Will 2025 be the year satellite-to-smartphone services truly take off?

Connectivity direct to unmodified mobes looms, thanks to Starlink and co

Analysis This year saw the launch of the first satellite constellations designed to provide commercial services straight to unmodified smartphones, which looks set to become the biggest satellite use case, with the US leading the way on adoption.

Satellite services integrated with terrestrial cellular networks are still in their infancy, but the revenue from these is expected to grow rapidly to reach about $16.8 billion by 2028, according to forecasts by research firm CCS Insight, overtaking satellite broadband and leaving IoT connectivity via satellite in the dust.

Those are the three applications of orbital internet service that CCS identifies, with broadband currently the largest at about $7.9 billion in revenue, thanks to providers such as Starlink.

This is predicted to rise to about $13.3 billion by 2028, but the revenue from so-called direct-to-cellphone satellite connectivity – your smartphone uses an overhead orbiting bird rather than a nearby cell tower – is set to rocket from virtually nothing today to pass broadband in 2027, while IoT will only just top a billion. (Direct to unmodified cellphone is not the same as dedicated sat phones, which have been around for yonks.)

"On the whole, the total revenue generated from these use cases is still relatively small compared to the telecom industry as a whole, but they do represent a long-term opportunity," said Research Analyst Vaishali Purohit.

Image courtesy CCS Insight

CCS also distinguishes two distinct approaches to providing a direct-to-cell service. One is to target modified devices that feature special hardware, the other focuses on unmodified smartphones, with key distinctions between the two in the spectrum they use, the players and partnerships involved, and the device support required.

Apple is one example of the modified device approach, first seen in the iPhone 14 which launched 2 years ago with the ability to send a message via satellite to a contact center and call for emergency help if no cell network is available. Messaging capabilities were extended in iOS 18.

Google added SOS capability with its Pixel 9 device, and some Chinese brands such as Huawei and Xiaomi also have satellite messaging, but only for users in China.

Modified devices typically access dedicated spectrum in the L-band or S-band ranges, owned by the satellite operator, Purohit said. This includes Globalstar in Apple's case, plus others such as Skylo and ViaSat.

While modified devices support basic services such as emergency and text messaging now, they are likely to support richer services such as voice and data by 2027, according to CCS.

However, the unmodified device market is likely to be significantly larger than that for modified devices – forecast to reach 8.8 billion units by 2028, compared with about 1.5 billion, respectively.

Unmodified devices effectively means those compliant with the non-terrestrial network (NTN) capabilities specified in Release 17 and 18 of the 3GPP standards, which should include all smartphone handsets going forwards.

This market is based on terrestrial cellphone operators partnering with a satellite provider to deliver a service, typically by sharing some of the operator's spectrum in order to expand coverage out to areas beyond the coverage of the cell towers, or "like putting a cell tower in space," as it has been described.

CCS highlights three main satellite provider networks that are serving unmodified devices; Lynk, AST SpaceMobile, and SpaceX's Starlink, all operating low Earth orbit (LEO) constellations.

Lynk, the smallest of the three, is the only one that offers an active service, but its coverage is currently in places such as the Cook Islands and Solomon Islands, though it does have a partnership with Rogers Wireless in Canada.

However, most of the market for the near future is going to be in North America, especially the US where there are large areas outside unserved by cellphone signal coverage. Starlink has a partnership with T-Mobile US, while AST SpaceMobile has signed up the other two major US cellphone carriers, Verizon and AT&T.

Other notable satellite operators include Amazon's Project Kuiper, which "could impact the satellite industry on a similar level to Starlink," according to Research Analyst Joe Gardiner.

There is also Sateliot, which focuses on NarrowBand-IoT for connecting devices, and Telesat, which is adding a LEO constellation to its existing geostationary network.

However, CCS Director for Consumer and Connectivity Kester Mann reiterated that satellite links are only likely to be a complementary technology to terrestrial networks, rather than any kind of replacement for them.

"It's about connecting the unconnected, principally the 350 million people throughout the world, many in emerging markets, who still cannot get online due to unavailability of telecom infrastructure," Mann said.

The US is going to be the epicenter of direct-to-cell satellite activity for the near future, dominating early usage and uptake thanks to all three of the country's major cellular carriers getting involved.

CCS figure 2 - chart showing sms subscribers - Click to enlarge

First mover on this is likely to be the T-Mo and Starlink partnership, according to CCS.

"We're expecting a commercial direct-to device offer for personal messaging almost anytime," Mann said, a forecast made more likely by the recent news that the US Federal Communications Commission (FCC) has given Starlink conditional authorization to operate its service.

Data services also on the near-term roadmap after the pair managed to demo a phone-to-phone video call using a Starlink satellite and unmodified smartphone back in May, he added.

However, Starlink has only agreed a one-year period of exclusivity with T-Mo before it opens up its network and offers the service to rival carriers as well.

In regions like Europe, the case for direct-to-cell is less clear cut because existing telecoms infrastructure already serves much of the population with either fiber or cellular services, plus the relative lack of large sparsely populated regions. The UK government has already partnered with Starlink to cover some remote areas.

There is also a much more fragmented telecoms structure that may make it difficult for satellite operators to share the spectrum of a terrestrial network partner without the risk of interfering with neighbouring services that may be operating in a bordering nation.

But Australia is "a recent hotbed of satellite activity," according to Mann, because like the US, it also has huge areas still lacking in any kind of mobile coverage. He pointed to Telstra partnering with Starlink for broadband delivery, while Optus is also working with the Musk-owned biz on direct-to-cell services.

Overall, it seems like satellite-based phone services could soon become the norm, as we have written before – depending on where in the world you are, of course. ®