Sizing Up the Satellite-to-Cell Opportunity

At any given moment around the world, 15 percent of the planet’s 5.2 billion mobile phone users are not connected, according to research conducted by Lynk, the first company to demonstrate a satellite-to-mobile-phone satellite constellation.

What if those disconnections – from being in a remote area far from terrestrial signals or cut off from cell service following a natural disaster – were a thing of the past?

That reality is coming as satellite-to-cell service emerges as a viable service, first by startups and soon by major telco and handset players. The lifesaving and efficiency benefits of connecting satellites directly to unmodified cell phones is clear – people will no longer be out of touch or require a specialized device to connect.

While satellite-to-cell startups, Lynk and AST SpaceMobile, already enjoy early market advantage, with Lynk just receiving the FCC’s greenlight to offer service internationally, the market could scale faster following a wave of partnering agreements between T-Mobile and SpaceX, and Apple and Globalstar.

T-Mobile, the second-largest wireless carrier in the U.S. with 110 million customers, is working with SpaceX so that the second generation of Starlink satellites can connect directly to the carrier's phones at no cost.

“The reality is that terrestrial cellular tech has limitations. It just can’t cover everywhere due to land use restrictions, topography, or technical limitations. This allows us to bring coverage a step farther to these remote areas,” Karri Kuoppamaki, senior vice president of Radio Network Technology & Strategy, T-Mobile, tells Via Satellite.

The company plans to begin a beta program late next year, initially offering text, picture messaging and participating messaging apps, “with a goal of enriching the service with voice and data coverage in the coming years,” Kuoppamaki stated. The carrier added that no extra equipment will be needed because the vast majority of smartphones already on T-Mobile’s network should be compatible with the new service.

Apple just announced that its emergency SOS messaging service via Globalstar’s satellite network is now available on all iPhone 14 models for customers in the United States and Canada. The company serves about 23 percent of all smartphone users worldwide, or 1.2 billion people, with Android users accounting for the remaining market of 7.26 billion. According to Apple, iPhone 14 customers can access the SOS feature free for the first two years.

Striving to make a cell phone work over satellites isn’t new, with early efforts in the 1990s led by Iridium and Globalstar and later, by TerreStar, with disappointing results.

“The service didn’t live up to expectations…you had to be out in a field. You couldn’t be under a tree or inside a building or even in a car,” recalls Tim Farrar, president of TMF Associates. He notes that Iridium’s first satellite phone users were journalists in war-torn Kosovo in early 1999, who quickly discovered that the phones didn’t work inside during rainy or wintry weather.

The stigma of Iridium’s failure in particular slowed progress of the market, say several sources, but today, the picture is much brighter, with many technical hurdles overcome, especially in the handset itself.

Market Validated by Major Players

Satellite-to-device startups are bullish about the future of this market and with good reason, following the dramatic validation from industry titans such as Apple set to offer the capability to their users.

“This is going to grow to be the biggest category in all of satellite,” predicts Charles Miller, co-founder and CEO of Lynk.

According to Miller, Apple’s plan to offer its two-way emergency SOS via satellite service validates what Lynk has known all along: that people will place a premium on never being disconnected. His firm’s in-house market research in 2018 found that safety and peace of mind were the top reasons phone users want a satellite-to-cell service. Those motivations, he adds, will likely drive demand and uptake for the service.

Miller cautions that not every competitor will emerge a winner given that it is a high CapEx investment, and market success depends on speed to market and serving mobile network operators (MNOs) and customers well.

NSR research backs this up. In its 5G via Satellite, 3rd Edition report, NSR states that the direct satellite-to-device market will be worth $93.1 billion between 2021 and 2031.

Lluc Palerm Serra, principal analyst with NSR (an Analysys Mason company), notes that while the Starlink/T-Mobile announcement “created a lot of hype,” other companies have been working on a satellite-to-cell service for several years now.

“For MNOs, they will need to match the quality of service offered by competitors, so all of them will reach agreements with satellite operators to offer ubiquitous coverage,” Serra says.

