TechCrunch : DeepMind claims its AI performs better than International Mathemati

DeepMind claims its AI performs better than International Mathematical Olympiad gold medalists

An AI system developed by Google DeepMind, Google’s leading AI research lab, appears to have surpassed the average gold medalist in solving geometry problems in an international mathematics competition.

The system, called AlphaGeometry2, is an improved version of a system, AlphaGeometry, that DeepMind released last January. In a newly published study, the DeepMind researchers behind AlphaGeometry2 claim their AI can solve 84% of all geometry problems over the last 25 years in the International Mathematical Olympiad (IMO), a math contest for high school students.

Why does DeepMind care about a high-school-level math competition? Well, the lab thinks the key to more capable AI might lie in discovering new ways to solve challenging geometry problems — specifically Euclidean geometry problems.

Proving mathematical theorems, or logically explaining why a theorem (e.g. the Pythagorean theorem) is true, requires both reasoning and the ability to choose from a range of possible steps toward a solution. These problem-solving skills could — if DeepMind’s right — turn out to be a useful component of future general-purpose AI models.

Indeed, this past summer, DeepMind demoed a system that combined AlphaGeometry2 with AlphaProof, an AI model for formal math reasoning, to solve four out of six problems from the 2024 IMO. In addition to geometry problems, approaches like these could be extended to other areas of math and science — for example, to aid with complex engineering calculations.

AlphaGeometry2 has several core elements, including a language model from Google’s Gemini family of AI models and a “symbolic engine.” The Gemini model helps the symbolic engine, which uses mathematical rules to infer solutions to problems, arrive at feasible proofs for a given geometry theorem.

Olympiad geometry problems are based on diagrams that need “constructs” to be added before they can be solved, such as points, lines, or circles. AlphaGeometry2’s Gemini model predicts which constructs might be useful to add to a diagram, which the engine references to make deductions.

Basically, AlphaGeometry2’s Gemini model suggests steps and constructions in a formal mathematical language to the engine, which — following specific rules — checks these steps for logical consistency. A search algorithm allows AlphaGeometry2 to conduct multiple searches for solutions in parallel and store possibly useful findings in a common knowledge base.

AlphaGeometry2 considers a problem to be “solved” when it arrives at a proof that combines the Gemini model’s suggestions with the symbolic engine’s known principles.

Owing to the complexities of translating proofs into a format AI can understand, there’s a dearth of usable geometry training data. So DeepMind created its own synthetic data to train AlphaGeometry2’s language model, generating over 300 million theorems and proofs of varying complexity.

The DeepMind team selected 45 geometry problems from IMO competitions over the past 25 years (from 2000 to 2024), including linear equations and equations that require moving geometric objects around a plane. They then “translated” these into a larger set of 50 problems. (For technical reasons, some problems had to be split into two.)

According to the paper, AlphaGeometry2 solved 42 out of the 50 problems, clearing the average gold medalist score of 40.9.

Granted, there are limitations. A technical quirk prevents AlphaGeometry2 from solving problems with a variable number of points, nonlinear equations, and inequalities. And AlphaGeometry2 isn’t technically the first AI system to reach gold-medal-level performance in geometry, although it’s the first to achieve it with a problem set of this size.

AlphaGeometry2 also did worse on another set of harder IMO problems. For an added challenge, the DeepMind team selected problems — 29 in total — that had been nominated for IMO exams by math experts, but that haven’t yet appeared in a competition. AlphaGeometry2 could only solve 20 of these.

Still, the study results are likely to fuel the debate over whether AI systems should be built on symbol manipulation — that is, manipulating symbols that represent knowledge using rules — or the ostensibly more brain-like neural networks.

AlphaGeometry2 adopts a hybrid approach: Its Gemini model has a neural network architecture, while its symbolic engine is rules-based.

Proponents of neural network techniques argue that intelligent behavior, from speech recognition to image generation, can emerge from nothing more than massive amounts of data and computing. Opposed to symbolic systems, which solve tasks by defining sets of symbol-manipulating rules dedicated to particular jobs, like editing a line in word processor software, neural networks try to solve tasks through statistical approximation and learning from examples.

Neural networks are the cornerstone of powerful AI systems like OpenAI’s o1 “reasoning” model. But, claim supporters of symbolic AI, they’re not the end-all-be-all; symbolic AI might be better positioned to efficiently encode the world’s knowledge, reason their way through complex scenarios, and “explain” how they arrived at an answer, these supporters argue.

