Until now, satellite and terrestrial cellular communications industries have been functioning separately in their own domains. 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.
As this will unleash a whole new world of opportunities for users around the globe, this is probably one of the most important developments in the telecoms and satellite industry ever.
Besides technological advances that will enable the merger of TN and NTNs, both industries possess specific complementary characteristics in the area of company cultures, service and market focus, life cycle management and pace of business.
Because these differences can be leveraged to obtain additional advantages and strengths, companies that embrace this opportunity will enjoy a strong competitive edge over competitors that prefer to stay within their traditional playground.
Culture differences
Most legacy satellite operators were born as intergovernmental organizations that facilitated countries joining forces to develop, build and operate satellite systems. This primarily served their public services but also the needs of commercial entities. The nature of these institutional companies made them big, slow and bureaucratic. Although many of these organizations have transformed themselves into commercial companies over the last few years, the traces of their past are still present today.
Backed by abundant government support from member states, satellite operators were able to develop proprietary satellite systems. This led to competition purely based on technical superiority more than commercial capabilities.
In sheer contrast, the terrestrial cellular industry comes from the complete opposite direction. Born as commercial companies and backed by investors who demand high ROI, this industry works with completely standardized services and is used to fierce competition based on superior commercial concepts.
Although these profiles are different, a close cooperation between these two industries offers satellite operators the opportunity to become more market-focused with leaner and more efficient organizations. This will result in a better ROI, increased shareholder value and higher interest from investors. Cellular operators can learn from the high-quality standards with which satellite services have to comply for government and enterprise clients. They can use these as an example to set the required quality standards and implement quality assurance processes required to address these attractive — but at the same time very demanding — market segments with mission-critical services.
Differences in service and market focus
Satellite operators have, from their inception, always focused on facilitating highly tailored services for government entities and various commercial vertical market segments. In this sense, they are used to competing mainly on differences around service characteristics.
As such, with a rather limited portfolio of services optimized 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.
The cellular operators, however, have been more involved in providing more mass-market segments with generic solutions, competing more on non-service- aspects such as branding, mass-market communication, the bundling of their own cellular service with fixed telecom, internet and TV services. Beyond this, they also allow third parties to leverage their basic services to launch their own portfolios of unique cellular services.
Besides this, satellite operators typically focus on a much more global scope, whereas cellular operators are more used to working on national or regional levels.
Therefore, satellite operators have much more experience offering services in developing regions with very adverse business and operational conditions while cellular operators have always focused on serving the most developed areas with the highest revenues and returns.
The new satellite services will, besides providing connectivity in completely unconnected areas of the world, play an important role in providing redundancy and augmented service capabilities and closing the coverage gap in terrestrial cellular networks in developed regions. Therefore, satellite and cellular operators possess complementary experiences and skills that can be leveraged to address both these regions and maximize total business volume.
Differences in life cycle management and pace of business
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 ten years back. This has facilitated large-scale cloud deployments facilitating market-driven service roadmaps and reducing service life cycles from years to only a few months.
SDN is an approach to networking that uses software controllers that can communicate with hardware infrastructure to direct network traffic. NFV abstracts network functions, allowing them to be installed, controlled and manipulated by software.
With this, cellular 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 companies’ solutions. This provides them with more resilient and sustainable revenue streams.
This, together with a whole new world of capabilities stemming from technologies including 5G and AI, has provided terrestrial cellular operators with the opportunity to expand their business with highly tailored Industry 4.0 services from the residential markets into a wide variety of enterprise segments. And now, cellular 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 LEO-sat operators to still provide highly proprietary solutions, and by legacy satellite operators taking the wrong turn into cellular services.
New LEO-sat operators still provide proprietary solutions
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 when 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 standardization of these services, and the characteristics of their different constellations. 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 into cellular services
Lately, there has been a lot of fuss about Apple and Qualcomm teaming up with legacy Mobile Satellite Services (MSS) operators like Globalstar and Iridium to provide “3GPP-standardized” Direct-to-Device services to modified smartphones.
However, 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. As these kinds of limited services will soon be made redundant by the 2, 3, 4 and 5G services from the new LEO-sat 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.
In contrast, I am convinced that there are more effective ways to counter this imminent threat, and even turn this into a great new business opportunity for new and legacy MSS operators alike.
The best of both worlds
So, this all raises the question: are satellite operators better or worse than cellular operators? Neither, of course. 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 talking with both parties, 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 it comes to serving the needs of the world. For this to happen, both sides have to cherish and leverage the strengths of each other. This is not only in their own interests, but is actually an obligation that weighs down on them to do their utmost to leverage all their available capabilities and assets to serve mankind.
Enrico Ottolini is currently co-founder and Executive Director of Planet Earth Connect. He has more than 25 years of extensive international experience in both the mobile and satellite communications industries. He guides telecom operators and solution providers through the rapidly changing and fragmented LEO-sat landscape. Currently, he and his team are in the process of creating a platform that will merge both these technologies into one fully integrated and seamless TN/NTN enterprise solution.
Tyler Mitchell