Why Satellites Could Mean a Giant Leap for Rural Mobile Users

Episode ID S1E12
October 12, 2022

Satellites are the next giant leap in mobile phone communications, and could have a profound impact on rural Americans. In this episode, CoBank’s Jeff Johnston and guest Tim Courtney, vice president of sales and strategy at Further Enterprise Solutions, explore what it will mean in the near future when smartphones can work anywhere in the U.S., regardless of cellular coverage.


Jeff Johnston: Hello, there and welcome to the All Day Digital podcast where we talk to industry executives and thought leaders to get their perspective on a wide range of factors shaping the communications industry. This podcast is brought to you by CoBank’s Knowledge Exchange group, and I am your host, Jeff Johnston.

On today’s episode we get to hear from Tim Courtney, VP Sales and Strategy at Further Enterprise Solutions to get his thoughts on satellite connectivity in smartphones. Over the past couple of months, we’ve started hearing about how our smartphones are now able to connect to satellites for text messaging and SOS type services. It started with SpaceX and T-Mobile announcing they would begin testing the service next year, followed by Apple’s iPhone 14 that will support the service in November. This is an exciting new development and could have a profound impact on rural Americans.

Tim is a wireless industry veteran and his experience and knowledge makes him a great guest to talk satellite and smartphones. I do want to note that Tim works in the mobile industry and is subject to NDAs, so anything he says on the podcast is either in the public domain, or it’s his opinion/crystal ball predictions.  

So, without any further a due, pitter patter, let’s hear what Tim has to say.

Jeff: Tim Courtney, welcome back to the podcast. It's great to have you here.

Tim Courtney: Jeff, good to be back. Good to see you. Good to chat with you. Looking forward to a bunch of Q&A and debating back and forth as always.

Jeff: Great. I was thinking about satellite smartphones because it's been in the press now quite a bit lately. I was like, "I'd love to do a podcast series on this particular topic." I was thinking, "Who can I get that knows this space really well?" Immediately, your name popped into my head, so thanks for taking the call and thanks for being here. I think it'll be a lot of fun to kick this around.

This whole notion of our smartphones now being able to talk to satellites really feels like it came out of left field. I know there's GPS and that kind of stuff. The ability to actually have two-way communication with a satellite, I don't know, to me, it seemed like, "Where did this come from?" I don't know. Maybe you can just level-set us here a little bit, Tim. What happened over the last couple of years or however long it took to make this happen, and why are our phones now able to talk to satellites?

Tim: Yes, I would say probably 10, 15 years ago, we had what was announced over the last month, but what we had were two phones rubber-band together. You could have bought a satellite phone and a cellular phone, all glued into one unit. It was big, it was expensive, et cetera. Fast forward to the Starlink announcement, the Apple announcement, the T-Mobile announcement. What has happened now is there's no satellite "technology" in these phones. If you did a tear-down of the phone, it would look like a normal cell phone.

Number two, the satellites. Every time you launch a new generation, just as you and I, we've been friends since 1G before it's been called 1G, we're up to 5G, 6G is going to perform better than 5G. The current generation of satellites are now able to pick up a cellular communication signal from the ground outdoors. A combination of the processing power of the phone itself, the chips in the phone and the newer generation of satellites, and the ability to use cellular spectrum.

Those are a handful of things that have changed since gluing two big satellite phones and cellular phones together into one big unit that no one really bought, no one really wanted.

Jeff: I guess you could think about a satellite in this context as almost like a bay station or a tower in the sky, right? They're communicating with the satellite just like they would a macro cell site. It's just it’s up in space. Is it as simple as that or--

Tim: It's simple as that. Most people think satellites are pointed in or in one direction. Geosynchronous satellites were kind of the thing originally. You would see all the ABC, NBC, CBS TV stations in your neighborhood and your city. They would all have dishes pointing up to these geosynchronous satellites that weren't moving, so they were fixed in the sky. Now, with low Earth orbit, you have more than one satellite obviously, and they're spinning in circles. You'll have to have multiple satellites.

Think about it. It's multiple base stations circling over your head, above your head, around the horizon, all around you. It's going to be dozens of satellites, for example. Iridium, as you know, came out probably 10, 15 years ago, 20 years ago with multiple satellites. It's more than one satellite and you're handing off to one satellite to the next if you have a longer communication, telephone call, let's say, or data session.

Jeff: Okay, cool. Let's talk a little bit about some of these announcements, and maybe you can help us understand the differences between what's been said here recently. Obviously, with iPhone 14, Apple has introduced satellite connectivity, sort of an SOS feature, that I think is going to be available, I believe they said, starting in November on the iPhone 14. Then the other big announcement, which actually happened even before the iPhone was launched, iPhone 14, came from T-Mobile and SpaceX.