“It is striking to see the contrast between continuing, spectacular progress on these kinds of benchmarks, and meanwhile, language models, including more recent ones with ‘reasoning,’ continuing to struggle with some simple commonsense problems,” Vince Conitzer, a Carnegie Mellon University computer science professor specializing in AI, told TechCrunch. “I don’t think it’s all smoke and mirrors, but it illustrates that we still don’t really know what behavior to expect from the next system. These systems are likely to be very impactful, so we urgently need to understand them and the risks they pose much better.”

AlphaGeometry2 perhaps demonstrates that the two approaches — symbol manipulation and neural networks — combined are a promising path forward in the search for generalizable AI. Indeed, according to the DeepMind paper, o1, which also has a neural network architecture, couldn’t solve any of the IMO problems that AlphaGeometry2 was able to answer.

This may not be the case forever. In the paper, the DeepMind team said it found preliminary evidence that AlphaGeometry2’s language model was capable of generating partial solutions to problems without the help of the symbolic engine.

“[The] results support ideas that large language models can be self-sufficient without depending on external tools [like symbolic engines],” the DeepMind team wrote in the paper, “but until [model] speed is improved and hallucinations are completely resolved, the tools will stay essential for math applications.”

FT : Activist hedge fund Elliott builds stake in struggling BP

Activist hedge fund Elliott builds stake in struggling BP
US investor could force UK oil company to refocus on core fossil fuels business after foray into green energy

Activist hedge fund Elliott Management has built a stake in struggling UK oil major BP, according to two people with knowledge of the move.

The exact size of Elliott’s stake could not be learned but the $70bn assets under management hedge fund has adjusted its activist strategy in recent years to increase the size of its individual bets, while reducing the number of situations it focuses on.

BP’s shares have fallen nearly 9 per cent over the past year, compared with a 6.5 per cent rise for rival Shell, and investors have complained about the company’s financial underperformance, high levels of debt and lack of strategic clarity.

For the past several weeks, speculation has been rife in the London market that BP is vulnerable to a takeover bid or to an activist shareholder.

Pressure from the US investor could push BP to refocus on its core oil and gas business after years of building up a sprawling empire of green energy projects.

One BP investor suggested that Elliott could call for a full break-up or for the company to retrench from some of its weaker businesses and relist in the US.

Other activist funds have recently looked at amassing a stake in BP, but the size of the £70bn company has deterred them. One US activist that considered a move said BP’s board had been “asleep at the wheel” and had a “muddled strategy”. It added: “BP’s upstream business on its own justifies its entire market value.”

Both BP and Elliott declined to comment. 

BP reports quarterly results on Tuesday, and will update investors on its medium-term strategy on February 26.

Murray Auchincloss, the company’s chief executive, delayed the update and moved it from New York to London after having undergone an undisclosed medical procedure. 

Elliott’s stake was first reported by Bloomberg.

TechCrunch : Elon Musk said he’s not interested in acquiring TikTok

Elon Musk said he’s not interested in acquiring TikTok

Elon Musk recently said he is “not chomping at the bit to acquire TikTok.”

Musk made those remarks during an interview at the WELT Economic Summit on January 28. A video of the interview was published today.

The interview came after President Donald Trump delayed a law requiring parent company ByteDance to sell TikTok or see it banned in the United States. At the time, there were reports that the Chinese government was open to a deal in which Musk (a key Trump ally) would acquire the app. Trump even told reporters that he’d like to see Musk or Oracle chairman Larry Ellison acquire TikTok; he’s also signed an executive order to create a sovereign wealth fund that could purchase a stake in the app.

But Musk claimed that he wasn’t interested, flatly stating, “I have not put in a bid for TikTok.”

“I don’t have any plans for what would I do if I had TikTok,” he said in the interview. “I guess I would look at the algorithm and try to decide: How helpful or useful is this algorithm? And what can we do to shift the algorithm to be more productive and ultimately be beneficial to humanity?”

He added that he doesn’t “use TikTok personally” and is “not that familiar with it.” And he described his acquisition of Twitter (now X) as an anomaly in his career: “I usually build companies from scratch.”

Musk’s comments on TikTok came nearly 20 minutes into the interview, which initially focused on his plans for his Department of Government Efficiency (DOGE) under the Trump administration. Musk and his allies have subsequently taken control of federal agencies and gained access to large troves of sensitive data.

