If you have been following the news on Direct to Device (D2D) services lately, you will have seen an increase in media buzz from D2D LEO-sat operators. Each claims to have the best proposition for Mobile Network Operators (MNOs) to expand their network beyond the limited coverage of their terrestrial network, highlighting the increasing interest in this sector. For the satellite industry to understand the true business opportunity and potential impact of D2D LEO-sat service, it is time to put things in the right perspective.
Revenue potential
According to the recent predictions of the Global System for Mobile Communication Association (GSMA), D2D LEO-sat services may attract an additional $30 billion of global spending on cellular telecom by 2035. This equals approximately 3% of the current total global cellular revenues. Although this might look rather small, this amount already equals a quarter of the total predicted $140 billion increase in global cellular revenues between 2023 and 2030.
However, the actual revenue potential for the industry is likely higher, as the GSMA prediction is based only on the 7% of the world’s population that lives in the coverage gaps of terrestrial networks and would therefore be new telecom customers. It leaves out of the equation the 5.6 billion people (nearly 70% of the world’s population) in more developed regions around the world who regularly move in and out of mobile coverage and offer greater revenue per person. This last group is very important as MNOs consider D2D LEO-sat services. These are existing customers that are, every month, generating revenues and who may switch to a competing MNO that’s able to complement its terrestrial cellular services with a more compelling D2D LEO-sat proposition.
As such, D2D LEO-sat services not only offer an opportunity for MNOs to increase their revenues, but also present a way to keep clients who might otherwise move to a competitor.
D2D LEO-sat services can also play an important role in providing augmented network capacity and service redundancy in areas with full terrestrial network coverage, further improving the quality of their service. By securing D2D LEO-sat connectivity for its clients, MNOs can also reduce the capital expenditure associated with terrestrial network rollout in sparsely populated areas, and instead focus their investments on creating a denser terrestrial network in densely populated areas.
Based on these considerations, it is very likely that the total financial impact of D2D LEO-sat services on terrestrial cellular communications will be much higher than just the $30 billion forecasted by the GSMA. In addition, the current global annual revenues of mobile satellite services amount to approximately $6 billion, but their addressable market was until now limited by the proprietary nature of their systems and the high prices of their dedicated and specific user terminals. Thus, the satellite industry clearly should do its utmost to obtain the highest possible share of the huge terrestrial cellular revenues, especially considering those revenues are 200 times bigger than mobile satellite service revenues are today.
Competitive position
Most MNOs are currently positioning themselves as tech companies instead of telecom companies, providing connectivity as an embedded part of their clients’ enterprise applications. Since the most valuable business accounts of MNOs are large companies operating on international or global scales, it is simply not an option to leave these clients without connectivity once they leave the range of terrestrial network coverage.
Instead, using satellite D2D services optimized and proven reliable on a specific satellite constellation could guarantee the same quality of service all over the world, independently from any local terrestrial network characteristics and specifications.
By creating an advanced D2D LEO-sat portfolio with maximum redundancies, MNOs can claim a strong competitive edge and secure or expand their position in the enterprise segment. This will protect them from possibly losing their most valuable clients to their competitors.
Creating a competitive D2D LEO-sat proposition
To realize such a portfolio, MNOs will have to partner with and connect to various D2D LEO-sat operators. The different D2D LEO-sat operators together offer a broad portfolio of services which covers a large part of the complete terrestrial 4G/5G service spectrum. As such, combining services from the different operators will allow MNOs to extend the coverage of most of their clients’ services beyond the limitations of their own terrestrial networks.
These LEO-sat operators can also provide complementary coverage areas with their different constellations. To facilitate this process, MNOs could also decide to work with an intermediary platform provider. Through such a platform MNOs would be able to connect the different LEO-sat systems, tailor services to the specific needs of their clients, mitigate certain shortcomings of these D2D LEO-sat systems (as I described in an earlier article) and source all the traffic from different D2D LEO-sat operators.
MNOs could work with a variety of LEO-sat operators who provide different D2D LEO-sat services, 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 or Starlink’s 4G/LTE voice, SMS and low-speed data services. Other D2D LEO-sat operators are SpaceMobile and OmniSpace, which are working in the 1-3 GHz band to provide 5G voice, SMS and data services of up to 30Mbps directly to unmodified cellular equipment. Likewise, Amazon’s Project Kuiper will offer TN-like 5G services through its cellular base station terminal, and will even provide speeds between 100Mbps and 16Gbps for cellular devices at specific locations.
On the other hand, legacy MSS-operators like Iridium, Globalstar and Orbcomm have, until now, only provided proprietary services to special and expensive mobile and portable devices, thus keeping their addressable market quite small. But now they too are making their first moves to enter the D2D game. However, their existing constellations lack the capabilities and flexibility to support advanced 4G/5G cellular services, as I explained in another article. Therefore, it still remains to be seen what portfolio of competitive D2D LEO-sat services they will be able to provide.
D2D LEO service: coming soon
These market changes are all about to happen soon.
For example, SpaceMobile recently secured its strategic partnerships with AT&T and Verizon, which have more than 70% of the market share in the U.S. between the two of them. They will commercially launch their D2D services across the whole U.S. in Q4 of this year. From thereon, SpaceMobile will start its rollout across the world. Similarly, SpaceX’s Starlink is expected to launch D2D text services in the U.S. before the end of this year together with its U.S. MNO partner T-Mobile. They will supplement their D2D services with voice, basic data and IoT services in 2025, and from thereon expand across the world. And the other LEO-sat operators are currently on a similar track.
As such, now is the time for satellite operators and MNOs to prepare, assess the threats and opportunities, decide on the most appropriate strategy and select the best partners to position themselves as best as possible.
Global standardization of D2D LEO-sat services
Due to a lack of full non-terrestrial network standardization, a disadvantage of these D2D LEO-sat systems is that they are, to a certain extent, based on proprietary solutions. Thus, some say it would be better to wait for global standards to emerge in the coming years.
Although this might be true, the launch and global rollout of new constellations that will fully comply with future standards will again take another four to five years. In this sense, it will probably be much easier for the current D2D LEO-sat operators to implement the new standards as an upgrade of their initial D2D-LEO-sat systems instead of waiting to launch whole new constellations and systems.
As such, current LEO-sat operators have the potential to offer future-proof solutions. Those that are able to capitalise on a first-mover advantage will be able to maintain their leading position among D2D LEO-sat services in the future. Thus, there is no reason for MNOs to wait for better options to come along. The time to act is now.
Enrico Ottolini is co-founder and Executive Director of Planet Earth Connect. He has more than 25 years of extensive international experience in both the mobile and satellite communications industries. He guides telecom operators and solution providers through the rapidly changing and fragmented LEO-sat landscape. Currently, he and his team are in the process of creating a platform that will merge both these technologies into one fully integrated and seamless Terrestrial Network / non-TN enterprise solution.
