Ish Omar, with Rose Njeru and Francesca Mendoza
Look up in the sky today and some of the twinkling lights you see will be a new generation of low-earth orbit satellites. They’re probably one of the roughly 6,000 from Starlink or 600 from OneWeb. Soon they will be joined by thousands more from Amazon’s Kuiper.
Most of these new satellites are less than 1,000 km above the Earth. By comparison, traditional satellites orbit at around 36,000km. If you could drive to these traditional satellites in your family car at 100 km/hr, it would take you 15 days. To get to the newer satellites would only take 10 hours. This proximity opens up an exciting range of new technological possibilities, and an even more exciting range of customer and government policy possibilities.
Direct to device
The latest promise of low-earth orbit satellites is direct-to-device functionality (or direct-to-mobile). This functionality allows satellites to talk directly to devices like your mobile phone, much as a mobile operator’s cell tower would. Currently, this connectivity is in its early stages, limited to text messages and mostly useful for emergency communications. In time though, they will expand to include direct to device voice and broadband connectivity (in Australia, Optus is targeting late 2025).
Between now and that dazzling future lie technological hurdles to overcome, fierce commercial competition, and regulatory skirmishes about how scare radio spectrum resources should be allocated between satellite services, mobile services, wireless broadband, television broadcast, radio broadcast, and a range of specialised wireless products and services. Direct-to-device functionality throws an interesting twist into all of these dimensions.
Blurring the boundaries between terrestrial and satellite networks
Traditionally, there has been a sharp distinction between the radio spectrum used for mobile satellite services (MSS) vs for normal mobiles — international mobile telecommunications (IMT). Each played to different needs. Simplified to two key dimensions:
The radio spectrum range used for MSS is assigned by national regulators for use by satellite operators to enable mobile earth station to satellite communications. MSS functionality has traditionally required custom devices, like satellite phones. But this has begun to change in small ways — since the iPhone 14, Apple’s handsets have integrated special-purpose hardware and software allowing them talk directly to satellites for emergency SOS messages — using MSS.
We have yet to see how far mobile device manufacturers will push MSS functionality into standard mobile phones. Beyond the need for special hardware and software, MSS functionality on mobile phones requires a separate service to your usual mobile service. For iPhone users, Apple manages the service on your behalf, contracting with the satellite operator and offering a free connection for two years after you activate a new iPhone.
In the meantime, low-earth orbit satellite operators are starting to talk to mobile devices in their native language, in the IMT radio spectrum. The opportunities are clear — coverage, coverage, coverage. We talk about this more below. But there are a lot of changes along the way for widescale IMT adoption. First, some components in a standard mobile might have to be re-engineered to talk louder – to be heard from all the way in space (even if it is low-earth orbit). A similar principle applies to satellites— it’s one thing for a satellite to talk to a (relatively) big, dedicated antenna, and another thing to talk to a device that fits in your handbag. There are many other technological challenges besides – instead of a slow handover between static mobile towers of a terrestrial network as the mobile device moves, your mobile device will be connecting and re-connecting to different satellites zooming overhead at extremely high speed. And beyond these technological considerations, IMT-based connectivity requires communicating in the radio spectrum bands allocated by national regulators to mobile telcos rather than to satellite operators.
The evolving industry
The interdependence of satellite operators and national telcos is leading to a range of tie-ups. For the satellite operator who is incurring the cost to build a global network, mass take-up is key, and a wholesale arrangement with a telco allows the satellite operator to tap into the near-universal adoption of mobile phones through existing mobile phone contracts. For the telco, space-based mobile towers become yet another piece in the jigsaw puzzle of providing connectivity – offering a welcome new option to extend coverage at the edges of the network at a unique price / performance combination.
As the technology matures, we may see novel products and services, like coverage expansion add-ons to your mobile contract, or paid data packs for satellite roaming. We suspect that the industry benefits may be brief and relatively narrowly confined — with first movers managing to reap some of the benefits of their innovation before competition transfers the value to consumers. We’ve seen this dynamic repeat consistently for several generations of mobile innovation. As long as the industry players continue to make enough of a return on investment in one wave to sustain their ability to invest in the next, it’s a positive outcome for all.
Speaking of positive outcomes for all takes us from the realm of consumers and the industry to the realm of government policy. We’ve already talked about the role played by national regulators allocating scarce public spectrum to different uses — most relevantly, the MSS radio spectrum bands to satellite operators and the IMT bands to mobile operators (allocations may change over time, and the dynamic nature of the industry means regulators are having to think carefully how to maximise today’s uses without locking out service innovations in the future). But another set of policy makers are also facing a kaleidoscope of new implications from the rise of low earth orbit satellites — those responsible for universal availability of communications and digital inclusion.