“With respect to government, really the challenge is overcoming bureaucracy,” he said. “I think bureaucracy is perhaps the penultimate boss battle. The ultimate boss battle is defeating entropy … The second hardest battle is defeating bureaucracy. That’s how difficult it is to improve government.”

WSJ : The Tequila Boom Is Over. The Tequila Price War Has Begun.

The Tequila Boom Is Over. The Tequila Price War Has Begun.
Threat of tariffs adds uncertainty to brands like Casamigos and Patrón, which are struggling to retain drinkers

America is losing its taste for top-shelf tequila.

Sales of the Mexican liquor soared over the past decade, making it the second-most popular spirit in the U.S. after vodka. But demand for tequila has cooled, and drinkers are looking for cheaper pours.

High-end brands including Diageo’s Casamigos and Bacardi’s Patrón have been lowering prices for more than a year, according to an analysis by equity research firm Bernstein. Until recently, a 750 milliliter bottle of Casamigos Blanco typically sold for more than $45, according to industry tracker IWSR. Now it sells for as little as $40, depending on the location.

U.S. sales volume of tequila, mescal and other agave-based spirits were roughly flat in 2024, according to IWSR. Sales fell in ultra-premium tequila, priced between $45 and $99.99, and grew in the middle tiers priced between $22.50 and $44.99.

Diageo said that to meet different consumer needs, it is now positioning Casamigos at a lower price point than its Don Julio brand. Pricing for Casamigos “got out of whack from where it needed to be,” in part because of out-of-stock problems during the Covid-19 pandemic, Chief Executive Debra Crew said.

“In stores where we have actually implemented the right pricing strategy, we are seeing improvements,” she said Tuesday on a call with analysts.

The move by consumers away from pricey tequila marks a reversal of a yearslong trend. Until recently, many consumers had been trading up to more expensive wine and spirits. Tequila, once associated with sugary margaritas and eye-watering shots, grew in popularity thanks to celebrity endorsements, increased interest in craft spirits and a shift toward drinking less but better.

Spurred by these trends, Diageo in 2017 agreed to pay up to $1 billion to buy Casamigos, the tequila brand co-founded by actor George Clooney.

President Trump’s threat of a 25% tariff on Mexican imports—currently on hold for a month after a deal he struck with Mexican President Claudia Sheinbaum—has added more uncertainty for tequila makers and importers. Tequila and mescal must be made in Mexico, just as sparkling wine can be labeled as Champagne only if it is made in a certain region of France.

Diageo on Tuesday withdrew its medium-term sales forecast and said U.S. tariffs on goods from Mexico and Canada could amount to a $200 million hit on its annual operating profit. Imports from the two countries represent about 45% of Diageo’s U.S. sales. The company’s shares are down more than 5% since Monday’s close.

Max Murphy, founder of Tozi Imports, an importer and distributor of Mexican mescal, gin and wine, said Trump’s promise in January to enact tariffs in February made it difficult for him to plan for the year.

His Woburn, Mass., company normally places its biggest orders in January and February so that the wine and spirits can be shipped before temperatures begin climbing in May. Murphy held off on placing orders this year because he wasn’t sure if or how new tariffs would affect his company.

“It’s just my wife and I,” Murphy said. “And if all of our inventory suddenly jumps 25%, there’s a good chance it could put us out of business.”

Tequila until recently has been a bright spot for the alcohol industry, which is struggling to retain drinkers. U.S. alcohol sales are declining because of consumer health concerns, expanding legalization of cannabis and a generational shift toward less alcohol consumption. The U.S. government is considering lowering the recommended limit of drinks a day that people can safely consume.

The looming tariff threat could give tequila makers a temporary bump in sales.

Knowing that prices could soon rise, Brian Harrison in January stocked up on his favorite tequila and splurged on a couple of fancy bottles he hadn’t tried before. Harrison, a 35-year-old systems engineer at a technology company, said he worries what tariffs could mean for the tequila industry.

“I know one of the best things I can do,” Harrison said, “is keep buying it.”

