Mixed Signals: The Dynamics Shaping the Rollout of the Satellite-to-Cell Market

Article originally published on March 26, 2024.

Ensuring the world’s 8.5 billion mobile phones never lose coverage isn’t a new idea, but it’s becoming increasingly viable, thanks to more powerful antennas and the arrival of Low-Earth Orbit (LEO) satellite constellations.

But before the satellite-to-device market can truly take off, experts say the industry must align around proprietary versus open standards, address the infrastructure hurdles of enabling cross-network roaming, and better define the use cases for the service.

“There is a lot of overlap and fragmentation in the market in terms of how players are approaching the satellite-to-cell opportunity,” says Andrew Cavalier, senior analyst focused on satcom and space technologies at ABI Research.

Recent regulatory action by the U.S. Federal Communications Commission (FCC) established a framework to allow satellite operators and their mobile network operator (MNO) partners to use certain licensed, flexible-use spectrum currently allocated to terrestrial services from space.

Considering these developments, Via Satellite asked key industry players to weigh in on how they see the market evolving, the obstacles that could impede progress and what it will take to fully unlock the satellite-to-cell opportunity.

Hype for Sat-to-Cell Cooled in 2023

Despite hype that 2023 would be the year satellite-to-cell service became a reality – fueled by the debut of Apple’s iPhone SOS service – it hasn’t happened as companies experienced delays and challenges around funding and business use cases.

Last year was marked by year-end news of Qualcomm and Iridium Communications ending their partnership to connect Android phones to Iridium satellites, followed a month later by Lynk Global announcing its merger to go public with a special purpose acquisition company (SPAC) owned by former MLB All-star Alex Rodriguez.

The infusion of cash will help Lynk, which has started service with eight MNOs in seven markets, to pursue plans to operate a constellation of 5,000 LEO satellites.

Then in January, Starlink launched the first six enhanced Starlink satellites to feature direct-to-cell capabilities, with plans to start text service this year and voice and data in 2025. The upgraded spacecraft are equipped with advanced phased arrays that act as cell towers in space.

Qualcomm’s decision to not pursue a direct-to-device (D2D) service with Iridium for Android phones wasn’t based on technology issues as much as an issue around business case, notes Francesco Grilli, vice president of product management and lead for Qualcomm’s satcom solutions. To roll out their capability fast, the partners needed to use a proprietary waveform, which didn’t get traction with smartphone makers, Grilli says.

“The Android ecosystem was not willing to spend the amount of money that would be needed to get the service launched,” he says.

The breakup of the partnership demonstrated “how commoditized the terrestrial wireless market has become, outside of Apple,” observes Matt Desch, CEO of Iridium Communications. “Smartphone margins are very thin. Being first, or at least uniquely competitive with Apple’s initial offering, was not nearly as important as having no wasted investment into a service that may need to evolve over time.”

Open Versus Proprietary Standards

Amid these developments, a big question remains: whether open systems or proprietary solutions for the satellite-to-cell market will win out.

“Both are emerging,” Desch says. “Proprietary solutions allow more differentiation, and that’s the path that Apple is currently employing. Standards-based allows economies of scale and seems to be preferred by all other potential players in the satellite-to-smartphone ecosystem. We have the ability to offer both for IoT going forward and expect there will be users of both long term,” he added.

He notes that adopting standards “provides more flexibility and lower costs over the long run, and that was more important than being first.”

Iridium pivoted in January, announcing its standards-based Stardust initiative. The planned narrowband-Internet of Things non-terrestrial network (NB-NTN) solution will deploy on Iridium’s existing LEO satellite constellation. Desch believes the move aligns Iridium better with industry interests than proprietary approaches, with the provider planning to initially offer messaging and SOS capabilities for smartphones, tablets, cars, and related consumer applications.

ABI Research’s Cavalier predicts that the NTN standard “will ultimately become the dominant force,” but in the near term, the industry will embrace different types of solutions. He acknowledges that some parts of the industry think standards won’t take off because of the need to integrate the modem into the device.

“Do you want to connect on unmodified devices using IMT [mobile] spectrum, or do you want to connect standardized devices using NTN spectrum? It’s going to come down to what kind of services you want to unlock on those devices,” he clarifies.

Scott Wisniewski, chief strategy officer of AST SpaceMobile, says working with existing devices is critical to achieving a mass-market solution. AST SpaceMobile is currently assembling and testing its first five commercial satellites, known as Block 1 BlueBirds, with service expected to launch in the second quarter with partners that include AT&T, Google, and Vodafone.

Dan Dooley, chief commercial officer for Lynk Global, brings a unique perspective as the former president of Sprint before it merged with T-Mobile. He compares the challenges facing the industry to a mosaic: “You have to have everything in place before you can really have a commercial service,” he says, citing technology, including underlying patents, the capital to launch the number of satellites necessary to get voice and data capabilities, as well as the right business model, subscribers and spectrum. “If you have to get folks to put new spectrum or a chipset in a phone – all of that is very tough. It takes a lot of time and a lot of partnerships that are not natural partnerships.”

A huge hurdle is the regulatory environment, which varies by country and region. Part of the reason for this fragmentation is because “no one ever thought this was possible even 18 months ago,” Dooley said.

Dooley predicts that whatever standard is ultimately adopted, it must allow the phone to work without any extra components or hardware. “It has to be like you and I experience mobile devices. Providing service to existing 3GPP standard mobile devices will lead to faster adoption of the technology,” he says.

