Deutsche Telekom Mixes and Matches Its Satellite Strategy

Satellite technology is one of the hottest topics in the telecom industry. It seems that almost every day, a new partnership, technical trial or satellite launch takes place. This is how I felt a couple of weeks ago when, in the space of one day, announcements about Deutsche Telekom and its majority-owned subsidiary, T-Mobile US, were all over my LinkedIn.

The announcements outlined the two very different approaches to direct-to-device satellite services and reflected how Deutsche Telekom appears to be mixing and matching its approach.

The first news story trumpeted a successful trial by Deutsche Telekom, Qualcomm and Skylo, a global non-terrestrial network provider. The test reportedly verified the capabilities of the participants’ technologies to receive and send SMS messages based on 3GPP Release 17 specifications for direct-to-device connectivity. The trial involved dedicated satellite spectrum and devices with specialized radio frequency modifications, an approach known as direct-to-modified smartphone. It’s an approach also taken by Google and Skylo for the Pixel 9.

On the same day, in the US, Starlink received partial approval from the Federal Communications Commission (FCC) to provide supplemental satellite coverage from space, despite concerns of possible interference with cellular networks. The approval, although not unexpected, is a big step forward for Starlink in offering connectivity over existing terrestrial frequencies to almost any smartphone, an approach known as direct-to-unmodified. The approval is also good news for T-Mobile, as it will boost its chances of launching a satellite connectivity service in partnership with Starlink by the stated goal of the end of 2024.

The differences between the modified and unmodified approaches are outlined in the table below and explained more deeply in CCS Insight’s Spotlight: Satellite Networks, 2024 report.

Approach	Satellite companies	Satellite constellations	Device support	Spectrum	Players	Uses
Direct-to-modified	Globalstar Iridium Skylo Terrestar Viasat	Existing geostationary and low-Earth orbit	Certain modified devices	Dedicated satellite bands owned by providers; L band, S band	Device-makers, chipmakers and infrastructure providers	Narrowband: emergencies, SMS and, in the future, voice and data
Direct-to-unmodified	AST SpaceMobile Lynk Starlink	New low-Earth orbit	Most modified devices	Sharing with operator-owned spectrum under 3 GHz	Mobile network operators and system integrators	Emergencies, SMS, voice and data

The close timing of the two announcements highlights Deutsche Telekom’s simultaneous pursuit of different strategies. Deutsche Telekom executives have insight into how T-Mobile’s agreement with Starlink has progressed, but have so far taken a different tack for the German market. A leading reason is the difference between the geographies of the North American and European markets.

Starlink faced considerable difficulties in gaining its recent partial approval from the FCC, and it is likely to face even more challenges trying to achieve the same approval in a diverse range of tightly packed European countries — spectrum doesn’t respect international borders. These difficulties will be compounded as operators look to roll out further capabilities that are connected by satellite technology, such as voice and data functions. Such problems, coupled with strong existing terrestrial coverage in Europe, raise questions about the potential return on investment for European operators that follow the direct-to-unmodified approach to satellite connectivity.

In a joint press release, Deutsche Telekom, Qualcomm and Skylo highlighted how their direct-to-modified approach “can be used on a pan-European basis, thus circumventing the challenges of international cross-border spectrum coordination”. Deutsche Telecom appears to be taking a broader view of direct-to-device satellite connectivity in Europe, and retaining a more cautious outlook on the unmodified device market.

Reflecting Europe’s heterogeneous nature, Swiss operator Salt has a different outlook. Despite operating in a landlocked country with multiple borders susceptible to spectrum interference, it opted in 2023 to partner with Starlink on a direct-to-unmodified device service, although a launch date has not been set.

North America, Asia, Oceania and Africa have vast areas of land with unconnected populations, ideal for satellite technology and with a lower risk of spectrum interference between countries. Constellations such as Starlink and AST SpaceMobile will still have massive addressable markets that may be easier to target than those in Europe. It’ll be interesting to see how Vodafone, operating predominantly in Europe and a partner and investor in AST SpaceMobile, tackles the problem of spectrum interference.

The FCC’s ruling is significant as it means the clock will soon be starting on Starlink’s one-year period of exclusivity with T-Mobile. After this, other US carriers can partner with the SpaceX subsidiary, removing the advantage T-Mobile has over its rivals. However, I doubt Verizon and AT&T would jump ship immediately from their AST SpaceMobile partnerships, especially given their respective $120 million and $20 million commitments to the constellation, and both operators registered complaints with the FCC about possible spectrum interference by the Starlink and T-Mobile partnership. The ending of a period of exclusivity will also put more pressure on AST SpaceMobile to accelerate the launch of its satellites.

Deutsche Telekom hedging its bets highlights the speed of change in the satellite connectivity market, and the range of options available as each operator in each market looks to select the best long-term solution. As Deutsche Telekom has shown, operators will aim to examine, test and trial different approaches. There’s no doubt we’ll see many more announcements in the coming months.

To learn more about the fast-changing satellite market, watch CCS Insight’s free webinar on Satellite Networks: Opportunities for Telecom Operators or read about our latest satellite networks report.