>>> Barron’s Weekend Summary

Cover:
-The first three weeks of President Donald Trump's second term have been marked by mixed signals in the stock market, with tens of millions of Americans believing Trump is God's gift to their country and tens of millions more loathe him. This has made defining Trump "impartially" difficult or rendering that word obsolete. In the 18 days since Trump took office, the S&P 500 has seen a 1.4% increase, compared to an average 0.9% return for all presidents' first 18 days in the White House since 1929. Shares of companies such as Baker Hughes, Netflix, JPMorgan Chase, and Walmart were among the 213 stocks making 52-week highs on Thursday, reflecting that Americans who voted for Trump are mostly happy with him. This makes sense, as they voted for a Disrupter in Chief, not someone to break bread with Mitt Romney, Chuck Schumer, or even the Business Roundtable. Another boost to the market may be belief in the "Trump put," which presupposes that if stocks tank in response to policy moves made by the president, he will retract said policy.

Interview:
-The Economic Policy Uncertainty Index is at its highest level since 2020, and many equity valuations and bond yields are at their highest levels. However, CEO George Gatch of J.P. Morgan Asset Management, a unit of JPMorgan Chase, believes that timing markets is the wrong move. Gatch spoke to Barron’s and he suggests that time in markets is more important than timing markets. Gatch, a 39-year J.P. Morgan veteran, has experienced market cycles and a regulation- and technology-driven revolution in asset management, leading to new investment strategies and products, including many that bundle traditional and risk-mitigating assets. J.P. Morgan Asset Management, which oversees $3.6 trillion in global assets, has many more such products on the drawing board.

Tech Trader:
-Big Tech companies like Amazon, Microsoft, and Google parent Alphabet have reported impressive numbers, but their stocks fell due to slight cloud misses. Meta Platforms' stock soared, but it has no public cloud to rain on the parade. The earnings reports indicate that the breathtaking pace of capital expenditures for AI data centers will continue in 2025, raising the bar across Big Tech, especially for the cloud. Amazon, which pioneered the public cloud category with Amazon Web Services, sees roughly 20% annualized growth from its AWS cloud business, down from over 50% five years ago. Google and Microsoft may be experiencing a similar trend, with Google Cloud Platform and Microsoft Azure growing 30% annually but suggesting growth may be decelerating. Cloud softness feels particularly acute, with tech companies spending heavily to build out artificial-intelligence capabilities.

The Trader:
-Renewables were not included in President Trump's "energy emergency" executive order, despite being the fastest-growing and cheapest sources of electricity in several parts of the country. Trump's rhetoric and actions have impacted clean-energy projects, leading to some companies pulling out of them. He issued a 90-day pause on federal permits and paused loans and grants issued by the Biden administration, upending existing projects. A judge has stopped the order from taking hold for now, though the spending pause may come back. However, there have been some hopeful signs in the renewables space, with French energy giant TotalEnergies stating the US is still an attractive market and plans to continue investing in renewables. Enphase Energy, which makes technology for controlling solar panels on homes, beat analysts' earnings expectations and reported a 6% increase in US revenue. CEO Badri Kothandaraman believes that Trump and the Republican Congress will not completely do away with support for solar, especially given Elon Musk's positive comments. Enphase is also producing a significant share of its products in the US and plans to double down on manufacturing. Wind power is also optimistic, although Trump's distaste for wind has been well-documented. Offshore wind projects are in trouble, but onshore wind installations are on track to increase 31% this year. Shell has withdrawn from a significant East Coast wind project and New Jersey has canceled a solicitation for offshore wind power. However, onshore wind installations are expected to rise 31% this year, with less reliance on federal environmental permits and leases.
-The stock market has been experiencing a downward trend, with the S&P 500 index dropping 0.2% this week, while the Dow Jones Industrial Average and NASDAQ Composite fell 0.5%. The market appeared unaffected by newsworthy announcements from the new administration, such as the dismantling of the US Agency for International Development and Trump's plan to occupy and rebuild Gaza. However, tariff news shook investors, with threats against Canada and Mexico and Trump promising reciprocal tariffs against countries imposing levies on US goods. Headline whipsaws have become commonplace since the start of the year, and investors are getting "chopped up by chasing headlines." The news outside of the administration is not particularly bullish at the moment. In between the tariff talk, corporate and economic news was mostly downbeat, with Amazon and Alphabet announcing disappointing guidance and monthly jobs numbers slightly weaker than expected.

