Starlink Goes Cellular: FCC Grants SpaceX Permission for Trials; What’s the Market Opportunity for Space Calls?

According to regulatory documents filed in December 2023, the U.S. Federal Communications Commission (FCC) has granted SpaceX permission to conduct tests for its direct-to-cellular communication system for a limited duration of 180 days. During this period, approximately 840 satellites equipped with direct-to-cellular payloads will be part of these tests, with approximately 60 of these satellites actively providing service to mobile handsets within the United States. These experimental tests will be using frequencies within the 1910 – 1915 Megahertz (MHz) and 1990 – 1995 MHz frequency bands, commonly referred to as the PCS G Block. Notably, T-Mobile USA, the licensee of these frequency bands, will be collaborating with SpaceX on this venture. SpaceX and T-Mobile have a partnership that was announced last year to utilize Low Earth Orbit (LEO) satellites to expand mobile coverage in remote areas in the United States and its territorial waters.

The SatCom market has been witnessing a commercialization shift. SatCom service providers are no longer limiting themselves to specialized users like government and defense, the military, aerospace and aviation, oil & gas, scientists, and maritime operators. The integration of SatCom into consumer smartphones is anticipated to experience rapid growth, particularly after The 3rd Generation Partnership Project (3GPP) Release-17. These standards will help establish a Non-Terrestrial Network (NTN) ecosystem built on significant partnerships and product launches. Companies such as Apple, Huawei, ZTE, Qualcomm, Motorola, MediaTek, Bullitt, Globalstar, Inmarsat, and Iridium, among others, have formed strategic partnerships within the mobile and satellite industries. These collaborations have also extended beyond to include Mobile Network Operators (MNOs) aiming to expand their network coverage. For example, T-Mobile, a U.S.-based MNO, has joined forces with satellite operator SpaceX/Starlink to offer satellite-to-mobile connectivity services. Additionally, satellite operators like AST SpaceMobile and Lynk have also established strategic partnerships with MNOs such as Vodafone, Rakuten Mobile, AT&T, Bell Canada, MTN Group, Orange, Zain KSA, Saudi Telecom Company (STC), and Telefónica.

ABI Research foresees the rise of SatCom for consumer devices (i.e., 5G NTN) as a potential game-changer with far-reaching impacts on individuals and businesses. Potential market impact includes:

• Bridging the Digital Divide: SatCom consumer devices are powerful tools for extending Internet and communication services to areas facing the digital divide. These SatCom consumer devices would be able to facilitate digital connectivity in remote and underserved areas, potentially empowering the communities by granting them invaluable access to education resources, healthcare services, economic opportunities, and emergency services.
• SatCom Global Roaming: SatCom provides global roaming by leveraging its extensive satellite coverage, mobility, and the coordination of satellite network operators and communication service providers. Users with SatCom-capable devices and SatCom services would be able to maintain connectivity across the Earth, making SatCom services a valuable solution for enhanced communications.
• Emergency Response: SatCom-capable consumer devices can offer individuals and communities a lifeline during emergencies by providing reliable communication, location tracking services, access to emergency services, and the ability to request emergency assistance. These SatCom consumer devices can be critical tools for personal safety and facilitating effective emergency response efforts, especially when localized ground infrastructure becomes compromised during storms, floods, fires, etc.

SpaceX has already initiated the promotion of a direct-to-cell satellite phone service on the Starlink website. The company is anticipating the introduction of a text messaging service in 2024, with plans to follow up by adding voice and data features in 2025. Internet of Things (IoT) support may also arrive in 2025. The company is also pursuing coverage expansion efforts by entering into agreements with carriers in various regions. These include potential partnerships with Rogers in Canada, Optus in Australia, One NZ in New Zealand, Salt in Switzerland, and KDDI in Japan.

Since the introduction of the 5G NTN standard with 3GPP Release-17 in 2022, major players in the mobile and satellite industries have been rapidly developing SatCom capabilities for their product portfolios. ABI Research forecasts substantial market growth with a Compound Annual Growth Rate (CAGR) of 59% in service revenue from 2024 to 2032 for the NTN mobile segment, reaching US$18 billion in service revenue and 200 million connections. For more details, refer to 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).)

ABI Research has three recommendations for market participants in the NTN mobile market space to optimize their business growth and capitalize on the growing demand for SatCom connectivity:

• Embrace Partnerships and Collaboration: MNOs could form strategic alliances with established satellite operators in the consumer SatCom space like SpaceX, AST SpaceMobile, or Lynk Global to leverage their existing infrastructure and expertise. In the partnership, the operators could also offer integrated SatCom-terrestrial packages to further enhance mobile coverage and customer appeal.
• Differentiate through Value and Service: Market participants in the NTN mobile market space could target the underserved and unserved populations in remote and far-flung areas, the maritime, aviation, and oil & gas sectors, or emergency response services to unlock unique value propositions. For example, tiered SatCom package plans could be offered with varying data cap and SatCom roaming capabilities to cater to a diverse user market with varying requirements and financial budgets.
• Stay Nimble and Be Adaptable: Market participants in the NTN mobile market space should continuously adapt to the evolving NTN technologies and standards to remain competitive in a rapidly changing landscape. They should also stay abreast of global regulations and actively participate in policy discussions. To foster innovation, market participants should also prioritize Research and Development (R&D) efforts to explore new applications and use cases for SatCom connectivity beyond the traditional markets.