Space Shot

Satellite broadband is becoming increasingly important for the telecom industry, as efforts to narrow the digital divide took on a greater focus in the wake of the Covid-19 pandemic. It’s a market in which high-profile investors including Elon Musk compete with big brands like Amazon in the race to launch satellites into low Earth orbit.

But there’s one lesser-known company I’m keeping an especially close eye on. US provider AST SpaceMobile is developing what it says is the first space-based cellular broadband network accessible directly by standard mobile phones. This contrasts with the traditional approach in which signals are beamed from space to receivers on the ground, serving as a hub for people to connect other devices to.

I recently interviewed AST’s chief strategy officer Scott Wisniewski, who gave me the low-down on the company’s plans. We talked about a high-stakes opportunity that could help millions get online for the first time, but that comes with the risk of competition from device-makers, imitation from aspiring rivals and numerous technological challenges.

AST SpaceMobile isn’t shy in promoting its ambitions. It wants to eliminate the connectivity gaps faced by over 5 billion mobile subscribers and bring cellular broadband to about half the world’s unconnected population. The company — which has nearly 400 full-time employees — started developing its technology in about 2016, and aims to offer its first commercial services in 2024.

Last week it confirmed plans to launch its BlueWalker 3 test satellite into low Earth orbit in August 2022. It follows the award of an experimental licence from the US Federal Communications Commission to use 3GPP low-band cellular frequencies.

BlueWalker 3 is the fruit of an investment of $85 million and more than 800 ground tests by engineers. It will be a major test of the company’s technology credentials. A recent partnership with Mr Musk’s SpaceX will form the platform for further launches in 2023 and beyond.

Like other satellite providers, AST will need to find the right balance between coverage and performance. Beaming signals to extremely wide areas can only be achieved with low-frequency spectrum, often below 1 GHz. But a lower bandwidth also means lower speeds for users. Further, the long distance between device and satellite will lead to some natural lags in communication because of higher latency compared with terrestrial alternatives. This won’t be as significant in low Earth orbit compared with geostationary satellites, but sceptics will contest AST’s claim that latency won’t be perceptible among users.

A more specific challenge for AST is the power requirement to stay connected. This is because its technology will be accessible on standard smartphones, and so raises questions about battery performance and the likelihood that devices will overheat. The company maintains that as its satellites are designed to function like ordinary cell sites, power usage by mobile devices will be similar to that of a phone in a rural area connecting to a typical macro cell tower.

But before even reaching that stage, the pure logistical effort of folding a 64-square-metre phased array antenna onto a rocket and then unfurling it in space will need to be overcome — an aeronautical engineering challenge, rather than a wireless one.

An important focus of the upcoming trials is integration testing with mobile network operators, which will be undertaken on five different continents. It’s crucial because operators are AST’s primary route to market, and it’s already secured about 25 separate agreements and memoranda of understanding.

Working with operators — rather than going to customers directly — makes sense, as it avoids the need to buy spectrum and allows AST to immediately tap into many millions of existing customer relationships. Vodafone, Rakuten Mobile, Orange, Globe and MTN are among those officially announced. In total its operator partners serve about 1.8 billion subscribers, Mr Wisniewski said.

Working with AST also makes sense for operators as they search for solutions to connect people living in rural areas more cost-effectively. But they should also be wary, because the technology could one day be used to bypass ground-based mobile and broadband networks. It may not be able to rival these for performance, but it could offer a very attractive alternative in populous developing markets. Vodafone’s investment in AST SpaceMobile therefore appears shrewd; it’s the company’s leading shareholder alongside other well-known industry names including Rakuten Mobile and American Tower.

Another advantage of AST’s approach is that billions of people already own a supporting device. The company says that most current mobile phones should be able to connect with its technology without needing any modifications. This means there’s no need to purchase or install expensive additional equipment. It contrasts with the Starlink model, in which dishes are sold for roughly $600 — even after a hefty subsidy — severely limiting its target market (for our subscribers, see Insight Report: Satellite Broadband’s Long Journey to Bridge the Digital Divide).

Of course, there’s one clear threat to AST’s model — the possibility that future smartphones are built with native satellite connectivity. Although this would undermine AST’s approach, it appears unlikely to happen anytime soon because of line-of-sight requirements and the power needs of potential devices. The latter could mean phones start to become much bigger and heavier, a trend that would be unwelcome among many. In 2021, false rumours surfaced that Apple was readying to include satellite connectivity in the iPhone 13, but that never really felt like a genuine possibility. It was noteworthy, however, that 3GPP Release 17 planned to include a long-awaited standard for satellite networks serving hand-held devices.

When I asked Mr Wisniewski about the danger of imitation, he said that AST SpaceMobile has over 2,300 patent and patent-pending claims in support of its technology. He agreed that others could attempt to replicate its technology, but highlighted significant barriers to entry. These include major upfront investment, long technology development cycles, regulatory approval and identifying the right partners.

It’s a long journey ahead for AST SpaceMobile with many technical, competitive and regulatory hurdles standing in its way. I’m cautious about the technology’s potential and how valuable it can become as it moves beyond tests and friendly trials. And let’s not forget, some previous ventures into satellite or airborne communications have ended in spectacular failure, posting a stark warning for today’s hopefuls.

But if AST can make just some inroads into a huge potential market, the rewards could be lucrative. I applaud its ambition and commitment, and will be watching its progress with interest.

If you enjoyed this blog, you may also be interested in a recent piece by my colleague Ben Wood who tried Starlink as a solution for home broadband connectivity. To access our subscriber content, please get in touch with our team.