Features:
-Trump's plans to impose higher tariffs have sparked concerns about rising prices, potentially affecting the Federal Reserve's goal of reducing inflation to 2%. Fed officials predict a soft-landing scenario where inflation subsides without a recession, but if confidence falters, inflation pressures could rise. The Trump administration has levied a 10% tariff on imports from China and plans to impose 25% duties on products from Mexico and Canada if no agreement is reached. The latest data shows a decline in consumer sentiment and a surge in inflation expectations, which could pose challenges for central banks in restoring price stability without causing harm to the labor market.
-Chinese AI platform DeepSeek has sparked a frenzy among the Chinese government, media, rival tech firms, and the country's rapidly expanding AI user base. The start-up claims its new version matches OpenAI's best model at a fraction of the cost and without access to advanced semiconductor chips. Based in Hangzhou, China, DeepSeek made its models open source, allowing anyone to harness and alter the product for their own use. Competitors are racing to show they have cutting-edge models, but their stocks have risen and their forecasts have brightened. This is partly due to the unproven assertion that DeepSeek used less advanced Nvidia chips and spent a mere $6 million in its final training round.

Europe:
-The Bank of England (BOE) has cut interest rates, following a decline in economic growth outlook, a move different from the Federal Reserve's approach. The UK central bank lowered its key rate to 4.5% from 4.75%, as expected, but two policymakers voted for an even larger half-point cut. This pushed the pound down against the US dollar, sending it 0.9% lower to $1.238. The BOE said a gradual and careful approach to the withdrawal of monetary policy restraint is appropriate. Catherine Mann, a hawkish member of the rate-setting panel, supported a bigger cut, while Swati Dingra, who has a record of supporting lower rates, dissented. The BOE decision follows a quarter-point cut from the European Central Bank in Frankfurt.

Emerging Markets:
-No update

Commodities:
-Gold prices have risen to a record price of just under $2,900 an ounce, indicating that investors remain on edge despite the recovery from President Donald Trump's tariffs. UBS analysts raised their gold forecast for the next 12 months to $3,000 an ounce, citing gold's enduring appeal as a store of value and hedge against uncertainty. The US has postponed tariffs on Mexico and Canada, and China's relatively constrained retaliation for new tariffs levied against it, providing some relief for markets. However, analysts predict that significant tariffs against the US neighbors won't last long and that tariffs on China will be gradually increased. Gold has room to rise due to elevated uncertainty, an extension of the global rate-cutting cycle, and strong investor and central bank demand. International tensions will remain regardless of U.S. trade policy, with the ongoing Russia-Ukraine war, Middle East conflict, and Trump's efforts to curb Iran's oil exports. Lower interest rates make gold more appealing as they reduce the returns investors forgo by holding assets that don't pay interest.

Streetwise:
T-Mobile stock has seen a 54% increase in a year and 694% increase over the past decade, surpassing Amazon.com, Meta Platforms, and Alphabet and Apple. The 2020 merger between T-Mobile and Sprint may have turned the industry into a lucrative triopoly, but antitrust issues may have played a role. T-Mobile's frothy stock price of 23 times this year's projected earnings might be worth it, but parent Deutsche Telekom offers a cheaper way in. A decade ago, Verizon Communications and AT&T controlled 72% of US national cell service, with T-Mobile and Sprint splitting the rest. T-Mobile was slowly gaining market share due to better deals and Sprint's stagnation. The growth mismatch between T-Mobile and Sprint led to T-Mobile running low on wireless spectrum, while Sprint had plenty. In 2018, T-Mobile announced its intention to buy Sprint for $26.5B, but antitrust regulators challenged the deal. In 2019, T-Mobile had to sell its Boost prepaid cellphone service and some spectrum to Dish to create a new, fourth industry competitor.

FT : Lebanon forms new cabinet after three-year hiatus

Lebanon forms new cabinet after three-year hiatus
New government will seek to enact reforms in order to tap much-needed aid from donor countries

Lebanon formed a new cabinet on Saturday after an almost-three-year hiatus that left the country reeling during an economic crisis and a 14-month war between Israel and Hizbollah.

Prime Minister Nawaf Salam said the government would enact financial and economic reforms and “be a space for constructive joint work, not for bickering”. Lebanese cabinets are made up of diverse factions rather than a single ruling coalition, so disputes are commonplace.

The new government includes businessmen, veteran ministers and some new faces. Salam, appointed to form a cabinet less than a month ago, has sought to form a grouping that has the international credibility to carry out reforms and to reduce the influence of Hizbollah and its ally the Amal Movement.

