Simon Baker
Simon Baker (Senior Research Director, Mobile Phones/Consumer Devices)
Angel Dobardziev
Angel Dobardziev (Senior Consulting Director, European Consulting)

The satellite world is changing fast. Elon Musk has shown that he can make Low Earth Orbit (LEO) satellite broadband a serious operational success to consumers and his Starlink venture has more than one and half million users and says it is on its way to operational breakeven.

With more than 5,000 spacecraft in orbit as of August 2023 across 100 launches, its success is broadening the attraction of satellite broadband from the niche it was before and is such that it looks likely that Starlink will dominate the satellite broadband arena to the same degree that SpaceX dominates the commercial launcher business.

At the same time work of the 3GPP technical standards group is integrating satellite communications within 5G as LEO satellite systems bring down satellite signal latency to almost the same level as that of terrestrial cellular.

In the earlier satellite world dominated by geostationary operators, European telcos and CSPs could choose to work with regional players such as Eutelsat which were owned mainly neutral local entities.

With Starlink they need to decide whether they want to work with a colourful and unpredictable entrepreneur who is yin to the yang of infrastructure cooperatives on which telcos liked to base their networks before.

Starlink is showing it will move into all the satellite markets its LEO system can provide for – from consumer broadband and serving people in mobile homes and remotely located businesses it is already into maritime service and airliner WiFi with, just as crucially, direct to device {D2D) service looming up soon, where smartphones can communicate directly with LEO satellites. And that’s not to mention military use in Ukraine.

The principal LEO option to Starlink is unlikely to be European. While Europe has one LEO operator, OneWeb, it has much less capacity than Starlink, a higher cost base, and will focus on wholesaling capacity for government and some business applications. A similar approach can be expected from the EU-backed IRIS2 LEO system, still on the drawing board.

Instead, the main LEO competitor will also be one owned by an American billionaire, Jeff Bezos, through his Kuiper system, which is beginning to gear up for service next year. While way behind Starlink, and appearing to target a narrower range of services, Bezos has committed to billions in launches and looks set to challenge Starlink in some services. Its prototype receivers are small enough to be easily portable.

Apple is investing hundreds of millions of dollars in its tie up with Globalstar to offer emergency satellite messaging. This service is already available across much of Europe. Its phone manufacturer rivals are in the process of responding, and this will set in train the move to full voice and data direct smartphone to satellite service (D2D).

The two current potential options in D2D to Starlink are two US-based startups, AST SpaceMobile and Lynk, both fairly long shot ventures which intend to configure their specialised satellites to work with smartphones. The potential revenue from D2D is being hyped in many quarters, but cellular operators still need to offer it, or their rivals will leave them behind.

It will take a few years before full D2D becomes a widespread service, but fixed – or portable – LEO access is already becoming a sizeable business in several countries around the world. In Alaska for instance Starlink is having a major impact on the provision of broadband service as it brings a better satellite service at reasonably affordable prices to outlying places than they ever had on offer before. In Australia, where there are reported to be 120,000 Starlink subscribers, Telstra has incorporated the service into its cellular pay plans.

Starlink already has regulatory approval in 33 European countries, so regional telcos and cellular operators have to decide how they will work with it. Should they play If you can’t beat them, join them, as Telefonica has recently done, deciding to work with Starlink in Spain and its coverage areas in Latin America.

With three cellular operators in most major European markets, those that sign up with Starlink first in each countries are likely to gain an advantage. In the past Musk has not shown himself keen to work with foreign partners, but with Starlink, where he needs to bring foreign markets onstream fast to produce income from otherwise unused satellite capacity, his approach looks different.

More broadly, European telcos need to resolve how they want to be involved themselves in several satellite areas over the new few years, as some other big technological possibilities loom, key among them satellite connectivity for smart driving in vehicles. Do they want satellite to just complement their own networks, or do they want to integrate it within them, for instance incorporating low latency LEO into cellular backhaul. Which use cases do they want to address? They have a lot of local marketing heft, and those with cellular networks retail outlets to sell reception hardware.

The tie-ups telcos decide on now may have a big influence on who they work with later when the business becomes substantial.

Time for all European telcos and CSPs to have a policy in place of what they want to do in including satellite into their service plans for the next few years.

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