The rapid evolution of the direct-to-device (D2D) connectivity market has been a whirlwind for stakeholders in the satellite industry. Within a mere six weeks, significant shifts have occurred, illustrating the dynamic nature of this technological frontier.
The major shake-up began on August 1, when EchoStar, a U.S.-based company, announced its ambitious plan to develop a $5 billion low Earth orbit (LEO) satellite constellation. This initiative involved the procurement of 100 satellites from Canada’s MDA Space. However, a dramatic turn of events occurred just over a month later. On September 8, EchoStar decided to abandon this constellation project after selling the spectrum designed for these satellites to SpaceX for a staggering $17 billion. This decision marked one of the most significant transactions, setting a new precedent in the space industry.
Barely a week had passed when Viasat, a geostationary satellite operator from the U.S., joined forces with Space42, based in the United Arab Emirates. On September 16, they announced a strategic initiative to combine their Mobile Satellite Services (MSS) spectrum resources. This collaboration aims to challenge SpaceX’s increasingly dominant position in the market.
Meanwhile, Europe has embarked on a study to explore ways to enhance D2D services using MSS spectrum. Not to be left behind, China has also released new guidelines to expedite their plans in this promising market, which analysts predict could eventually surpass $100 billion in value.
In another noteworthy development, EchoStar has recently divested $23 billion worth of terrestrial spectrum to AT&T. This move effectively ends the company’s attempts to operate as a conventional mobile carrier within the United States. These spectrum sales unfolded amid an investigation by the Federal Communications Commission (FCC) into whether EchoStar was effectively utilizing its spectrum holdings. This scrutiny arose from complaints lodged by SpaceX and other entities. Following these developments, the FCC has since dropped its investigations, which at one point had prompted EchoStar to contemplate bankruptcy protection.
The remarkable deal between SpaceX and EchoStar took center stage at the World Satellite Business Week in Paris. This acquisition, valued at more than the combined market capitalization of numerous satellite companies, underscores SpaceX’s strategic focus on this emerging market, which it aims to dominate.
### A Market Once Distant, Now Imminent
The perception of D2D as a long-term opportunity is rapidly shifting to a more immediate prospect, as noted by Pacôme Révillon, CEO of Novaspace, a boutique research firm. Novaspace projects that by 2030, the number of monthly D2D users will reach approximately 300 million, with service revenues soaring from around $400 million today to $5.7 billion.
SpaceX is actively positioning itself to capture these users by advancing its plans. Having already deployed over 650 Starlink satellites equipped with D2D payloads, the company is now seeking FCC approval to launch up to 15,000 more satellites. These new satellites aim to capitalize on the spectrum acquired from the EchoStar deal, pending regulatory approval.
### Blurring the D2D Dividing Lines
Traditionally, the D2D landscape was divided into two distinct approaches. The first approach focused on terrestrial wireless partnerships, exemplified by companies like SpaceX, AST SpaceMobile, and Lynk Global. These companies collaborated with mobile network operators (MNOs) to leverage terrestrial spectrum from space. The second approach concentrated on satellite spectrum strategies, with legacy MSS providers like Viasat and Globalstar employing space-licensed frequencies to connect specialized devices, adapting mobile industry standards to reach a broader market.
AST made headlines by blurring the distinction between these two camps. The Texas-based venture struck a deal with Ligado Networks in June, securing access to L-band spectrum across North America for over $500 million. This was followed by a smaller agreement for global S-band frequencies, subject to country-by-country approval.
AST’s strategy of combining cellular and space spectrum is pivotal for achieving its goal of providing broadband speeds of up to 120 megabits per second for unmodified smartphones beyond terrestrial network reach. The venture currently operates five Block 1 BlueBird satellites in LEO and plans to enhance its coverage in the U.S. and other key markets through 13 additional launches over the next year and a half. These launches will feature larger and more capable spacecraft.
In contrast, Lynk, based in Falls Church, Virginia, operates five pizza-box-sized satellites in LEO, enabling basic messaging and alert services in collaboration with telecom operators in select island nations. Lynk’s recent partnership and equity sale to Luxembourg’s SES grants it access to the operator’s satellite spectrum resources, although the specifics of this alliance remain undisclosed.
### SpaceX’s D2D Boost
SpaceX is leveraging cellular spectrum to deliver connectivity for text messaging, emergency alerts, and select apps across the U.S., New Zealand, and Japan. The company’s substantial resources enable it to further expand this hybrid spectrum strategy. Analysts speculate that an additional 50 megahertz of bandwidth from EchoStar could approximate the user experience of 5G services offered by terrestrial cellular networks. This move reduces SpaceX’s dependence on cellular spectrum from partners like T-Mobile in the U.S.
