Will the merger of satellite and terrestrial mobile services offer the best of both worlds?
Until now, satellite and terrestrial cellular communications industries have been functioning separately in their own domain. However, perfect conditions for merging both are approaching with the upcoming commercial launch of many new LEO-sat operators and the further development of seamless terrestrial network/ non-terrestrial network (TN/NTN) cellular standards.
However, most legacy satellite operators were born as intergovernmental organizations that facilitated countries joining forces to develop, build and operate satellite systems. The nature of these institutional companies made them big, slow and bureaucratic. Although over the last few years many of these organisations have transformed themselves into commercial companies, Planet Earth Connect co-founder and executive director Enrico Ottolini said the traces of their past are still present today.
“Backed by abundant government support from member states, satellite operators developed proprietary satellite systems. This led to competition purely based on technical superiority more than commercial capabilities,” said the consultant.
In contrast, the terrestrial mobile industry was born as commercial companies and backed by investors who demand high ROI; this industry works with completely standardised services and is used to fierce competition based on superior commercial concepts.
Ottolini believes the two sectors can still learn from each other. “Satellite operators have, with a rather limited portfolio of services optimised for specific market segments such as maritime, aeronautical and media industries, they obtained an almost exclusive position in serving each of their specific target segments,” he said. “The mobile operators, however, have been more involved in providing more mass-market segments with generic solutions…Beyond this, they also allow third parties to leverage their basic services to launch their own portfolio of unique cellular services.”
Life cycle management
Until recently, service roadmaps in the satellite industry have been dictated by the limitations of their mainly hardware defined space and ground segments as well as the huge production and launch costs of bulky satellites built to last a minimum of about 20 years. This resulted in very limited capabilities for service modification and development over long periods of time.
In contrast to these hardware-defined networks, the terrestrial cellular industry began adopting Software Defined Networks (SDN) and Network Function Virtualization (NFV) about a decade ago. This has facilitated large-scale cloud deployments facilitating market-driven service roadmaps and reducing service life cycles from years to only a few months.
“With this, mobile operators are already a few years in the process of providing their highly tailored connectivity services deeply integrated with the functionalities of their enterprise client`s IT-systems and applications, essentially embedding their networks into other company’s solutions. This provides them more resilient and sustainable revenue streams,” he said.
And now, mobile operators are well-positioned to guide satellite partners in this same transition. Although this paints the picture of a very promising and effective merger between the cellular and satellite industry, this could be complicated by the tendency of new LEOsat operators to still provide highly proprietary solutions, and by legacy satellite operators taking the wrong turn into cellular services.
LEOsat operators are still proprietary
Although the new LEO-sat operators have a profile more similar to terrestrial cellular operators, it is striking to see that, until now, all new market entrants act similarly to the legacy satellite operators where it comes to service strategy and choosing to launch highly proprietary solutions, and to compete on technical aspects while providing a rather narrow range of services. “This stems, to a certain extent, from a lack of complete 3GPP standardisation of these services, and the characteristics of their different constellations,” he said. “It appears that the new LEO-sat operators are applying a divide and rule strategy, trying to capture their clients within their proprietary solutions and, as such, stay in full control of them.”
However, this leads to a very fragmented offer where each satellite operator will only serve a small part of their client’s needs. In the end, such an approach will turn out to be highly counterproductive, leading to slow market adaptation and negatively impacting their ROI.
Legacy operators taking the wrong turn
Lately, there has also been a lot of fuss about Apple and Qualcomm teaming up with the legacy Mobile Satellite Services (MSS) operators like Globalstar and Iridium to provide “3GPP-standardised” Direct-to-Device services to modified smartphones.
“When we take a closer look at these services, it becomes evident that these are limited to just one or two-way SOS and very simple messaging, which cannot even be regarded as 1G cellular services,” said Ottolini. “As these kinds of limited services will soon be made redundant by the 2, 3, 4 and 5G services from the new LEOsat operators, this approach does not seem to be a very productive measure to counter the competition from these new market entrants. Aware of this shortcoming, Qualcomm already pulled the plug on its project with Iridium.”
So, this all raises the question: are satellite operators better or worse than mobile operators? “Neither of course,” he said. “By creating the technical framework for seamless connectivity between TN and NTN services, it becomes possible to combine the strengths, unique capabilities, and experiences of both these industries — a move that will prove critical for success in global connectivity.”
However, when Ottolini talks to both parties, he said there appears to be a lack of mutual respect towards each other. Namely, mobile operators complain about the lack of commercial capabilities and the bureaucratic nature of the satellite industry. And satellite operators, proud of their groundbreaking achievements in space, claim technical superiority over the terrestrial cellular industry.
“Such a tribal attitude is counterproductive when serving the world’s needs. For this to happen, both sides must cherish and leverage each other’s strengths,” he said. “This is not only in their own interest, but an obligation that weighs down on them to do their utmost to leverage all their available capabilities and assets to serve mankind.”