Lebanon’s donor countries have made badly-needed reconstruction aid conditional on the appointment of a cabinet capable of reforming the dysfunctional state and sidelining Hizbollah, which has been badly weakened by its war with Israel.

White House Special Envoy Morgan Ortagus said on Friday that the US would not accept Hizbollah being represented in government.

Amal has retained control of the crucially important finance ministry via the appointment of longtime MP and former economy minister Yassine Jaber.

In Lebanon’s sectarian power-sharing system, the prime minister must be a Sunni Muslim, the president a Maronite Christian and the speaker of parliament a Shia Muslim. The cabinet is divided along sectarian lines.

Salam had insisted on naming one of the Shia ministers himself, leading to a showdown over the past four days as he and longtime parliament speaker Nabih Berri, head of Amal, clashed over candidates for the post.

The appointment of behavioural economist and former economy official Fadi Makki as a Shia minister could give Salam at least one Shia ally in the chamber if Hizbollah and Amal later boycott the cabinet, as has happened in the past.

The cabinet will now require a parliamentary vote of confidence to formally take charge, but it has been decades since parliament withheld its approval.

The new cabinet faces the decision of whether to include a reference to the right of the Lebanese to resist Israeli occupation — in practical terms a reference to Hizbollah’s weapons — in its ministerial statement, which forms the government’s platform. The last time a ministerial statement did not endorse the resistance by name was 1996.

Although the war between Hizbollah and Israel ended with a ceasefire in November, Israel continues to strike Lebanon, including a drone strike on Saturday that killed at least three people, according to state news.

FT : Starmer sacks health minister over offensive WhatsApp messages

Starmer sacks health minister over offensive WhatsApp messages
Andrew Gwynne was accused of making racist, antisemitic and sexist comments


Sir Keir Starmer has sacked Andrew Gwynne, a health minister, after offensive comments shared on a WhatsApp group came to light.

The prime minister sacked Gwynne, an ally of former leftwing Labour leader Jeremy Corbyn, on Saturday night as soon as he became aware of the comments, a spokesperson for Starmer said.

Gwynne, junior minister for public health and MP for Gorton and Denton, said he deeply regretted his “badly misjudged comments”, which were revealed by the Mail on Sunday, and apologised for any offence caused. https://dub.sh/cDr33bq

The paper reported various messages sent by Gwynne, including one in which he said he hoped a pensioner who did not vote Labour would die before the next election.

It also disclosed antisemitic slights, derogatory comments about Labour colleagues and ‘jokes’ about a constituent being “mown down’” by a truck. Gwynne did not immediately respond to a request for further comment.

A government spokesperson said: “The prime minister is determined to uphold high standards of conduct in public office and lead a government in the service of working people. He will not hesitate to take action against any minister who fails to meet these standards, as he has in this case.”

A Labour spokesperson said: “We are investigating comments made in this WhatsApp group in line with the Labour party’s rules and procedures. Swift action will be taken if individuals are found to have breached the high standards expected of them as Labour party members.”

Gwynne has also lost the party whip in the House of Commons.

For Starmer, who is struggling to galvanise his government, it was an unwelcome political blow. Gwynne’s comments were seized upon by the Conservatives as evidence that Labour was scornful of pensioners.

In 2018, Gwynne was disclosed to have been in a Facebook group in which antisemitic messages were shared.

At the time he responded: “I was added to this Facebook group without my knowledge or permission. I DO NOT support the posts and I ABHOR anti-Semitism.”

Nigel Huddleston MP, Tory co-chair, suggested that Gwynne’s comments confirmed that Labour had “contempt for pensioners”.

Starmer’s government last year withdrew winter fuel payments from 10mn pensioners.

FT : Mobile operators look to satellite technology to end ‘not spot’ plague

Mobile operators look to satellite technology to end ‘not spot’ plague
Race to bring satellite-connected phones to wider market heats up as some question bullish promises from operators

The race to make satellite-connected mobile phones accessible to millions of consumers is heating up as T-Mobile rolls out its Starlink service to customers in the US and Vodafone promises space-enabled video calls in parts of Europe from this year.

UK telecom operator Vodafone revealed last week that it had made the world’s first satellite-enabled video on a mobile from an area with no network coverage. This followed news that T-Mobile was testing its “direct to device” service that allows customers to connect via more than 300 dedicated satellites from Elon Musk’s Starlink network.