New Industry Alliance Pushes for Ecosystem Collaboration

The standards push is getting noticeable traction across the satellite ecosystem, as evidenced by the formation of a new industry group, the Mobile Satellite Services Association (MSSA), to address spectrum needs for satellite-connected devices. The alliance was announced in February and includes founding members, Viasat, Terrestar Solutions, Ligado Networks, Omnispace, and Yahsat.

According to MSSA’s chairman and Viasat CEO Mark Dankberg, a key thrust of the group is to help create standards and interoperability tools to enable ecosystem collaboration. This includes working with chipmakers so standards are compatible with member spectrum to enable roaming.

“Spectrum is an essential ingredient to achieving scale for these devices. MSSA members believe that by creating a framework that can enable interoperability roaming through standards and allowing us to bring the aggregate of all our spectrum instead of each operator’s spectrum individually, we can achieve that scale,” Dankberg says.

He anticipates that just as the industry came together 40 years ago when there was a need for narrowband safety services for maritime and aviation, it will do the same for this market.

“It was done in a way that gave many countries stakes in this, whether some of it was economic, some of it was governance, or some of it was physical facilities,” he says. Dankberg believes for the satellite to cell opportunity to scale, it will require a similar degree of participation and ownership among nations.

“The role of our association is to help create the standards and the interoperability tools that will allow that ecosystem to come together.”

Is Total Connectivity on a Cell Phone Possible?

Industry insiders have varying views on whether the industry will ever achieve the holy grail of an always-connected smartphone.

“I think we are very close,” says Grilli. “When I started working on satcom four years ago, I made a forecast that by 2025, mainstream smartphones will be able to communicate with satellites. Now we are one year away, and Apple already has a phone that communicates with a satellite through the Globalstar system. Our expectation is that the Android smartphone will also be able to communicate over satellite by the end of this year.”

Although the Iridium partnership ended, it’s clear Qualcomm is still interested in this type of connectivity. While not going into details, Grilli indicated that “Qualcomm wants to be the first to release integrated NTN in smartphones.”

Lynk exec Dooley contends that it depends on how one defines what is good enough.

“There is a remote island of Palau, an island country in Micronesia, where, for the first time, the parents are able to connect to their kids who are going to school on the main island. They can send a few text messages a day. While that’s not life changing for us in the states, it is life changing for them.”

Desch predicts total connectivity won’t happen – in our lifetimes. “Satellite connectivity to smartphones is finally realistic, but the laws of physics still apply.”

The variables that matter include everything from capacity, or the number of satellites deployed, to their expense, the ability to launch and maintain them and the size of antennas in space and the costs to get them there.

Desch notes that even if it was possible to design the perfect handset at 5G speeds, with super low latency, excellent voice quality and the ability to connect in buildings or outside, “it would be impractical and challenging to make the business case work, and you’d still lack the capacity to offer it at a low price to compare to terrestrial wireless.”

“Bottom line – satellite is a great technology to augment your wireless phone where it doesn’t work today, but it could never replace it, or replicate the experience entirely,” he says.

Dooley contends the larger questions revolve around regulations and the business case of how companies will make money from a satellite-to-cell offering.

With the market exploding, everyone agrees that partnerships will continue to drive the satellite-to-cell market. And the type of partnerships being forged this year will include people pushing to get new standards into the phones.

The Business Case: Serving Metros & Being Backward Compatible

For Dooley, a key underlying tenet is that all phones support sat-to-cell service, not just the new models.

“You really have to be backward compatible. You’re seeing a lot of MNOs signing up with people like us to use their terrestrial spectrum to give themselves more coverage in their countries.”

He cites the fact that Lynk has already signed three new MNOs in the first six weeks of 2024. “You’ll see a lot of folks who are not in that backward-compatible space trying to get together to position themselves to use their own spectrum or their chipset or devices in the new world. But the way we get to the holy grail is to be able to use existing satellites, existing phones, existing subscriptions.”

Dankberg emphasizes that while satellite-to-cell services can operate anywhere in the world, dense metro areas are the sweet spot. He points out that in the early days of satellite broadband, most people expected the customers would be in remote places but that wasn’t the case.

“There are pockets without coverage and large numbers of people who have lower penetration. The upshot is there are a lot more absolute users in metro areas than in remote areas.”

The Telco Factor: All In or Wait and See?

A key piece of the satellite-to-cell market equation is buy-in from telcos. But, have the AT&Ts and Verizons of the world fully embraced the satellite opportunity?

Desch doesn’t think so. “Understandably, they are still trying to understand what satellite can provide them and their customers, how good it will be, what they can charge for it, and how will the value created be apportioned among the various players.”

To Qualcomm’s Grilli, the telecom community is in a wait and see mode to see which constellations will reach completion to bring these services to fruition. “The operators don’t want to invest too much in a particular solution unless they have some level of certainty that that solution will be working in the future,” he says.

They consider satellite-to-cell services as an opportunity to reduce OpEx and CapEx because deploying these services requires fewer base stations. “They also are trying to figure out how this can be integrated in the current offering of services,” he says.

Grilli says that automakers, an obvious ecosystem partner once satellite-to-cell services are broadly available, are even more conservative than the telecom industry. “They want to see some track record before they invest.”

Cavalier agrees and envisions that a handful of players will dominate the global satellite-to-cell market: two U.S. “titans” – Amazon and Starlink – and China, with possibly Europe through the EU’s IRIS2 satellite constellation.

“Satellite-to-cell services are going to gain adoption as the satellite infrastructure actually starts going into space,” he says. VS

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