Satellite connectivity is the final frontier

Welcome to edition #15 of the Beyond the Next Billion newsletter. This past week was relatively quiet in terms of industry events but there was a flurry of news flow in our respective coverage areas, so plenty for us to highlight here and in some cases, take a deeper look and unpack the news.

As always, this edition also includes relevant news and announcements that we have been covering.

Satellite connectivity is the final frontier

We have covered the momentum behind low earth orbit (LEO) satellite constellations over the last year, with an initial post digging into the key drivers behind LEO momentum. There have been plenty of headlines and soundbites for nearly a decade, devoted to the Next Billion, Connecting the Unconnected, Bridging the Digital Divide and so on. There seems to be a 70:30 rule, yes, not even 80:20, when it comes to terrestrial coverage deployments by mobile operators. That is, roughly 30% of a given country’s geography will remain out of reach for terrestrial mobile networks. Of course, this is an oversimplification, and it depends on the market being considered. For example, a country like Australia will do exceedingly well to cover 50% of area, while an island state like Singapore has been blanketed with coverage, including at indoor venues.

Nonetheless, there are a significant number of users who are remain stuck on the fringes of modern communications and Internet access. COVID19 has also played a part in shining a light on these disparities. Indeed, the pandemic only served to exacerbate the disparities. As we wrote in the earlier post, “The pandemic has caused well-documented disruptions to the workforce as well as consumer households through lockdowns and “work from home” strategies deployed, among others, to combat the spread of the virus. While the degree of disruption varies across countries and regions, one common theme has been the displacement of people from urban to rural, from workplace to “home,” from schools to “home” and so on. The implication of all these shifts, some transient, some permanent, has been that disparities in broadband connectivity have become very apparent. Policymakers have taken cognizance of this and moving quickly to address these gaps.”

So how does the industry address the elephant in the room, or in other words, the significant gaps in terrestrial network coverage? Relying on operators to fix the gaps is a non-starter, as there is no business case for rural and remote coverage in an industry that is already plagued by heavy capital expenditures, long depreciation cycles for legacy equipment and a mission critical dependence on the energy grid. Early and ambitious attempts by the likes of Google (Project Loon) and the formerly named Facebook (Aquila) did make a dent but were quickly sunset by their owners. There is renewed momentum with the advent of LEO technology and the heavy investments by the likes of Starlink, OneWeb and others to launch constellations. Elon Musk’s Starlink has recently helped to launch an Indonesian satellite Satria-II to occupy an orbital slot above Pulau, with a reported capacity throughput of 150 Gbps/sec. The Philippines is another archipelago country in Southeast Asia which is very keen on satellite connectivity. Globe, a Filipino operator, has been conducting trials with Lynk Global’s LEOs for SMS and emergence alerts, while other service providers like IEC Telecom is exploring solutions for the maritime industry in the Philippines. ?

But there seem to be some new drivers.

• The first of these is momentum towards a vision of Direct to Device, or the ability for users to connect directly to other consumers using smartphones from their own devices when outside the range of terrestrial networks. We covered momentum for D2D in this post that was published after MWC23. In this post, we had discussed new developments from Snapdragon Satellite by Qualcomm, Mediatek Satellite as well as a number of operator-driven satellite services from the likes of Telefonica, Deutsche Telekom, and others. Telstra has also spoken recently about their ambitions to offer voice and fixed broadband services to remote areas through LEO connectivity.
• The second new driver is coming from demand from telecom operators for backhaul links and capacity. The biggest of these announcements came from Telstra recently. Telstra will be partnering OneWeb (soon to be acquired by Eutelsat) to provide backhaul links to its remote sites across Australia. Many of these were previously based on GEO satellite links, which meant that the links were very expensive to maintain and also low capacity. Telstra will begin to transition “hundreds of existing remote base stations” to the OneWeb LEO constellation, with a claimed capacity of 25 Gbps per second.
• The third new driver is demand for IOT applications in rural/remote areas. With the rise of Industry 4.0 and IoT, there is an increasing awareness of use cases that cut across manufacturing, oil and gas, aviation, maritime and several industry verticals, many of which are in remote areas and need reliable connectivity. In one recent example, Softbank in Japan has signed an MOU with a shipping line Mitsui OSK Lines and e5 Lab for maritime broadband communications at sea.
• The fourth driver, albeit more of a supply side development, is the introduction of new chipsets and solutions from companies like Qualcomm, that recently announced new chipsets to “provide uninterrupted remote monitoring and asset tracking.” These new chipsets are an extension of Qualcomm’s recent launch of its Aware platform for IoT.

The biggest of these drivers in the short term will prove to be the telcos’ need for backhaul links, as they look to cast the net wider for consumer and enterprise connections. D2D will come along eventually, and despite some exciting demos like the Mediatek one we highlighted in the MWC23 note, the technology still has a way to go before it becomes mainstream. That said, we firmly believe that the satellite portion of NTN is much closer to reality than most currently are aware of. ?

INDIA and SOUTH ASIA

Make in India continues to make the headlines, though this week it was not necessarily for the right reasons. A previously much touted JV between the Vedanta Group and Foxconn to set up a semiconductor plant in the state of Gujarat has just come unstuck. The reasons are as yet unspecified, but Foxconn has withdrawn from the JV and Vedanta is now the full owner. Link ?

Last week, we had included a discussion on GenAI and its implications for the “Global South.” The key question we posed was, “Will AI help these economies leap into a digital future, or will it cause a slow haemorrhaging of jobs as enterprises wise up to the potential of AI to drive “efficiencies” in their business?” Looks like the early evidence shows that such efficiencies are already available in markets like India, and that too from startups. We believe that this is not an anomaly, and it could have a devastating impact on a number of lower-tier white collar jobs in Global South markets, especially in those sectors that thrive on labour arbitrage as a key competitive differentiator. Link ?

In India, a battle royale is brewing over spectrum allocations for SatCom services. On one side, Starlink, OneWeb, Amazon Kuiper and a host of “global” players are pushing heavily for an administrative allocation of spectrum for satellite service. On the other side, and unsurprisingly, Reliance Jio is lobbying hard for these frequencies to be auctioned, citing the “same service, same rule” principle and the past Supreme Court ruling that all natural resources should be auctioned. The Indian Government, which had attacked the previous Government coalition when in the Opposition, is now claiming that its hands are tied. Link

The ITU is doing the necessary groundwork for 6G, which is already being referred to as “IMT-2030”. The Indian delegation has submitted its inputs to the ITU based on the “Bharat 6G Vision” document that was published in March 2023. India has not been a consistent contributor to previous generations of cellular technology but is keen to change their relative weight in 6G contributions. Link ?

AUSTRALIA & NEW ZEALAND

Telstra and OneWeb have completed a number of trials and have entered into a commercial agreement to utilize OneWeb’s LEO constellation for connecting rural and remote sites across Australia. Link

As always, feedback is welcome. Let us know your thoughts, comments and things that can be improved. DM on LinkedIn as needed.?