This is not last century’s universal service
We’ve looked at the promise of low earth orbit satellites as a complement to existing mobile networks — the potential they have to push coverage beyond the limits of today’s network boundaries. Some serious telcos have suggested that this should mean a very significant scaling back of government programs that currently aim to ensure universal service availability.
The basic impulse of universal service is the same everywhere:
- communication facilitates everything from access to life-saving emergency services to education to a wide variety of economic activity
- as factors like geography, low income and low population density limit the number of people that can be reached via a set amount of network investment, it becomes increasingly uneconomic to serve people ‘on the edge’
- governments can and often must fill the gap by subsidising users, telcos or direct investment in infrastructure
- there are a variety of funding sources like industry contributions or general government spending from consolidated revenue.
So, will the problems in step 2 disappear because of low earth orbit satellites? Will the cost to serve people everywhere be reduced to the point that everyone — or almost everyone — can access market-based communications services? There are a few challenges and nuances that remain. And new opportunities too. We can explore this through the lens of Australia’s universal service landscape.
Australia ranks number 6 out of 194 countries in the world by landmass. Yet over 86% of our population is squeezed into urban areas (likely to go to over 90% by 2050). This has led to a universal service policy that is highly focused on the cost of building networks to reach people in wide, sparsely populated, remote and regional locations. In turn, this defines policy settings:
- centrally allocated funding to specific industry participants to build monopoly infrastructure to be accessed on a shared or open basis (e.g. the Mobile Black Spot Program and the Telstra Universal Service Obligation Performance Agreement)
- an obligation on fund recipients and others with capability to serve remote and regional consumers (e.g. Telstra’s Universal Service Obligation and the nbn-centric Statutory Infrastructure Provider obligations)
- cross-subsidies from those in the industry earning revenue from urban populations to those obliged to serve remote and regional consumers (the Telecommunications Industry Levy and the Regional Broadband Scheme).
But these challenges are on the cusp of transformation. Low earth orbit satellites paired with home antennae are currently providing performance on-par with wireless networks in urban areas (note we’re not talking about direct to device here — not yet). And because these satellite networks are being built at a scale that will serve far larger populations than Australia’s, when they are overhead there’s likely to be capacity to spare. As competition between them ramps up, this excess capacity may drive down the cost of connectivity and there is a real prospect that these operators will contribute to reduced connectivity pricing for consumers (see our discussion above on mobile value).
If reach is no longer the hardest or most expensive problem to solve for universal services, policy makers will be considering whether to change the funding models – perhaps to subsidise consumers with low incomes so they can directly purchase satellite antennae from their provider of choice, noting that up-front cost of equipment may remain a barrier to access.
The Australian Government’s First Nations Digital Inclusion Advisory Group is considering a range of other issues that particularly affect indigenous communities, like greater digital literacy and mobility. Ensuring universal service for other user groups, in Australia and beyond, might benefit from a similar culturally and demographically rooted analysis.
Beyond the individual consumer, space-based broadband access could transform government, not-for-profit and even private sector delivery of services like education and health. Just as the technology can lower the cost of pushing out the edges of mobile networks with direct to device functionality, it can also lower the cost of providing essential services.
With the improving capability and dependability of space-based solutions, including the direct to device capabilities we discuss above, it’s also time to take another look at traditional universal service policy divisions between fixed vs mobile universal services and voice vs broadband universal services. We don’t suggest the divisions are completely outdated — if you’ve ever used your mobile device as a hotspot, you know it’s not ready to replace your home internet. But the technology and competitive dynamics are changing rapidly, and the greatest benefit will come from a universal service framework that can accommodate that dynamism.
Is space the final frontier?
Telecoms is the most dynamic of infrastructure sectors. In barely more than a decade we’ve had the widescale replacement of copper with fibre, moved from 2G to 5G mobile services, had governments mandate vertical separation of fixed networks in some economies, had the market mandate vertical separation of mobile networks in many economies, and seen a great build-out of subsea cable and data centre infrastructure. Now we see the advent of fast, ubiquitous space-based broadband.
Just as with previous pivotal changes, funders, operators and policy makers will adjust to new realities. Each will influence the others, with security laws influencing operating procedure and network design, technological development influencing investment decisions, and government investment determining affordability and take-up. Each will benefit from a deep understanding of the possibilities, implications and local considerations for this bold new frontier.