Andrew Cavalier, industry analyst with ABI Research, says his firm isn’t attaching a revenue forecast to the market at this early stage, but the analyst firm did estimate that the satellite-to-phone service segment will reach up to 6.8 million connections by 2027. ABI Research’s recent research analysis on the Low-Earth Orbit (LEO) satellite services industry goes more in-depth into this segment.

“With 3GPP advancing standards to connect mobile phones to satellites over a 5G core network and industry players already moving to connect mobile devices to satellites via terrestrial spectrum and LTE, this segment will quickly grow to connect millions,” Cavalier says.

Regardless of how quickly satellite-to-cell revenues grow over the coming decade, one thing is clear: the unconnected are a sizable market. Just over half of the world’s premises were connected to fixed broadband, wireless, or satellite broadband service in mid-2021, leaving a sizable gap in the broadband communications market with unserved and underserved premises and communities. ABI Research finds that by 2026, 580 million people will remain uncovered by cellular, 140 million premises will remain uncovered by fixed wireless access, and 966 million premises will remain uncovered by fiber optics.

“When you talk about satellite cellular, you’re on the edges of the trillion-dollar wireless market,” observes Scott Wisniewski, chief strategy officer for AST SpaceMobile, which is targeting space-based cellular broadband with its planned commercial service.

With more than five billion phones in operation and nearly a trillion dollars in capital investment in 5G over the next five to 10 years, this market represents numbers for the satellite sector that “are a different ballgame,” Wisniewski says. “The market reception of SOS, a very limited service, validates that there is a real market out there.”

In September, both Lynk and AST SpaceMobile had cause to celebrate. First, the FCC approved Lynk’s satellite-to-cell service, needed for the company to launch commercial services and that puts the company ahead of the market. Lynk has six satellites in space and plans to launch three more by year-end and another six satellites in 2023.

On Sept. 10, AST SpaceMobile’s test satellite, BlueWalker 3, launched into orbit as the largest commercial phased array ever deployed to Low-Earth Orbit (LEO) at 693 square feet in size. In the coming months the company plans to begin direct-to-phone in-orbit testing with its mobile network operator (MNO) partners, including Vodafone, Rakuten Mobile, and Orange. The company has regulatory approval to offer commercial service in seven countries in Africa and Asia but won’t debut its service until the launch of five additional satellites late next year, according to Wisniewski.

Tackling Spectrum and Technology Challenges

Wisniewski contends that the key to ubiquitous global coverage is flexible technology that can support multiple frequencies, given that there are very few globally aligned frequencies. “In order to tap into phones, you need to have a range of frequencies to offer,” he says.

While many market entrants depend on the spectrum from MNOs or mobile satellite service (MSS) providers to reach consumers, the field of potential partners is limited. They include LEO providers Globalstar and Iridium and Geostationary Orbit (GEO) players Inmarsat and EchoStar. OmniSpace is a new category of company, with its 5G hybrid mobile network that will rely on telecom operators’ mobile networks on the ground.

Asked if GEO players might pursue the satellite-to-cell market, many industry insiders expressed doubt. Most GEO providers “are not well aligned for the satellite-to-cell market,” says Wisniewski, not only because of the latency issues in GEO, but also because of the complexity and the partner ecosystem the market requires.

“No one has all the pieces and that’s why we’ve been at it for so long,” Wisniewski adds.

AST SpaceMobile has worked on its space-based cellular broadband solution since 2017, including teaming up with Nokia for the last two years on core network solutions designed to reduce latency. There is typically a 20 to 40 millisecond delay in LEO, compared to GEO satellites’ 500-millisecond delay.

“While it’s possible to do texting or emergency service over GEO, to work with the five billion cell phones that exist today, LEO is your best solution,” Wisniewski says.

And despite the progress with making satellite-to-cell service a reality, several technical challenges remain.

“Closing the link with the phone, given the low power levels, is the highest challenge. That’s why these satellites plan to have huge antennas,” says Serra, citing access to spectrum, spectrum coordination and interference as other major issues.

“And, for those trying to use MSS bands — Globalstar, Iridium, OmniSpace — convincing the mainstream mobile ecosystem to adopt satellite bands can also be a big challenge,” he adds.

