A ‘market shift’ toward NTN: GSMA Intelligence

GSMA Intelligence begins tracking NTN developments as satellite and telecom converge

In a sign of the increasing convergence of telecom and satellite, GSMA Intelligence has put out its first quarterly tracker focused on satellite and Non-Terrestrial Networks (NTN).

The report identified 91 telecommunications operators with signed partnerships with satellite companies, through distribution agreements. Those partnerships cover about 5 billion mobile subscribers globally (or about 60% of mobile users), according to GSMA Intelligence, and include both backhaul arrangements for mobile base stations (55% of deals) and direct-to-cellular capabilities (45% of the live or planned services).

“This is a market shift from the telco perspective, with satellite increasingly viewed as a pragmatic means of network extension and access to revenue streams – both consumer and B2B/IoT – not otherwise economically feasible,” according to a report summary.

Tim Hatt, head of research and consulting at GSMA Intelligence and lead author on the tracker report, said that there is “broad convergence between telco and satellite groups, and that has been building for several years. It’s there because it’s an economical way of extending terrestrial networks to areas that would be unaffordable using purely land-based network extension.

“We’ve gotten to about 90 percent population coverage, [for] 3G/4G now, but the final 10%, economics become prohibitive without alternative means,” he continued. “Satellite has a symbiotic relationship there, because of course it can reach 100% land mass and be integrated with the terrestrial networks.”

For the mobile operators, Hatt said, this provides a “much more of a viable route to previously untapped revenues in the consumer and B2B dimensions. So, that’s bringing people onto the mobile network and the internet who haven’t been there before, particularly in places like Africa, parts of India, but even in parts of Europe, the U.K. and the U.S.” Hatt said there is known demand for roaming services on the consumer side, but also IoT connections for companies such as utilities or oil and gas providers with operations in disparate areas that often fall outside of terrestrial coverage. The combination of serving both consumer and B2B segments, he added, offers both telcos and satellite companies “a route to new revenues and filling a challenge that has been long-running, in terms of reaching areas that were previously unreached.”

Meanwhile, he pointed out, direct-to-device satellite-based service is “not totally new.” He continued: “What’s changed is that NTN standards have become enshrined in 3GPP, which means that now you have a scale economy that handset manufacturers and chipset players can build off and tailor their device portfolios to incorporate satellite connectivity. So people are going to direct-to-device because the standards are in place. Secondly, it does away with the need for a dish, which has been a hindrance to people because it costs money and it worsens the quality of the signal that you get, because it has to make a Wi-Fi hop from the dish to the actual users.” So the service itself becomes more seamless, the cost structure looks better—and Hatt also said that the Elon Musk “halo effect” can’t be discounted. Starlink has “some very formidable partnerships in the works, and I think just like Apple does with smartphones, a lot of people sort of look at that model and see they should be paying attention to that. Because it can reach both consumers and businesses, and I think a lot of mobile operators are keen to do that.”

Hatt told RCR Wireless News that there is a short-term view and a longer-term view in terms of the business case for NTN, and how many players it might be able to support, particularly on the satellite side.

“In the short term, I think competition is going to stay very vibrant. There’s a lot of private investment going into satellite operators, even beyond the behemoths like Starlink that is there because they believe in the growth story,” he explained. The GSMA Intelligence tracker, he said, indicates that there are a significant percentage of global mobile subscribers—40%—who are not yet covered by satellite-based services. “There’s still a lot of headroom to move into,” Hatt said, and the constellations that may competitively serve those potential customers are still being developed and put in place, but won’t go live for another 12 to 18 months.

“I think in the long-term, there probably will be consolidation among some of the satellite groups—like three to five years plus,” Hatt reflected. He said the extent of the consolidation will depend on two things: How much of a success direct-to-device turns out to be, and spectrum. There are two spectrum models being used by different satellite-telco partnerships: The use of mobile satellite spectrum, or reuse of terrestrial spectrum. “If those two models co-exist, there’s less reason for consolidation overall. If one starts to be favored over another, then I think that augers towards some combinations,” Hatt said.