Operator: Thank you. Our next questions come from the line of Bryan Kraft with Deutsche Bank. Please proceed with your questions.
Bryan Kraft: Hi, good morning. I had a few, if you don’t mind. I guess, first, I wanted to just ask you what regions will the Block 1 and Block 2 satellites cover? I’m assuming that, that will be equatorial regions, but I wanted to see how you’re thinking about that? Maybe I throw the second one in at the same time, which is, at this point, when do you expect revenue to really begin to ramp in a meaningful way? Is that maybe early 2025 after the first 25 satellites in orbit and operating? Or will it take longer before we start to see that ramp up?
Scott Wisniewski: Thanks, Bryan. I’ll jump in first. So in terms of initial markets for Block 1, we have not announced that. And the reason why — believe it or not, you can actually change that. Where the satellites focus pretty late in the cycle because it’s just a matter of inclination that you launch into. But of course, we have some pretty good sense and the U.S. market is the most valuable telecom market in the world. But that’s a decision prioritization that just what we made with our partners and there’ll be strategic considerations. But those initial markets for Block 1, we expect well service globally in some way. And yes, we expect revenue on those for sure. In terms of revenue ramp, the Block 1 revenue will be a 2024 event, and then Block 2 revenue will continue to ramp alongside it.
For us, it’s important that we’re not selling services based on satellites, we’re selling services based on capabilities and coverage. And so as we start to put agreements in place, they’ll kind of — they’ll forecast the expectation of additional coverage and additional capabilities, and we’ll be able to leg into that kind of automatic clear as we go. So really 2024 for initial revenue from Block 1 and Block 2 will chase as quickly as we can.
Bryan Kraft: Well, maybe just — I mean, without getting into specific markets, I guess one thing I just wanted to understand is there’s really two types of markets, right? There’s Western markets where you’re providing fill in coverage for people primarily who are roaming off the grid. And then there are markets where you’re providing primary broadband service, right, because there’s not terrestrial service available, which I think is a big part of your mission. I guess I was just curious as to whether the first two blocks of satellites will focus on providing that primary broadband service? Or if it will be more in the developed markets like the U.S. where you’re providing complementary service to terrestrial networks?
Abel Avellan: Yes. We are taking a dramatic and strategic approach where we focus the satellites, and that depends on the agreements that we have. I mean, obviously, our ability to provide connectivity for both type of markets, developed markets where people, most of the time, have connectivity, but moving out of connectivity when it’s hiking or in a row that do not have connectivity or simply driving between New York and the Hamptons and heat an area where there’s no connectivity. And as you indicated, also developing countries where people work and live in places where there is no broadband connectivity at all. So we’re approaching both. The ARPU of the developed market is higher. The U.S. market is the largest telco market in the world.
And we are taking decisions of where we focus these initial assets as per the agreement that we are working and negotiating with our telco partners. So they will be — to answer your question is, it will be driven by the commercial agreements that we’re negotiating.
Bryan Kraft: Got it. That makes sense. And then my other question is, on the financing side, what’s the potential for securing financing through one or more of your MNO partners? I mean with so many large, well-funded partners, you wouldn’t need a lot of participation among companies to make a modest investment to finish the build out or at least get you through the next phase on the Block 2 satellites. And I guess I was wondering how realistic that might be as an option and maybe that plays into some of the prioritization discussion, too, about where you focus first?
Abel Avellan: No, I think you — you’re absolutely right. That the — we were strategic for our telco partners. We actually partnered with them in solving a major problem for them, which is coverage, and specifically, the coverage has become more expensive for them, which is the last portion of their territories where there’s no broadband services. We will explore that as much as we can. And we will work with them. We have been working since inception. So that’s what we’re working with our existing shareholders and strategic partners as part of our development of our constellation.
Bryan Kraft: Do you want to add something there, Sean? It sounds like you’re trying to jump in.
Sean Wallace: No, I think Abel said it best. I mean, I think as we move along and derisk this business, it’s very clear in our conversations with them and our MNO partners that this is a great — this is a business that attacks their capital expenditure problems. They need to build fewer towers. They probably need to buy less spectrum and they’re going to help their ARPU, which all drive their return on invested capital. So it’s a very interesting business that’s complementary to their existing platform and is going to be able to grow without having to spend a lot of money. So we do agree with you that over time, as we derisk prove the technology, that there’s going to be a lot of — we hope there would be a lot of companies to be very interested investing alongside this.
Bryan Kraft: Okay. Thank you very much.
Operator: Our next questions come from the line of Landon Park with Morgan Stanley. Please proceed with your question.
Landon Park: Good morning, everyone. Thanks for taking the questions. I’m wondering if we can just start off on the testing you mentioned. Can you maybe just define what 5G speeds sort of means when you’re talking about that? And is the testing indicating that you’ll have a reliable enough connection for consistent voice services as well?
Abel Avellan: Well, first of all, the — when we refer to 5G, we refer to what the SEC basically state of 5G — 5G or 4G speed. So that what we use as a reference.
Landon Park: What, 30 megabits or…
Abel Avellan: In that order, yes. So the — in order to provide broadband directly to a handset, you need to have the ability to calibrate, being form, track, doppler and delay compensate, which we do with our patented approach to do that directly to a regular handset. So at this moment, we have all the evidence that we get enough signal strength to achieve that. As I said before, we are not completed, we still steps to finish to do that end-to-end connectivity to the phone, but we have basically validated the whole architecture at this point. And yes, this will support voice quality, text, data, video, video streaming and anything that you can do with a 5G device and the rest architecture. Of course, with the limitations of our wireless infrastructure and obviously, that capacity needs to be administrated carefully in order to maximize the number of users per satellite.
But in principle, we estimate that we will be able to support all applications that you currently have on the terrestrial networks.
Landon Park: Understood. And talking about the BlueBirds, I think you previously indicated that you expect the full size production satellites to have 9 to 13 gigabits of capacity. Has the testing given any indications of potential upside or downside versus those numbers that you had previously given?
Abel Avellan: Well, we indicated — I mean, the first block, they are the same size of BlueWalker 3, they are FPGA base. The next generation, the Block 2s are our ASIC base. We have done a tremendous amount of progress on that. We will be taking out that ASIC pretty soon, and we estimate a tenfold increase in capacity per satellite when we incorporate the ASIC into our technology. Our testing at this point have been mostly focused in BlueWalker 3 and basically enabling end-to-end connectivity with all the impairment that a LEO system will have, which is the core of our technology.
Landon Park: Understood. So is the 9 to 13 gigabits for the full-size ASIC-based satellites. Is that still the right range we should be thinking about?
Abel Avellan: Yes.
