The difference between NTN/D2D and satellite broadband — Madden

Joe Madden

Everybody’s working on connecting phones directly to satellites. At the same time, broadband services using satellites has become a very popular way to connect rural homes and businesses. But we’ve seen a lot of confusion between the two markets on Wall Street and even within the industry.

For Non-Terrestrial Networks (NTN) and satellite “direct-to-device” (D2D) services, the early implementations are great: texting services from remote places are a game-changer for remote workers.

But will the market support six or seven different constellations? Can Kuiper and SpaceX and Iridium, Lynk Global and AST SpaceMobile all make a profit here? We’ve done a little homework to estimate the potential size of this market and to compare it with the market for satellite broadband.

First, some techie background: Smartphones and IoT devices connecting directly to satellites can NOT expect to reach broadband speeds. Even if they did, the cost of broadband services would be, well, astronomical. Today, we see some extremely limited texting services and a possible path to low-bandwidth voice services. Maybe a bursty IoT connection would work well.   

But broadband services require much higher bandwidth in order to offer a service to the public. A Starlink satellite offers 80 Gbps of capacity using wide RF bands above 10 GHz. Each user can reach 100-200 Mbps. This is possible because the Consumer Premise Equipment (CPE) is the size of my grandma’s turkey platter and it achieves high gain. Smartphones and IoT devices, on the other hand, must use extremely small antennas that are often not pointed directly at the satellite. The difference in RF link budget is a factor of 1,000 or more.

In other words, the small size of the antenna reduces the power that a device can transmit by a factor of 1,000, or reduces the power received from the satellite by a factor of 1,000. That dog won’t hunt.

So, from a market point of view, we see one market for NTN connections to mobile devices with dinky antennas, and a completely separate market for satellite broadband connections to CPE units engineered for high performance.

NTN: The Non-Terrestrial Network or, more specifically, the “satellite direct to device” market offers a low-speed version of mobile connectivity in remote places. It’s not useful indoors and in most populated places there’s no business case for this. The market potential is based purely on people and IoT devices located in remote outdoor locations. Lumberjacks and pressure sensors on oil pipelines.   

We estimate that about 500 million people globally are willing to pay $1.50 average per month for the privilege of using NTN services occasionally. That’s a potential services market of $9 billion annually, with zero adoption today. Add a potential for 500,000 cellular IoT devices at $10 per month for another $60 million in revenue. With generous assumptions about growth, the IoT segment could grow to millions of devices, but today we don’t see a path toward billions in revenue from satellite-based cellular IoT.

Satellite Broadband: On the other hand, the market for satellite broadband services is growing briskly and carries much higher potential revenue. Roughly 5 million people use satellite broadband (Starlink, Echostar/HughesNet and others) today, and subscribers will pay more than $6 billion this year. Looking forward, the growth profile for satellite broadband services is strong, and we expect the market to double by 2028.  

We’ve taken a close look at comparative economics and capacity, from very rural cases (1 home per square kilometer) to suburban cases (500 homes per sq km), and we can see some very clear distinctions between the economics of terrestrial fixed wireless access (FWA) and satellite broadband. Based on this, we estimate that 350 million people live in rural zones where satellite broadband will compete very favorably against FWA and FTTH … accounting for low ARPU in many cases, this market still has the potential to reach $84 billion in revenue in time.

In summary, our point of view is that the NTN “satellite direct to device” market is a niche, where one or two constellations can make a profit, but over-investment will result in an epidemic of bankruptcies at some point in time. On the other hand, the satellite broadband market has strong long-term potential, and the 10% to 33% revenue growth for various constellations will grow steadily for years.  

Don’t get these two markets confused. They serve very different purposes and the investment outlook for each satellite type is very different.

Joe Madden is principal analyst at Mobile Experts, a network of market and technology experts that analyze wireless markets. 

"Industry Voices" are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by Fierce staff. They do not necessarily represent the opinions of Fierce Wireless.