House race to attach satellites to Apple, SpaceX, AT&T telephones

The race to deliver high-speed internet via satellite is on – but another, more ambitious competition to connect devices like smartphones directly from space started in earnest earlier this year.

The potentially untapped market — related to, but beyond, sending texts through space — is fueling a history of two strategies: those that build specialized antennas into phones, versus those that attach high-powered antennas to the satellites themselves. For some companies, that means spending billions on a potentially loss-making approach.

“The satellite industry is really niche and – if they can connect billions of smartphones – they can start talking about market sizes that are much larger than they could ever address before. Everything before that was in the millions.” Caleb Henry, senior analyst at boutique research firm Quilty Analytics, told CNBC.

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A multitude of projects and partners – from Apple, iridiumSpaceX, T Mobile and AT&T, among others – have come to the fore in various stages of development in 2022 to connect directly to smartphones. It’s long been a dream of satellite communications visionaries, but bulky, specialized, and usually expensive satellite phones didn’t reach the mass market.

According to Patricia Cooper, founder of Constellation Advisory and former SpaceX vice president of satellite government affairs, a technological advance is changing the race for perfect space-based communications.

“One of the differences [from earlier generations] is the capability of today’s satellites in low-Earth orbit, meaning they can potentially deliver more than just a thin type of text or almost like a pager service,” Cooper said.

Different technique

SpaceX announced a partnership this summer that would allow T-Mobile users to send messages from places that terrestrial cell towers can’t reach, using SpaceX’s second-generation Starlink satellites.

CEO Elon Musk said the larger, upgraded Starlink satellites would have wide antennas that could broadcast directly to a mobile device, with T-Mobile hoping to eventually add voice calls over the satellites.

While SpaceX has launched more than 3,000 first-generation satellites to date, it will require thousands more to add direct-to-phone service.

The partnership is similar to that of AST SpaceMobile. The company put its second test satellite into orbit last month and has deals with wireless carriers, including AT&T, Vodafone and Rakuten. The satellite company went public via a SPAC last year and has raised nearly $600 million to date.

AST’s network would consist of fewer satellites than the Starlink constellation, but still requires the deployment of nearly 250 for global coverage.

Private company Lynk Global also wants to deploy a cell tower in space from satellites, with plans for a constellation of several thousand in a few years. Lynk has raised approximately $25 million since its inception in 2017. So far, the company has flown five test satellites into orbit.

The company announced that it sent “the world’s first text message from an orbiting satellite to a standard mobile phone on the ground” in early 2020.

And while some are building satellite networks, other big players are eyeing terrestrial innovations, with systems that depend on a special antenna in phones.

Apple – the previous leader in satellite smartphone communications, albeit with limited launch capacity – recently announced an emergency feature for iPhone 14 models that uses the technology. In a relationship with global starthe feature allows users to send compressed text messages from iPhone 14s via satellite.

Apple is expected to spend more than $400 million to use the majority of Globalstar’s network and add more satellites.

iridium, a longtime provider of satellite communications for specialty phones, has yet to announce a partner for a direct-to-smartphone service. But CEO Matt Desch told CNBC at the World Satellite Business Week 2022 conference last month that his company was “working on this opportunity.”

Iridium expects to sign a deal with a smartphone partner by the end of 2022, with Desch saying that “our service will be day one globally when it launches.”

A way to go

Enterprises must overcome key technological and regulatory hurdles to bring these long-awaited networks to market.

“Historical services all start with the minimally most intensive service they can offer – and that’s SMS,” noted Henry of Quilty Analytics. “The true demonstration of the level of service each of these companies can provide ultimately comes down to how many satellites they can launch, how powerful the satellites are, and how much spectrum they have access to. “

Both Henry and Cooper said the regulatory unknowns surrounding these types of services will pose a particular challenge for enterprise networks. Telecom is “a highly regulated space,” Cooper said, and “there aren’t very many scenarios where the rules for a new technological innovation are first established.”

She also stressed the true scope of the market and how lucrative it could be remains to be seen.

“I don’t think we know how that’s going to be paid for. We don’t know if the market will be driven by how much wireless companies will pay satellite companies for partnerships and investments [in constellation infrastructure]or if it’s going to be paid for by consumers and add pennies to your bill, and that’s going to go to the satellite companies,” Cooper said.

“Until we know that, we can’t know the scale,” Cooper added.