Serra points to two positive indications of positive movement – the recent 3GPP Release 17, the third installment of the global 5G standard, and the incorporation of satellite into the 5G standard.

“It seems chipset manufacturers and smartphone brands are ready to incorporate satellite in their future designs. There have already been multiple tests proving the technical feasibility of the model, so we should see a ramp up of services very soon. But do not expect performances matching terrestrial networks, as performances connecting to a satellite will always be lower,” he cautions.

The speed and types of services possible depend on a satellite’s distance to the ground as well as the type of antenna technology used. Globalstar’s constellation is positioned in a higher LEO orbit over 800 miles from Earth, compared with Lynk’s planned 300-400 mile-altitude orbit, and uses smaller antennas with less link margin, Miller says.

Farrar notes that “the more constrained the link budget, the more burden it puts on the services you can provide, which can limit you to providing a very low data-rate messaging service, which is what Apple and Globalstar are doing.”

Companies can compensate for these issues by either installing a more capable antenna in cell phones or deploying a big antenna on the satellites to improve the service.

Spectrum access remains one of the biggest hurdles. Until September’s FCC ruling, Lynk, like AST, was limited to launching outside the United States. And even telecom goliaths like T-Mobile that have spectrum face challenges.

“T-Mobile’s planned service is a little overhyped since they have a lot of regulatory hurdles to clear before they can use the spectrum that they want with SpaceX,” notes Juan Deaton, a research scientist and engineer who has spent half his career in mobile satellite space and the second half in the satellite industry. “The FCC rulemaking process will take a while,” he adds.

Satellite-to-cell players also face challenges with using terrestrial spectrum that isn’t dedicated for their use. Doing so is “incredibly inefficient, in trying to achieve this co-existence," says Cavalier of ABI Research. “If they’re going to operate a satellite service, they need to have dedicated spectrum for that service,” he says.

He notes that there are inherently more capacity limitations for satellite systems (design/antennae size, constellation size, and power) than terrestrial systems.

“With satellites there is path loss and doppler effect which needs to be accounted for, which makes using mid-band terrestrial spectrum less efficient with satellite systems, alongside the fact that regulation hasn't caught up on this front,” Cavalier says.

He anticipates that the U.S. and FCC will likely approve new radio non-terrestrial networks with companies with dedicated spectrum that have direct-to-mobile links from satellites, likely before the companies with terrestrial spectrum will.

"It’s not a given – there’s a lot of road bumps these companies need to overcome,” Cavalier predicts.

Business Models: To Pay or Not to Pay

When it comes to business models, companies are embracing different strategies to attract users. Apple will offer its service for free for the first two years. T-Mobile has also said that it will not charge for full messaging access via SpaceX’s Starlink satellites. Still other market entrants may opt to charge for the service. Lynk and AST SpaceMobile deliver connectivity through MNOs, who will set their own rates for selling direct to consumers.

Farrar says most consumers expect messaging to be free, since they are used to getting it included as part of their mobile plan, which would leave the cost of the service to be covered by either the handset manufacturer or the mobile operator. He adds that to get consumers to pay for a service, it will need to be “a lot more comparable to what they would get from their terrestrial network.”

That’s in line with T-Mobile and SpaceX’s intent to expand from emergency assistance to include text and picture messaging services for U.S. users in late 2023, followed later by other high-bandwidth capabilities.

SpaceX’s plans echo the focus of AST SpaceMobile to eventually offer 5G-like services that can support tens of megabits per second services and potentially work indoors. But some industry experts emphasize that data, not voice services, are the future.

“The data platform is the future here. Voice even in emergency circumstances isn’t as effective as texting with GPS,” says one seasoned telecom executive.

Other sources stress that it will take more than messaging to attract tens of millions or hundreds of millions of people to pay for a service.

“That’s the big question – whether it’s realistic to expect 5G-like services or a service that works indoors or in challenged environments,” says Farrar. “We’ll have to wait and see. Ultimately, this is all going to come down to user experience – what services are provided, what people are prepared to pay for and whether that’s the operator, the handset manufacturer or the end customer. That’s been the killer issue for all these MSS systems in the past – what is the service experience and is it something people are prepared to pay for?” VS