether Equatys can succeed in its business model.

Ultimately, Equatys must prove whether operators in different countries and under different spectrum conditions are willing to long-term share the same satellite and ground infrastructure.

04

This is also why 'space towers' can help understand Equatys but cannot directly replicate the experience of ground towers.

Ground towers remain largely stationary once built, with relatively stable coverage areas and service targets. Low-Earth orbit satellites, however, constantly fly at high speeds, passing over different countries and regions with varying spectrum licenses, regulatory rules, population densities, and communication demands.

Equatys also hopes that different participants will bring their own spectrum to the platform while retaining corresponding spectrum rights and regulatory arrangements. This means it must not only share satellites but also coordinate beams, capacity, frequencies, and ground networks simultaneously.

Today, the number of collaborations for direct phone-to-satellite connections is growing rapidly, but the industry is still in its early stages. Announcing collaborations does not equal stable revenue, and the ability to send text messages does not mean significant voice and data traffic will immediately follow.

Therefore, Equatys must validate not only whether satellite sharing is technically feasible but also whether this industrial organization method can support stable commercial returns.

05

For China's commercial space industry, Equatys provides references mainly on how infrastructure should be divided.

As of September this year, the Qianfan constellation has 238 satellites in orbit, with other low-Earth orbit satellite networks also advancing. Policies have been proposed to promote the large-scale application of new models like direct phone-to-satellite connections by 2030, with over 10 million satellite communication users, and to support telecom operators and satellite companies in conducting business through co-construction and sharing.

China Tower has also begun exploring integrated space-ground-sky infrastructure solutions, including using existing tower sites to deploy low-Earth orbit satellite ground facilities, distributed satellite ground stations, and emergency gateway stations.

Behind this lies an economic logic already validated by ground communications. According to China Tower's disclosures, over the past decade, co-construction and sharing have avoided the construction of 1.27 million towers domestically, saving over 430 billion yuan in investment and operational costs.

As low-Earth orbit constellations continue to expand in the future, shared objects may not be limited to communication towers but could extend to ground stations, gateway stations, and other public infrastructure.

Of course, satellite networks involve spectrum, orbits, security, and operational entities, making them far more complex than ground towers. China may not see a model that exactly replicates Equatys.

However, the next stage of competition in China's commercial space industry will not only focus on who can launch more satellites but also on who can more efficiently connect in-orbit satellites to communication networks, operators, and end-users.

06

SpaceX currently represents a highly vertically integrated route: controlling rockets, satellites, and networks itself, then collaborating with operators in various countries.

Equatys has chosen a different approach.

It attempts to separate part of the satellite communication infrastructure, allowing multiple operators to share it.

Which model is more cost-effective and efficient remains to be seen. However, the coexistence of these two paths already indicates that direct phone-to-satellite connections are moving from pure technological competition to more complex industrial competition.

Over two hundred years ago, The Wealth of Nations discussed why pin-making required division of labor.

Today, the question has shifted to satellites.

When a market is large enough, which capabilities should remain in one company's hands, and which infrastructure is better suited for shared use by more people?