- The D2D services are just getting started now, and many will take years to come to fruition
- SpaceX and T-Mobile are likely to launch their service for free initially, analyst Farrar expects
- He sees a long path to commercial service for AST SpaceMobile
Two hundred miles above the globe, new swarms of low earth orbit (LEO) satellites are starting to be assembled. SpaceX is leading the pack but others are now also promising to deliver direct satellite to cellphone service.
Yet despite the hundreds of satellites that will need to be sent up between 100 and 500 miles above the earth to support these services, and how this may wreck the view of the night sky in less populated areas, one specialist satellite analyst wonders if any of these companies will be able to make money from direct-to-cell services.
“It will take years and billions of dollars,” said Tim Farrar, president at TMF Associates, in a call with Fierce this week, talking specifically about the ASTMobile launch plans and how long it will take to actually take to offer a consistent service to users in the United States, and - hopefully - around the globe. More generally, he wonders if any company will be able to make money out of satellite to cell services.
Direct-to-device
SpaceX is leading the pack in launching direct-to-cell satellites, with around 19 launched so far. The direct-to-cell satellites are different from the Starlink Internet satellites, being larger and with antennas on board to enable the service. SpaceX has said that its direct-to-device (D2D) service with T-Mobile will commence this fall.
Farrar wonders if even SpaceX will be able to make money from a D2D service. Farrar considers Morgan Stanley’s expectations that “10s of million of people” would “pay $3 a month” for a SpaceX D2D service might be somewhat far-fetched. If all you’re really getting is a bit of messaging that perhaps you could do free on iPhone who’s going to pay for that?” Farrar questions. Remember, Apple is also offering its own emergency D2D messaging service on the latest iPhones.
“Is that the total that they’re paying [SpaceX] or is some of that going to T-Mobile?” Farrar asks. He expects that T-Mobile and SpaceX will initially launch the D2D service for free, at least initially, and T-Mobile will pay SpaceX like they would a domestic or foreign roaming partner - so the service won’t be heavy earner for SpaceX in the beginning, or maybe ever.
Space teething problems
If the big dog in commercial space services may struggle to make money from D2D how are the smaller companies going to survive? AST SpaceMobile has garnered a lot of publicity with its planned D2D service with AT&T and - now - Verizon.
“It's got a lot of regulatory hurdles still to progress through because it's going to have to go back to the FCC and get approval for use of this spectrum that is being provided by both AT&T and Verizon,” Farrar noted. AT&T is leasing the company 700 MHz and 850 MHz spectrum, while Verizon said it would lease 850 MHz spectrum as part of its $100 million investment in the company.
Then, AST will need to launch a lot more satellites. The CEO told Fierce the company would need around 60 satellites to provide continuous service to the U.S. It is planning to launch five satellites with SpaceX later this year, Farrar noted
It will need to launch a lot of satellites before it can offer a commercial service, Farrar said. Really, despite the interest - or should we say hype - around AST SpaceMobile, it has barely even got its service off the ground so far.
“The budget will get blown out” Farrar suggested, noting that the initial five large satellites that SpaceX is launching on Falcon 9 - in a special ejector - for AST SpaceMobile will cost around $40 million.
“AST is going to need many dozens of satellites [for a continuous service], and that’s going to take a long time,” Farrar concluded.
So, get ready to wait for space services from AT&T and Verizon.