In its FCC application for 15,000 D2D satellites, SpaceX indicated plans to utilize ground-based equipment to enhance coverage with the EchoStar frequencies. The company is contemplating the creation of a hybrid satellite/terrestrial network to expand the coverage and capacity of these services. Testing of D2D services using the newly acquired spectrum is slated to commence by the end of next year, contingent upon the availability of a new generation of satellites with compatible payloads. Moreover, partnerships with other firms will be necessary to ensure device compatibility.
SpaceX President Gwynne Shotwell emphasized the magnitude of this undertaking at the World Space Business Week conference on September 16. The company is collaborating with chip manufacturers to integrate the appropriate chips into phones, moving beyond earlier plans that relied on terrestrial mobile spectrum for D2D services. Now, owning spectrum allows SpaceX to provide capacity to MNOs’ customers, streamlining the process compared to negotiating with individual operators for spectrum rights.
### The Reaction
During a panel discussion at World Space Business Week on September 16, D2D executives expressed both excitement and caution regarding the market’s next phase. AST President Scott Wisniewski and Barbee Ponder, General Counsel and Vice President of Regulatory Affairs at Globalstar, affirmed that SpaceX’s moves validate their own strategies. Ponder highlighted the potential of Mobile Satellite Services spectrum to deliver substantial public benefits globally and swiftly.
SpaceX is preparing to launch satellites to replenish Globalstar’s aging network, which supports Apple’s iPhone emergency messaging service. Apple is also financing a $1.5 billion expansion constellation of 48 additional satellites to enhance this capability.
For Iridium, which is developing a standards-based D2D service on its existing LEO network, the landscape appears different. Iridium’s Chief Operating Officer Suzi McBride remarked on the challenges faced by competitors in the wake of SpaceX’s aggressive and resource-intensive approach.
Andre Tremblay, Executive Chairman of Canada’s TerreStar Solutions, which collaborates with Canadian carriers to extend mobile coverage using S-band spectrum, encapsulated the mixed sentiments. He acknowledged the formidable nature of SpaceX but emphasized the strategic importance of these networks for governments, consumers, and businesses alike.
### New Alliances and Sovereignty Push
Viasat and Space42 are capitalizing on the concept of sovereignty as a market differentiator. During the conference, they unveiled a joint venture called Equatys, aiming to establish the largest coordinated block of D2D frequencies within three years. Equatys boasts over 100 MHz of L- and S-band spectrum already allocated across more than 160 countries, along with geostationary satellites currently in orbit. The companies plan to launch LEO spacecraft in the coming years.
Equatys proposes a business model akin to cell tower companies, pooling spectrum and satellite assets under a neutral entity to reduce unit costs. Viasat, Space42, and potentially other entities like TerreStar would act as tenants. Equatys positions itself as a sovereignty-friendly D2D alternative, committed to working within existing national spectrum allocations and collaborating closely with countries to provide access to a coordinated global system.
In contrast, SpaceX’s Starlink broadband constellation has occasionally clashed with countries like Iran by offering services without formal approvals. Viasat CEO Mark Dankberg emphasized the importance of extending shared infrastructure concepts to national carriers trusted by their respective countries.
Equatys is also designed to accommodate spectrum beyond L- and S-band, including terrestrial frequencies where permitted by regulators.
### Who is Paying?
The question of how widely D2D will be adopted and the willingness of consumers to pay for additional coverage remains open. T-Mobile only recently began charging subscribers $10 per month in the U.S. for a Starlink-enabled D2D service offering texting and multimedia messaging. The economic viability of such services in markets with lower spending power is more complex.
Space42 Managing Director Karim Sabbagh highlighted the high costs associated with traditional MSS operators, which typically spend around $150 on infrastructure per customer. In contrast, Equatys’ economic model aims to reduce this cost to $3. Sabbagh argued that while a premium market will exist, mass-market D2D services require a different cost structure and service model to avoid being perceived as merely a premium add-on.
### The Next Chapter
SpaceX’s significant moves have catalyzed a D2D race that now encompasses spectrum advantages, sovereignty, and sustainable business models. TerreStar’s Tremblay emphasized the urgency for all stakeholders to organize themselves to deliver competitive services.
Analysts view this as the initial phase of a race shaped by political support and spectrum control as much as technology. Mike Crawford, an analyst with B. Riley Securities, noted that the D2D market has matured sufficiently for SpaceX to invest in dedicated spectrum, signaling confidence in the technology’s commercial viability.
Crawford asserted that the global D2D market will not be a winner-takes-all scenario, with opportunities for companies like AST and Globalstar. He identified AST as a leader in enabling true D2D broadband connectivity for unmodified phones, highlighting its innovative satellite architecture.
Regardless of the eventual leaders, the D2D market represents a promising bridge between the space industry, valued at approximately $600 billion, and the terrestrial communications market, which generates trillions of dollars annually.
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