- WIA staged a virtual event asking: How will satellite connectivity shape the future of wireless networks?
- Analysts Tim Farrar and Joe Madden shared insights based on their recent reports on the direct-to-device (D2D) market
- The upshot: No surprise here. Satellites can’t do it alone – they’re going to need a land-based assist to blanket the world
It’s the question of the day: If a direct-to-device (D2D) player wants to become a truly global network operator, what would they need?
That question came up during a Q&A session as part of the Wireless Infrastructure Association (WIA) D2D webinar on Tuesday. Moderated by WIA VP of Innovation and Technology Iain Gillott, the event featured Tim Farrar, president of TMF Associates, and Joe Madden, president of Mobile Experts.
Considering this was an event sponsored by WIA – whose membership includes terrestrial tower companies and other ground-based infrastructure personnel – you might assume the material would be skewed to their clientele.
But recall: American Tower is a WIA member and it’s been an investor in AST SpaceMobile. The point being: Even tower companies are keeping an open mind.
What does a D2D satellite player need to compete globally?
So, what does a D2D satellite player need to compete globally?
“I think first thing they would need is a gigantic satellite array to be able to receive signals through the roof of the house,” Madden said.
He noted that his firm has done studies that show AST SpaceMobile actually has a “much better opportunity” than SpaceX’s current configuration to reach consumers indoors due to the size of its antenna arrays.
“My prediction is that all these guys are going to move to much bigger arrays on the receiver side on the satellite. Then, in addition to that, they're going to need to have regulatory clearance in all those countries to actually operate there,” he said.
By the way, he answered the question within 32 seconds of the 60 seconds allotted. (As moderator, Gillott timed it, dutifully adhering to the webinar's one-hour format.)
Farrar was given the same question. “It's going to need a terrestrial network,” he said. “That's the issue. I mean, it's as simple as that. You're not going to do this with a standalone satellite network.”
Granted, “you can do certain niche use cases” that involve things like drones or solutions for the defense industry.
However, “at the end of the day, if we're talking about a consumer smartphone-focused solution, you need a terrestrial network to give you the service in the cities that people rely on and give you the hundreds of megabits per second,” he said.
“It's simply not feasible for the satellite operators to acquire enough spectrum and build enough satellites and incur all the costs of doing that in a way that will deliver a standalone satellite global mobile service,” Farrar added, concluding his answer in a respectable 48 seconds.
Satellites and indoor coverage
The WIA event highlighted two recent reports from the analysts.
Mobile Experts’ “Will Satellites Replace Cell Towers?” concluded that satellites offer a great solution to the problem of wide coverage, but a combination of technical and business factors will prevent satellites from directly competing with terrestrial mobile services.
The report notes that people spend more than 90% of their time inside buildings and vehicles and 90% of people live in regions with good 4G/5G coverage.
Based on those numbers alone, “logic suggests that only one percent of cellular usage would migrate to satellites,” the Mobile Experts report said. “Poor indoor performance, high cost and capacity limitations make satellites a poor substitute for the terrestrial mobile network. In the end, we need both systems.”
D2D’s spectrum challenges
Farrar’s report, “Satellites Direct-to-Device: A Supplement for Terrestrial Cell Coverage,” provides a rundown of the current state of D2D and the spectrum challenges.
SpaceX is spending more than $20 billion to acquire rights to 65 MHz of U.S. terrestrial spectrum from EchoStar, but T-Mobile, AT&T and Verizon each has access to more than four times that amount of spectrum.
“Making significant amounts of spectrum available for satellite use is very difficult,” the report noted.
Some D2D players initially approached mobile network operators to use their spectrum. AST SpaceMobile, for example, gained access to spectrum from AT&T and Verizon in the 850 MHz range, while SpaceX tapped PCS spectrum from T-Mobile.
One of the challenges is there’s only a limited amount of mobile satellite service (MSS) spectrum up for grabs, such as in the L, S and Big LEO bands, Farrar said.
The coming months will show how it all plays out.
“People have concluded that a network which solely relies on terrestrial spectrum access is probably not going to gain the scale and the amount of spectrum needed to offer more capable services that hopefully people may end up paying for,” he said.
D2D: Negotiations continue?
Madden reiterated his belief that despite SpaceX President Gwynne Shotwell’s references to aspirations about being better than the Big 3 terrestrial U.S. mobile carriers, it’s most likely that SpaceX is not setting its sights on the smartphone business but on more futuristic things like robots, self-driving cars and physical AI.
Comments like what Shotwell made on SpaceX’s Q2 earnings call are more indicative of SpaceX trying to tell Wall Street that SpaceX isn’t interested in purchasing a mobile operator or even investing tens of billions of dollars in spectrum for a terrestrial network, Farrar said.
“I think it's more of a signal that they're saying to people you know, don't put that in your models. And really, at the end of the day, this is still a negotiation with the mobile operators,” Farrar said.
All three U.S. facilities-based mobile operators have said they’re not keen on signing an MVNO deal with SpaceX’s Starlink Mobile, in part because it doesn’t increase their total addressable market (TAM) in any significant way. They even announced a joint venture to pool spectrum resources and work with satellite providers (plural) to eliminate dead zones.
That has left many on Wall Street and elsewhere to speculate if one of them will end up breaking rank and signing an MVNO deal with SpaceX as part of their “prisoner’s dilemma” resolution.
If that happens and common wisdom prevails, they will essentially – we reckon – hand over the keys of the mobile kingdom to Elon Musk.
Read more about D2D:
SpaceX lays out plan to compete with Big 3 wireless carriers
SpaceX plans bigger Starlink mobile push in US: report
Verizon CEO shuts down Starlink MVNO talk, touts strong Q2 comeback