AST SpaceMobile: Successfully Beaming 4G Capabilities to Standard Smartphones from Space, but Is More to Come from SatCom?

AST SpaceMobile made a significant announcement in June 2023 regarding the successful completion of a comprehensive series of tests conducted with its BlueWalker 3 (BW3) satellite. Notably, the engineers had managed to beam down data at 4G speeds from space to multiple unmodified smartphones located in Hawaii. By using the BlueWalker 3 satellite, AT&T's Band 5/850 Megahertz (MHz) spectrum, and Nokia’s Radio Access Network (RAN) technology, the 4G Long Term Evolution (LTE) download speed testing achieved initial speeds of up to 10.3 Megabits per Second (Mbps). AST SpaceMobile mentioned that it had also conducted further voice call tests with AT&T employees, building upon previous trials conducted in early April. Additionally, the company has expressed its plans to test the capabilities of the BlueWalker 3 satellite at 5G speeds.

AST SpaceMobile aims to directly connect standard smartphones to its space-based cellular broadband satellite network called SpaceMobile for 4G/5G connectivity. The company accomplishes this by using a constellation of LEO satellites that function as "cell towers" to provide a satellite-based cellular broadband network. When a user sends a signal from their device, it is transmitted to the nearest AST SpaceMobile satellite, which then relays the signal to the ground-based cellular network. This enables users to make calls, send texts, and access data services worldwide, even in regions with limited or no traditional terrestrial cellular coverage.

AST SpaceMobile: The Business with Mobile Network Operators

AST SpaceMobile’s business model involves forming partnerships with Mobile Network Operators (MNOs). By leveraging the MNOs' existing terrestrial spectrum, AST SpaceMobile can provide its services without requiring users to directly subscribe to its platform. Instead, users can easily access AST SpaceMobile's Satellite Communications (SatCom) services through their existing MNOs. Here's how SpaceMobile will function for consumers: when a mobile subscriber moves out of their MNO's coverage area, they will receive a text message from their provider that offers access to SpaceMobile connectivity. By replying with a simple "yes" via text, users will receive a day pass, which will incur an additional charge on their monthly bill. Users will also be able to opt for ongoing SpaceMobile connectivity as a monthly subscription, ensuring a seamless and uninterrupted service experience. Additionally, a standalone plan will be available for those who wish to use SpaceMobile as their primary network in areas without cellular coverage. Under partnership agreements, SpaceMobile will be offered to MNO subscribers under revenue share agreements. AST SpaceMobile has established strategic partnerships with more than 25 MNOs, including Vodafone, Rakuten Mobile, AT&T, Bell Canada, MTN Group, Orange, Zain KSA, STC, and Telefónica, that collectively service more than 1.8 billion cellular customers.

AST SpaceMobile's latest announcement builds upon a previous one, highlighting the company's progress toward commercializing its SatCom technology. In April, AST SpaceMobile achieved a significant milestone with the successful completion of the first-ever two-way voice call from space to a standard smartphone (Samsung Galaxy S22). (see the recent ABI Insight, “AST SpaceMobile completes the first ever space-based voice test. More to come from the convergence of the Satellite and Telco Industries?”).

AST SpaceMobile's accomplishments of facilitating two-way voice calls and delivering 4G LTE download speeds through satellite-to-mobile connections on unmodified smartphones are significant milestones in the growing field of satellite-to-mobile communication technology. These accomplishments mark significant progress, as currently available satellite-to-mobile services by smartphone heavyweights like Apple, Qualcomm, and Huawei have been limited to text-based applications. Moreover, the 4G data rate in the recent test will also unlock a multitude of functionalities. These include features such as basic voice and text capabilities, web browsing, file downloads, access to messaging apps, and even video streaming.

With smartphone heavyweights, major satellite operators, and MNOs entering the satellite-to-mobile marketplace, the future of SatCom for consumer mobile devices looks promising. Specifically, ABI Research forecasts that the Non-Terrestrial Networks (NTN) mobile segment will generate service revenue of US$18 billion and approximately 200 million connections by 2031. This represents a Compound Annual Growth Rate (CAGR) of 59% in service revenue from 2024 to 2031, indicating a significant growth trend in this sector. (see ABI Research’s The Role of Satellite in 5G: Non-Terrestrial Networks (NTN) Mobile report (AN-5515) and SatCom Constellations: Deployments & Subscriptions market data (MD-SATCC-102).

While SatCom for NTN mobile does present the possibility of a lucrative venture, there are also two notable cautions to highlight for market participants in the NTN unmodified smartphones value chain:

1. Potential Market Saturation of Satellite-Enabled Smartphones: In ABI Research’s forecast for NTN mobile, the NTN mobile segment consists of three groups: New Radio (NR)-NTN, Narrowband (NB)-NTN, and NTN unmodified. The NR-NTN and NB-NTN segments consist of companies like Apple, Motorola, Huawei, ZTE, etc. in the NTN-native User Equipment (UE) (i.e., modified equipment with built-in SatCom components capable of processing satellite signals and communication protocols) value-chain, while the NTN unmodified segment consists of companies like AST SpaceMobile, SpaceX/Starlink, and Lynk that aim to connect standard mobile devices to SatCom. ABI Research projects that the NTN unmodified segment will rapidly gain momentum in the initial stages. For one, the companies in this segment target not only existing mobile users, but also users who are not covered by mobile services. Besides that, these companies will also be targeting the existing smartphone market that may not yet have built-in SatCom capabilities. This would be a key factor for the growth of the NTN unmodified segment in the early stages, as switching costs for the consumers are minimal given that they would not have to purchase SatCom-enabled handsets, which are priced at a premium currently. Due to these factors, the NTN unmodified segment is expected to undergo significant revenue growth during its initial phases. However, this early growth is expected to eventually decline and taper off as satellite-enabled smartphones are expected to become commonplace in the time to come.
2. Not Yet Ready for Full Commercialization: The primary companies in the business of providing SatCom services to standard smartphones (NTN unmodified segment) are AST SpaceMobile, SpaceX/Starlink, and Lynk. It is important to note that both AST SpaceMobile and Lynk are still far from providing a global commercial satellite service due to the need for a more substantial constellation in orbit. AST SpaceMobile has only launched two satellites, to date, while the company has mentioned that it will reach global coverage once approximately 110 satellites are in orbit. Similarly, Lynk currently has three commercial satellites in orbit and requires about 1,000 satellites in orbit for truly continuous global broadband coverage. Lynk notched a commercial launch with Palau National Communications Corporation (PNCC) in June 2023, starting as a beta service offering periodic Short Messaging Service (SMS) in the southwest islands of the Republic of Palau. Among the three companies, SpaceX/Starlink is realistically the closest to providing full service, as it has the largest and most substantial satellite constellation. However, given that the company is more invested in the satellite Internet broadband business and that it has only a single MNO partnership (with T-Mobile), to date, it is important to temper expectations and enthusiasm for commercial SatCom services with unmodified smartphones for the time being.

Despite the potential challenges, ABI Research forecasts that the NTN unmodified segment has a positive outlook and that satellite-to-mobile connectivity adoption will increase. It is also anticipated that the operators in that value chain will continue to form strategic alliances with MNOs. It is important for market participants to temper expectations for satellite-to-mobile services though, as the market is still in its infancy and has yet to see widespread consumer adoption.