Signals from space: Direct-to-device satellite phone connectivity boosts coverage

If you build it, will they come?

There is a race to build a new set of satellite-enabled global telecommunications services for consumers, enterprises, and governments. Basic services for emergency communication, simple text messages, and IoT monitoring have already started. The new emergency services have enabled rescues and saved the lives of people in car crashes and natural disasters.²

To help make this a reality, capital is being raised, satellites are being launched, chips have been developed, regulatory frameworks established, and agreements with mobile network operators are being secured. Some are very bullish on the potential size of the market (reaching tens of billions of dollars in the next 10 years), while others are expecting it to take a long time to mature and generate sufficient revenue.³ In either case, this could represent an opportunity to significantly increase the size of the global satellite communications market.

Being able to make a voice call through a satellite from a handset is not new. Iridium had its first call in 1999 and is providing service today to nearly 400,000 commercial voice and data subscribers as of the end of 2022.⁴ But those handsets are expensive, and they look and function nothing like the five billion smartphones that consumers carry. What is new is that there are space companies making and using satellites that can talk directly to existing smartphones, and there are smartphone companies that are adding relatively inexpensive chips to models that can talk directly with satellites.

Smartphone makers are hoping that adding satellite connectivity will be seen as an attractive feature—encouraging existing users to upgrade to new phones and helping makers gain share against competing phones that don’t offer the capability. Smartphone shipments have languished recently, a predicted 1.15 billion in 2023, down from around 1.4 to 1.5 billion per year between 2015 and 2018, and manufacturers are eager to grow the market and gain share.⁵ Mobile network operators are looking for new revenue from more subscribers and add-on services. They’re also looking to expand their geographic footprint without building expensive new ground-based infrastructure. Satellite operators are hoping to capture a growing piece of the global telecommunications market. They want to get access to a large number of new customers and fresh investment from their partners.

There are two different types of consumers who could help drive the growth of this market. The GSMA estimates that 95% of the world’s population is covered by a mobile broadband network.⁶ That leaves about 400 million people who don’t have access and could benefit from satellite-based mobile services. However, many in this group may not be able to afford the handsets or services needed. The much more significant market is made up of the ~5.6 billion current mobile subscribers around the world.⁷ Integrating satellite and terrestrial mobile networks on their handsets could help fill in service gaps, maximizing geographic, as well as population, coverage. If a moderate number of current subscribers are willing to pay an incremental amount in addition to their normal monthly bills, the market could be quite robust.

Although the consumer market is getting the bulk of the attention, commercial and government services could also help influence the market. Communications services for public safety and national security are natural use cases for direct-to-device (D2D). In addition, IoT applications that only require periodic connectivity and transmit limited amounts of data could see strong adoption—especially in the health care, industrial, and transportation industries. The market for satellite-based IoT services is already robust and growing—Globalstar and Iridium both reported gains in their commercial IoT subscriber base in the second quarter of 2023.⁸ More advanced direct-to-device capabilities could broaden two-way communication and accelerate the number of connected devices.

Constructing a winning team: The who’s who of D2D

There are many companies trying to develop this market, each with slightly different approaches and technologies—some are using existing infrastructure, others are building their own, some are taking an open approach and others are being strictly proprietary. Some of the larger, more advanced efforts include:

