Upheavals continue in the satellite industry, with the latest acquisition in the space totaling $6.4 billion (Advent International, a private equity company, purchased satellite imagery provider Maxar Technologies).

There's also been recent movement in the phone-to-satellite sector, with companies like AST SpaceMobile and SpaceX's Starlink making some progress toward their respective commercial launches.

However, analyst Tim Farrar with TMF Associates noted that companies pursuing phone-to-satellite connections still face a significant number of obstacles, both regulatory and financial. Further, he said there's no guarantee of significant profits for companies that actually manage to launch commercial services.

Specifically, Farrar pointed to Globalstar's deal with Apple. Globalstar's satellites power the emergency phone-to-satellite service on Apple's new iPhone 14. But Globalstar expects its sales to increase to between $185 million and $230 million next year, up from $124 million in 2021. "Not very much money," summarized Farrar.

SpaceMobile and Starlink

Regardless, a wide range of companies are still hoping to profit from phone-to-satellite services.

Figure 1: (Source: NASA)

Starlink, for its part, recently received US government approval to launch 7,500 of its second-generation satellites. After receiving that approval, the company updated its application to include phone-to-satellite connections on around 2,000 of those satellites.

Farrar explained that Starlink timed its new application in a way to obtain regulatory approvals as quickly as possible. But he cautioned that such approvals could take a year or more.

Further, Farrar pointed out the FCC is scheduled later this month to vote on a new process for reviewing "innovative satellite applications in the new space age." Currently, the agency has no way to formally consider the use of terrestrial spectrum for satellite communications, as Starlink and T-Mobile have proposed for their planned phone-to-satellite offering.

Another phone-to-satellite hopeful, AST SpaceMobile, has managed to show some progress with its newly launched BlueWalker 3 satellite.

"In the past two weeks alone, AST SpaceMobile has made significant progress, testing ground segment links with partners Rakuten and Nokia, enabled by the company's patent-protected doppler and delay technology, as well as installing ground networks in Texas, Hawaii, and Japan, not to mention receiving test licenses in the US, Japan, Columbia, Kenya, Nigeria, Philippines and Indonesia," wrote the financial analysts with B. Riley Securities in a recent note to investors.

Broadly, the analysts argued that SpaceMobile is "years ahead of anyone else in pursuit of commercializing true direct-to-standard mobile device broadband connectivity from space."

However, Farrar with TMF Associates noted that SpaceMobile will need to raise significantly more money in order to fund the launch of its planned satellite constellation. And that, he said, will likely be complicated by the company's falling stock price. SpaceMobile's shares have tumbled from a high of almost $14 per share in August to around $4 today.

To be clear, though, SpaceMobile and Starlink aren't the only companies pursuing phone-to-satellite services. Lynk Global, Omnispace, Iridium and others have signaled their interest in the space as well.

A reason to upgrade

The overall size of the phone-to-satellite market remains unclear. Some, like Northern Sky Research, believe the industry could generate billions in revenues within the next few years, Others, like Farrar, are a bit more skeptical, particularly in light of the amounts involved in the deal between Globalstar and Apple.

"The hype and talk about the possibilities here might outweigh the actual amount of money flowing to the providers of these services," he said.

However, Farrar said there's one main, important factor driving the industry forward: The possibility of phone upgrades.

Farrar explained that major handset makers like Apple view phone-to-satellite services as a mechanism to encourage smartphone owners to upgrade their device. He said the last major upgrade driver was 5G, and phone-to-satellite services "is potentially the next driver of an upgrade cycle."

Indeed, Samsung has been rumored to be in discussions with satellite company Iridium for a phone-to-satellite function that it could add to its next Galaxy S23 smartphone.

Already, UK-based Android smartphone maker Bullitt is promising such features in an effort to increase sales of its own gadgets.

A recent Apple patent filing could signal the iPhone maker's interest in phone-to-satellite technology beyond the realm of emergency calling. "Streaming video, television data, satellite radio data" are among the satellite-powered services mentioned by Apple's latest filing.

And while that might sound like a threat to established mobile network operators on the ground, some analysts don't see it that way.

"DTH [direct to handset] is a new market segment for emergency services and connectivity in areas where none exist. It is not a replacement for fixed wireless access because DTH has low throughput by comparison," wrote analyst Frank Rayal of Xona Partners in a post to the firm's site. "DTH is also not a solution to 'connect the unconnected' because by definition one needs to have a subscription with an MNO [mobile network operator] to use this service."

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— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano