The imminent market entry of several direct-to-device (D2D) LEO satellite constellations standardized to use telecom protocols by the 3rd Generation Partnership Project (3GPP), the global organization that develops the standards for terrestrial and non-terrestrial cellular communication, has sparked a wave of excitement around the world. In particular, these systems can play a huge role in the global south, serving to connect the roughly 3 billion currently unconnected people living and working outside of the coverage of terrestrial cellular networks.
But how can companies offering D2D LEO satellite services succeed in this new and very challenging market? It will prove particularly difficult, especially considering that, for the first time in history, this will truly merge terrestrial cellular and satellite services.
Although the major companies in this space will together cover a substantial part of the whole 5G service spectrum, their focus on competing with each other is hindering their ability to address the needs of enterprise clients for a complete and bundled 5G Non-Terrestrial Network (NTN) service portfolio to provide seamless coverage extension of their TN connectivity solutions. This issue could keep companies from remaining competitive, especially if they miss out on business in new markets.
Several players have already made promising entries into this space, such as Sateliot and OQ Technology’s NB-IoT store-and-forward services for non-time critical IoT applications, Lynk’s message and low-speed data services and Starlink’s voice, SMS, and low-speed data services.
Also vying for a share of the market are SpaceMobile and OmniSpace, which are working in the 1-3 GHz band to provide voice, SMS and data services of up to 30Mbps directly to unmodified cellular equipment, and Amazon’s Project Kuiper, which will offer TN-like 5G services through its cellular base station terminal with speeds between 100Mbps and 16Gbps for cellular devices at specific locations.
While they have entered into an important enterprise market, they and other new market entrants still have several challenges left to solve.
Geopolitics forces operators to focus on enterprise solutions
Geopolitical tensions have worsened over the last few years. In particular, relationships between Western countries with parliamentary democracies and countries like Russia and China with more authoritarian regimes have been strained. As such, there is increasing competition for geopolitical and geoeconomic world dominance between each general faction, especially over regions in the global south that represent a large part of the anticipated future revenues of most LEO-sat operators.
Presently, China is developing its own LEO-sat systems as an alternative to initiatives underway in the United States, Europe and Japan. As such, it is likely that China and Russia will leverage their strong relationships with the governments in the global south to favor the market entry of the Chinese system.
Considering the growing twofold civilian-military use of LEO satellites, China’s strong financial and political position and many developing countries’ energy dependency on Russia, this can make it particularly difficult for LEO-sat operators from the Western world to gain regulatory market access for their services in these countries.
Seeing that most LEO satellite operators are counting on revenue from the global south, the aforementioned geopolitical dynamics will hugely impact their business cases. Moreover, it forces these companies to revise their strategies to obtain a larger part of their revenues from Western countries rather than being able to rely on entrance into untapped markets.
To do this, these companies must also revise their services strategy, focusing more on the specific opportunities for LEO-sat services in developed countries. This includes offering their services as a seamless extension of fixed and cellular services and addressing the needs of residential clients and enterprises for bundled LEO-sat services to obtain sufficient revenues and economies of scale.
However, before these D2D LEO-sat operators can fully address the high-revenue market for enterprise solutions, several barriers need to be solved.
The lack of NTN standardization
The D2D LEO-sat operators have mainly based their services on proprietary solutions. Because each company is developing its own solution to compete with rather than complement the rest, this will complicate service consistency for enterprise applications across different complementary LEO-sat constellations, and lead to a wide variety of deployment models and architecture for the integration with terrestrial cellular services.
The reason for this lack of standardization is the rather limited scope of release 17 of 3GPP, which should have set the standards for 5G TN/NTN multi-connectivity. However, it is limited to only transparent satellite access nodes. This excludes any regenerative capabilities to compensate in the NTN 5G Core Network and Radio Access Network (RAN) for satellite-related issues such as long propagation delays, large Doppler effects, rain fading and so on. As a result, release 17 will at best facilitate interworking between 5G TNs and NTNs. But that leaves full TN/NTN multi-connectivity for future releases 18, 19, 20 and onward.
However, the new direct-to-device LEO-sat constellations will be launched and become commercially available long before that date. As such, each D2D LEO-sat provider will develop and implement its own separate, proprietary and dedicated Core Network and RAN solutions best suited to make their services connect seamlessly with unmodified 5G user equipment.
So, where global standardization in the cellular industry has clearly proven its value — just look at the worldwide propagation and usage of cellular services — it appears that the attempt to implement similar standardization in the new generation of D2D LEO-sat constellations has failed so far.
Services fragmentation
Additionally, the specific 5G frequency bands and satellite design used by the different LEO-sat operators put different requirements and limitations on both user equipment and the services. As a consequence, each of these systems is more suitable to offer services only in a specific part of the whole 5G services spectrum.
Hence, the complete range of LEO-sat services is divided among three or more different LEO-sat operators, each focusing on a limited part of the whole 5G services spectrum, whereas terrestrial cellular operators will typically provide a complete range of service.
Where one LEO-sat operator provides its services only as a stand-alone — without integration with terrestrial 5G services — another operator offers this terrestrial-satellite integration by connecting the mobile network operator’s core networks directly to its satellite RAN. Meanwhile, others propose a generic roaming model. As such, it will be virtually impossible for operators and resellers to manage the whole LEO-sat service range consistently and efficiently.
Generic roaming’s shortfalls
In 5G stand-alone networks, we will see major differences, both in network slicing solutions as well as in-the-core versus in-the-edge policies used by the different operators. Whilst some of the LEO-sat operators propose the generic roaming approach as a solution to offer LEO-sat services as an extension of terrestrial service, this cannot guarantee service consistency between terrestrial and satellite 5G networks. Nor can it offer the end-to-end quality of service needed for complex business applications across the different networks.
As these are critical requirements for large-scale enterprise deployments and are essential for the financial feasibility of these new LEO satellite systems, this approach will not work. As such, I identify this as a barrier to the quick and large-scale adoption of LEO-satellite services as an integrated part of mission and business-critical connectivity solutions for enterprises.
Operators’ resistance to bundling
All of these LEO-sat operators are generally more focused on delivering a limited range of services to end users, either directly or through mobile network operators. Therefore, these systems fail to meet the needs of reseller organizations that would bundle and tailor services to specific enterprise clients’ needs, and would also integrate the services within their existing portfolio of terrestrial services and solutions.
As seen, there are multiple key barriers to D2D LEO-sat operators being able to fully address the enterprise market, which, for Western companies unable to find sufficient business in the global south, may be a necessary source of revenue. Presently, operators, system integrators, IT solution providers and global enterprises looking to complement their full range of terrestrial 5G services and solutions with LEO-sat services will have to source the different LEO satellite services from different satellite operators and connect with the specific systems of each of them.
This will be both extremely inefficient and costly, leading to a delay in quick market adoption of LEO-sat services by these distribution channels. Consequently, this will hinder the LEO-sat operators from reaching the economies of scale and obtaining additional revenues from high-value enterprise clients for premium services, both of which are likely necessary to bear the huge costs of their constellations.
Because each LEO-sat operator will likely continue to make its service different and better than its competitors, it is unlikely that these LEO-sat operators will work together to solve the aforementioned issues. Consequently, the only solution will be an intermediary that bundles this fragmented LEO-sat service offer and makes it available through one service platform with sophisticated tailoring capabilities.
Effectively, this will enable each reseller organization to offer its clients seamless TN/NTN-services, generate the needed additional revenues for the LEO-sat operators, and consequently play a key role in making these ventures financially feasible.
Enrico Ottolini is co-founder and executive director of the business consultancy firm and LEO-sat / HAPS Network as a Service platform provider, Planet Earth Connect. He and his team are in the process of merging the relevant technologies into a fully integrated TN/NTN enterprise solution.