The emergence of satellite-enabled phones is being hailed as the most significant revolution in mobile communication in decades — even as some of the more bullish claims from operators about their performance are being questioned.

Operators plan to use it to close the “not spots” in their network coverage, areas where building a cell tower or fibre network is either not justified by demand or too difficult to do. Globally it is estimated that some 350mn people do not have access to mobile broadband coverage. And unlike the dedicated satellite phones of the 1990s, usually the size of a brick, these services will be beamed directly to modern handsets.

“It brings mobile service to those areas that we would never have reached, including the sea,” Vodafone chief executive Margherita Della Valle told the Financial Times. “You can do a voice call, text message, but also video internet. It effectively gives you the full mobile broadband experience” via satellite, she added.

Space consultancy Novaspace estimates the market could generate service revenues of up to $42bn over the next decade. That prospect has drawn substantial investment into the technology in recent years. Apple began the rush to space in 2022, when it struck a partnership with US satellite operator Globalstar to offer an emergency texting service on its iPhones in areas without mobile networks. Apple has invested $1.7bn in Globalstar to develop the partnership and more recently reports have emerged that it could also enable iPhones for Starlink connections.

AST SpaceMobile, the US-based company whose massive Bluebird satellites carry the world’s largest commercial communications array in low Earth orbit, enabled the Vodafone video call. It has attracted more than $2bn in investment, according to Scott Wisniewski, its president, and raised $460mn in a recent convertible loan note offering.

Yet, for all the excitement, experts agree that satellite to mobile phone connections will not be good enough to replace traditional mobile services, raising questions over the optimistic promises being made by many operators. New Zealand’s commerce commission took telecom provider One NZ to court last year for overstating the performance of its Starlink service.

While Vodafone’s video call is a technological achievement, the question will be whether it can deliver such a data-intensive service consistently to more than one user.

Direct to device connections will operate at significantly lower speeds than terrestrial networks, will often require handsets to be in sight of the satellite, and will struggle to transmit through buildings or dense foliage.

“Satellites are several hundred kms away, whereas a base station might only be less than 1,000 meters away. Science tells us that the signal won’t travel as well,” said Mike Thompson, a director at consultancy Access Partnership. But it would be useful for “situations where you need minimal connectivity, for example, a disaster emergency mission,” he added.

Tim Hatt, head of research and consulting at GSMA Intelligence, affiliated with the mobile operator trade body, said that “over time, as satellite providers add more capacity, speeds are expected to increase, but they will remain lower than those of terrestrial networks”.

Moreover delivering the service requires access to an already scarce radio spectrum — the invisible highway of electromagnetic waves that carry all wireless data.

Satellite providers either have to rely on mobile operators surrendering the terrestrial spectrum that they have paid handsomely for, and which comes with regulatory uncertainty due to interference concerns, or dedicated mobile satellite spectrum, most of which has already been allocated.

Spectrum access could be “the biggest challenge in creating a direct to device ecosystem”, said Gökhan Tok, senior manager for space and connectivity at Access Partnership.

Even more so if operators wanted to offer video and other bandwidth-intensive data services. The more users, the slower the speeds, said Tim Farrar of satellite intelligence group, TMF Associates.

In an extensive study of the spectrum challenges, TMF Associates and advisory Summit Ridge found that emergency and texting services delivered the most value in mobile black spots. “Providers of higher bandwidth D2D services may spend the most money to chase the fewest incremental dollars of revenue,” the report found.

AST insisted its technology would be able to deliver all cellular mobile applications, from text to video. “Our approach allows us to do data cellular because of the size of the antenna,” said Wisniewski.

But some question whether high-intensity data services such as video could ever be widely available or financially viable.

“There are a lot of discussions about what I call Netflix in the mountains — or broadband connectivity outside cellular coverage,” said Paul Jacobs, Globalstar chief executive. “That is an unproven market. You could provide high speed to a certain number of devices. But it is not proven yet that a consumer will pay for that kind of service.”

Vodafone has not said what it would charge for its satellite service. Apple has offered its emergency texting as standard in all new iPhones, while T-Mobile’s chief executive recently suggested the company would bundle the service into its higher-rate subscriptions.

Pricing would depend on “use cases . . . why you benefit from this connectivity in your daily life,” said Vodafone’s Della Valle. “But customers will definitely value the availability of the service. It gives a peace of mind that you wouldn’t otherwise be able to have today.”