• Apple and Globalstar:  Apple has invested US$450 million in Globalstar to upgrade their ground stations, develop a new generation of satellites, and secure 85% of their constellation’s capacity in LEO to provide emergency communication services to iPhone 14 and 15 users.⁹ The “Emergency SOS via satellite” function currently enables users in 14 countries (with 740 million in total population) to share critical information with emergency services while outdoors with no wifi or cellular service.¹⁰ Additionally, Apple has said they are partnering with AAA on a “Roadside Assistance via satellite” feature for US iPhone 14 and 15 owners.¹¹ Both of these services are free for the first two years of phone ownership. It’s unclear how users will be charged after the initial two-year period.
• SpaceX and T-Mobile: T-Mobile is working with SpaceX to use their Starlink LEO satellite constellation to provide text messaging services for customers in the United States (with plans to move to voice and data in the future).¹² Their aim is to provide full global texting coverage by the end of 2024.¹³ To enable these services, Starlink’s second generation satellites will need to be used, which have more advanced antennas.¹⁴ This generation of satellites began launching in early 2023. SpaceX is also working with telecom operators Salt in Switzerland and One New Zealand to eventually provide similar services.¹⁵
• Lynk Global: This startup is looking to construct its own satellite constellation to provide direct-to-device services. Currently, it only has three satellites in LEO, but its goal is to launch 1,000 by 2025 (with potentially thousands more).¹⁶ Lynk touts that its system can work (in varying capacities) with any cell phone without using a specialized chip.¹⁷ They’re working directly with mobile network operators in over 40 countries. Their first test case will be with the Palau National Communications Corporation.¹⁸
• AST SpaceMobile: This company has only just started to build out its satellite constellation. It deployed a test satellite with the largest commercial antenna ever in LEO at the end of 2022.¹⁹ AST SpaceMobile has also demonstrated its capabilities with a two-way test call.²⁰ The initial launches for its constellation are currently slated for 2024—it needs 110 satellites for sufficient global coverage.²¹ AT&T is leasing part of its wireless spectrum to AST SpaceMobile for their use.²² AST SpaceMobile is also working with other mobile network operators, including Telefónica, Vodafone, and Rakuten.²³
• MediaTek and Bullitt: MediaTek has developed a GEO-satellite compatible chipset (MediaTek MT6825) to be used in Android devices.²⁴ This is being used, along with the Bullitt Satellite Connect platform, in devices like ruggedized Android smartphones, in addition to a stand-alone accessory that can be linked to any Android or iOS device.²⁵ Since the service uses GEO-based satellites (from Inmarsat and EchoStar), messages take longer to send and receive, but don’t require aiming the smartphone.²⁶ Plans range from $5-25/month, depending on the number of messages used.
• Huawei and China Telecom:  Huawei’s Mate 50 series of smartphones have the capability to send texts for emergency services through China’s BeiDou Navigation Satellite System.²⁷ Their newest phone, the Mate 60 Pro, has more advanced satellite-based calling and messaging features through China’s three Tiantong-1 satellites in GEO.²⁸ China aspires to deploy one or more LEO satellite broadband constellations in the coming years that may expand D2D services.²⁹

Bottom line

This market is in its early stages and very dynamic, with many companies around the world seeking a stake. However, just because something is possible and there is significant activity, doesn’t mean that it will be successful. There are several challenges to the development of this market.

Economic: Will the overall demand be there for the capacity that’s being built? Will consumers be willing to pay for these services? If so, what’s the best way for services to be monetized (for example, subscription, per use, etc.)? Can the necessary fundraising for launching, operating, and maintaining satellite constellations be sustained? Will semiconductor and handset manufacturers see a spike in demand?

Technical: In addition to the intrinsic technical challenges with deploying and maintaining large satellite constellations, such as successful launches and operating in a crowded orbital environment, there are also specific direct-to-device issues. Coordinating spectrum use and managing potential interference between operators will likely be an ongoing challenge.³⁰ Global standards should be developed for things like cybersecurity and interoperability. The 3rd Generation Partnership Project Release 17 is a start, covering standards for the role of satellites in global 5G networks.³¹ What technical approach will predominate—one where chipsets in smartphones power satellite communication or where satellites act more as space-based cell towers enabled by network-on-the-edge architecture? In either case, advancement in both satellite and smartphone technology will likely be necessary to enable the full potential of D2D.

Regulatory: There are currently few specific regulations for the direct-to-device market. Just like other initiatives, satellite, and mobile network operators should work through the appropriate agencies in the countries they are operating in for approvals—for things like spectrum allocation, orbital slots, and landing rights (permission for satellite services in a country). In the United States, the FCC has worked to enable satellite and mobile network operators to collaborate easier. They recently proposed a regulatory framework to allow satellite operators to apply to access spectrum controlled by mobile network operators.³²

Blending these different markets together to make connectivity like air is ambitious and potentially lucrative. There are many benefits—connecting the unconnected, improving safety and emergency response, expanding IoT applications, and increasing the resiliency and reliability of the global telecommunications infrastructure. The question is, how fast could a fully realized, integrated satellite and terrestrial network contribute to new innovations and behaviors that can be widely adopted and monetized?