Carlsbad’s Viasat is betting on space satellites so you don’t drop texts. How would that work? – San Diego Union-Tribune

A growing field of technology companies will spend millions of dollars this year on space satellites so you can keep texting. Their goal is to build global satellite networks so phones, computers, cars and people never lose coverage.

It won’t replace the cellular service you pay for from companies like Verizon and AT&T, but it would be an added benefit to cover dead zones. That means you might soon have an option to pay extra to get satellite texting on your phone while you hike the mountains or get stuck in an emergency off the grid.

These direct-to-device networks — which are sometimes called non-terrestrial networks or D2D networks — enable devices to stay connected through satellites in space. For rural communities or businesses operating in remote regions, it could bridge coverage gaps that are not served by cell towers and antennas on Earth.

Satellite-connected phones and devices aren’t a new concept. Iridium, a satellite communications firm based in Virginia, introduced its satellite mobile phone in the late 1990s. But, that was before everyone had a phone in their pocket.

Today, the idea is being more widely adopted as a new avenue to make money. There’s increasing momentum behind connecting not just phones, but cars, cows and entire industries to satellite networks, and more companies want a piece of it.

Apple invested $450 million in satellite communications firm Globalstar to bring emergency SOS texting to its latest iPhones. Elon Musk’s SpaceX has partnered with T-Mobile to offer satellite texting to U.S. customers in the coming year.

And the latest player to plant their flag in the direct-to-device space is Carlsbad’s Viasat.

The local telecommunications company has partnered with Skylo Technologies, a non-terrestrial network service provider, to provide direct-to-device services globally. It marks a new revenue opportunity for Viasat in the IoT (Internet of Things) space at a scale it hasn’t previously delved into, said Anton Monk, vice president of wireless initiatives at Viasat.

“We’re partnering with (Skylo) because (their infrastructure) plugs directly into our gateways around the world and it allows us to offer services through our satellite network anywhere around the globe,” Monk said.

The plan is to roll it out early this year in North America using the Ligado SkyTerra satellite network, then expand globally.

The company emphasized that this will be the industry’s first global direct-to-device network because it combines Skylo’s Release-17-based satellite technology and Viasat’s licensed spectrum holdings.

That means once new industry standard chipsets have been developed that work with Viasat’s satellites, cellphones using those chips will be able to communicate anywhere in the world. This approach also means the frequencies these devices will operate on are globally authorized for use and don’t interfere with other technology, Monk said.

In contrast, some companies like SpaceX are taking a non-standards-driven approach that could work with some unmodified smartphone models. It relies on varying frequencies from space satellites and terrestrial antennas within the network of partner phone carriers, like T-Mobile, to cover specific areas.

How big is the direct-to-device market?

A report by Deloitte predicts direct-to-device networks will be a top trend for the telecommunications industry in 2024. Companies could spend more than $3 billion this year on satellite construction and launches to enable this technology, according to the report.

The size of the market has yet to be determined. Monk said estimates from industry analysts are quite broad, ranging from annual global revenue of $15 billion to $40 billion.

“Nobody really knows,” Monk said of the market valuation. “But we’re taking the opportunity to get into this market with a pretty low barrier to entry.”

Viasat plans to build on its existing assets, including satellites from its merger with Inmarsat. Since Viasat closed its $7 billion acquisition of the European satellite firm last year, it has wasted no time leveraging these satellites in its business strategy.

Last week, Viasat announced it is part of a new industry trade group called the Mobile Satellite Services Association, which is focused on stakeholders who are building direct-to-device networks. Other founding members include Ligado Networks, Omnispace, Terrestar Solutions and Yahsat.

The chairman of the international organization is Viasat’s CEO, Mark Dankberg, who said in the announcement “integrating satellite connectivity into consumer mobile devices is a transformative opportunity for the satellite industry.”

While it’s still in the early stages, this growing ecosystem relies on partnerships between device manufacturers, chipmakers, network providers, satellite companies and telecommunication firms to get it off the ground.

There are a couple of methods for connecting devices to satellites. Viasat’s standards-based approach relies on manufacturers outfitting future devices with satellite capabilities. In some cases, this dynamic could be a roadblock for launching a network.

For example, San Diego’s Qualcomm ended a partnership with satellite-provider Iridium in November, less than a year after making plans to compete with Apple’s SOS phone feature. The local chipmaker said although their proprietary technology was successfully developed, Android smartphone manufacturers opted not to include it in their devices.

Will consumers pay more to connect to satellites?

One of the big questions associated with direct-to-device networks is: How much are people — especially those who live in the suburbs or city — willing to pay for satellite-connected devices?

Tim Farrar, a technology consultant with TMF Associates who has more than 20 years of experience in the telecommunications industry, said that this looming question is one of the reasons why it’s hard to pin down a value for this market.

He explained another question for this segment is how these companies define success and the scale they’re looking to operate at.

In the case of Viasat, Monk said this foray into non-terrestrial networks leverages their acquisition of Inmarsat, takes advantage of its existing licenses and expands their business strategy in the IoT segment. Viasat is still investigating use cases for the network, but some of the services could include consumer smartphone devices, automotive and defense applications.

“Viasat already has these satellites in orbit that they are using for lots of other purposes, so they don’t need a lot of revenue and usage to be a success on their terms,” Farrar said. “But, if you’re Apple or Samsung and you’re making smartphones in the tens of millions, if not hundreds of millions every year, you’re only going to move the needle if you sell to a lot of consumers.”

Monk foresees the potential for satellite messaging to become a standard feature on phones, which could lead to additional business models like premium versions of applications. From there, it will be up to the mobile network operators, such as AT&T, T-Mobile and Verizon, to market these capabilities to consumers.

Additionally, some companies already sell satellite-connected devices to consumers for a monthly fee, which is useful for outdoorsy folks who are hiking or camping off the grid.

These non-terrestrial networks are also applicable for government usage and business enterprise. One example Monk shared is already being used in agriculture to tag cows. These Internet-connected tags talk to a satellite and transmit valuable data to farmers, such as the location and health of the livestock.

Farrar is convinced that direct-to-device networks offer interesting and new capabilities. But, he’s less convinced that this segment is going to be a big money maker.

Another hurdle for the adoption of direct-to-device networks in its current state are the limited capabilities. Currently, networks support only basic text messaging — not voice calls, sending media or video streaming.

Farrar noted that the average person may use these features rarely if ever. Even then, connecting to a satellite signal currently requires the device to be outdoors, in the open with an unobstructed view of the sky.

For those companies hedging their bets on consumers seeking out this technology on smartphones and paying more for it, Farrar said historically that hasn’t worked. But for companies like Viasat who play in specialist markets, such as defense, there are interesting opportunities.

Iridium’s first crack at satellite phones for consumers in the 1990s was a failure on its original terms. But, the company adapted the technology to be useful for specific cases, such as soldiers on the battlefield.

Apple’s latest iPhones that include the SOS feature didn’t see a huge uptick in sales, or people clamoring for the free feature, Farrar said. And the future price for this feature is still unknown. In November, Apple extended the free offering another year.

“There’s definitely interesting opportunities here,” Farrar said. “The unknown is really the degree to which consumers really care, and we’ve had 25 years of learning that in most cases, to date, we’ve not seen a lot of evidence that they do care.”

He said it will soon become evident whether consumer expectations of pricing and service quality are met as more direct-to-device networks roll out over the next year.

Originally Published: February 15, 2024 at 8:30 AM PST