Sat-to-phone ambitions may need course corrections

Much of the opening banter about satellite-to-phone services at the recent Satellite 2024 trade show in Washington, DC, bubbled with optimism that connectivity from space would soon lift off from being a slide in a PowerPoint deck to become a routine notification icon on a smartphone's screen.

"The total addressable market is almost as big as the entire satellite industry," declared Dan Dooley, chief commercial officer of Lynk Global, in a Satellite 2024 morning panel. He predicted a future of seamless satellite backup to terrestrial service: "My kids, my grandkids, won't even know whether they're on satellite."

Sitting alongside Dooley, Qualcomm product-management VP Francesco Grilli urged carriers and manufacturers to look past sat-to-phone startup costs: "Even a tiny change in market share for an operator or a handset manufacturer could mean hundreds of millions of dollars in difference in revenues and profits."

Multiple speakers emphasized how quickly satellites could allow a mobile operator to vault from patchy to complete coverage. 

Lim Kian Soon, VP for satellite at Singtel, pointed to that Singapore-based carrier's business in Australia, where terrestrial coverage only serves about 30% of that continent: "With ... just a few satellites, you can go from 30% to 100% coverage."

And FCC chair Jessica Rosenworcel offered her own vote of confidence a week after the commission voted to approve a framework for supplemental coverage from space.

"For us to reach everyone, everywhere, at any time, we need satellites," she said. "We want to make it possible that there's always a backup in the skies." 

Launch constraints

But it was equally remarkable to see the red flags waved by speakers about how well sat-to-phone service could scale to meet broadband demand and how many people would be willing to pay to yield a profit for the companies involved. 

Download speeds haven't been a concern with the one service today available in the US mass market, Globalstar's emergency-messaging service for newer iPhones. And T-Mobile's plans to offer roaming via SpaceX's Starlink also envisage a text-only offering at the start.

But AT&T's ambitions with AST SpaceMobile risk raising customer expectations that direct-to-cell technology may not be able to meet. AT&T network head Chris Sambar promised "true broadband capability" via AT&T's deal with AST SpaceMobile. Other contenders have comparable plans.

"The topic of data density is a key issue," said Mark Hogenboom, special projects director at Nokia. And while terrestrial operators can split cells easily and add spectrum less easily, both are a lot harder when the cell towers are a few hundred miles up. 

"If you are expecting here to have the same experience on satellite that you would on a cellular network, then you are going to be disappointed," warned Thomas Scott Jensen, strategic alliances director at Gatehouse Satcom. He suggested that download speeds of 1 Mbit/s would still be doable, adding "you can still do some streaming."

(At MWC Barcelona, AST SpaceMobile said the power of the giant phased-array antennas on its satellites, combined with upcoming capacity improvements in newer generations of them, would keep its capacity ahead of demand with an initial global-service constellation of just 90 satellites.)

And even with the vast reduction in launch costs driven by SpaceX's reusable Falcon 9 workhorse rockets, direct-to-device (D2D) service from satellites also has costs far beyond terrestrial deployments. 

Viasat CEO Mark Dankberg said the sector needs airtime costs to drop by "orders of magnitude" – from the dollars per megabyte quoted today to the dollars per gigabyte customary for terrestrial wireless – with "similar improvements" in speeds. 

"Nobody still knows how money is going to be made in D2D," said Matt Desch, CEO of Iridium Communications. "How much money is T-Mobile paying Starlink?," he asked. "Is it a cost sharing between AT&T and AST?"

(Verizon's lack of interest in sat-to-cell service has grown conspicuous in comparison, although that carrier is looking to use Amazon's forthcoming Project Kuiper satellite service to boost backhaul to remote cell sites.) 

Downloads to dollars

Speaking a week after the show, analyst Tim Farrar of TMF Associates drew a line from the bandwidth issue to bottom-line concerns. 

"If you actually want to charge for it, then, yes, you have to offer something more than basic messaging," he said. "I think that it's true to say that if people are expected to pay substantial amounts of money for it, they'll need broadband."

AT&T's Sambar suggested the operator could bundle satellite roaming with its more expensive unlimited-data subscriptions, but would offer it as an upcharge on cheaper offerings. 

But Sambar declined to say if the carrier would offer funding beyond its participation in a $155 million funding round of partner AST SpaceMobile. He jokingly asked AST SpaceMobile CEO Abel Avellan "You want more money?" The AST leader's response: "Well, we do."

Farrar said satellite operators that already have spacecraft in orbit – he name-checked Skylo and Iridium – face decent odds. But he said that anybody looking to launch a new satellite constellation would first have to catch up to SpaceX. 

"SpaceX is vastly ahead of anyone else," he said. "It's going to be challenging for people like Lynk and AST to build and launch a substantial number of satellites."

But even SpaceX is still wrestling with ways to make sat-to-phone service work with phone antennas optimized to talk to cell towers at most a few miles away. 

SpaceX recently posted a filing with the FCC asking permission to operate direct-to-cell Starlinks at orbits starting at 211 miles up, below the orbits occupied by its first-generation Starlink birds. And just a few days later, the FCC dismissed a 2023 SpaceX request to provide direct-to-cell service on midband frequencies already licensed to Globalstar and Dish Network that sit on either side of spectrum it's authorized for T-Mobile satellite roaming.

Farrar asked: "Does SpaceX believe in D2D enough to invest billions of dollars in that as opposed to spending those billions of dollars competing in the terrestrial market?" 

He also offered a warning to future users of sat-to-cell bandwidth: "No one's ever said what the uplink speeds are, because they're a lot lower," he said. "Forget sending a picture of your beautiful mountain scenery when you're hiking in Glacier National Park."