They talked about how they were going to begin offering-- Well, actually, they talked about starting a beta trial of their sort of smart-- I call them smartphone satellites, towards the end of next year and that, depending on how old your phones are, a certain number of smartphones on T-Mobile's network will have satellite capabilities. Why is it that Apple is able to come out with this service in November? And T-Mobile and SpaceX, they just seem like they're way far behind. Is it a technical issue? Is it just a planning issue?

Tim: Yes, I would say it's probably more of a planning issue in what SpaceX and Starlink were more focused on. They were more focused on broadband connections, a satellite ISP, internet connection to your home, business, maybe mobile RV-type situation. Apple's partner is Globalstar. They've been in the satellite business originally with Qualcomm, who helped launch Globalstar. They've been used to doing satellite phones. They're used to doing personal communicators, IoT tracking devices.

There's a lot of experience with Globalstar in terms of the handset. SpaceX, they don't have that, right? They don't have a phone product at all, so a little behind the eight ball. I'm sure there's a bunch of smart people that will figure that out, but they've got regulatory issues. They've got to get a spaceship to get those satellites up into the sky. They're going to test this all out and get a bunch of satellites out there.

Jeff: Okay, and then on the regulatory stuff, maybe you can help me understand this a little bit. It's on the spectrum side. I don't know that T-Mobile and SpaceX have spectrum that the FCC approved to be used in satellite communication. Is that accurate?

Tim: They have spectrum to do, obviously, the broadband communication with the product they're selling today. What they don't have, regulatory approval. Take T-Mobile out of the equation. It would be any carrier that has landline-based spectrum that now wants to broadcast and send it down from space to hit the Earth. You're going to need approval on that. Again, to compare that to a Globalstar, Iridium, et cetera, they already have approval to use their frequency band for satellite communication. That box is already checked. A carrier like T-Mobile has to lend, lease their spectrum to SpaceX so they can retransmit that signal from space to the ground in a two-way communication path.

Jeff: Do you think that's a good use of T-Mobile’s spectrum? This is a finite resource. It's very expensive to acquire. Do you think loaning spectrum or whatever they're going to end up doing to enable this service, does that sound like a good strategic move on your part, do you think? How big is this market going to really be?

Tim: Revenue-wise, it's probably never going to come close to fixed wireless and mobile communication, but I commend the cellular industry, T-Mobile, specifically Apple, for providing the safety and security. That's utmost. You read too many stories of people breaking down, getting stranded in Death Valley, hiking, et cetera, that could have been rescued. To put that in comparison, the Globalstar brand or sub-brand Find Me SPOT on their webpage, they brag about all the rescues.

They're approaching 9,000 rescues and a lot of people don't know who Find Me SPOT is, in Globalstar. Everyone knows who Apple and Samsung are from a handset perspective. Imagine the number of people an Apple, a T-Mobile, a SpaceX could say. Now, back to your original question. Again, if I was a carrier, I'd want that service one way or the other. Just talk about safety and security. That's the ultimate.

Just like an OnStar button or the emergency button on your home alarm system, why not have that extra peace of mind? If you're thinking years in advance, could satellite replace cellular communication? I don't see that ever happening. I see that filling in the holes. Like the T-Mobile CEO said, there's 500,000 square miles of the U.S. that aren't covered with cellular communications. Let's focus on those areas, especially with SOS that isn't going to load the system.

A T-Mobile or any carrier would only have to give a sliver of their spectrum to provide that service. Now, if they want to provide fixed wireless access like they're doing on the Earth, that would take up all their spectrum, let's say. Again, I would advise any carrier, have a balanced approach, some SOS, some text messaging, some voice communications. I wouldn't see this as a replacement for a cell phone in general and, clearly, not a replacement for your internet connection at home.

Jeff: When do you think or will it ever be possible to make a voice call over these smartphone satellite devices? Because right now, again, I think it's fairly limited. Could you ever stream video or anything like that, do you think, or is it just going to be limited to very low bandwidth-type applications?

Tim: Well, I think T-Mobile stated they would do all that. I think what you're going to see, you're going to walk before you run, crawl before you walk. SOS definitely first, location tracking, probably then text messaging, and then voice communication, low bandwidth data, high bandwidth data in that order. The easiest service to provide to the hardest service to provide. There is going to be a small segment of the population that they do by satellite phones. They do have wireless terminal for remote working. Oil refineries, mining, et cetera, natural disasters, as the T-Mobile CEO discussed.

It's going to be a combination of all those, but those aren't going to be free, right? The data isn't going to be free. Who knows if the voice would be free? There's going to be some economics associated with that. It's definitely going to complement what the cellular networks can do. There's going to be some appetite for all those services wrapped up into one device and that's what a cell phone is doing. It's converging more and more devices, right? We used to carry a camera. Who carries a camera? You used to carry a calculator.

Jeff: My mom still carries a camera. She was taking pictures the other week. Her and her 85-year-old friend, they pulled out their point-and-shoot cameras and they were the only ones.

Tim: Well, the best analogy I heard from someone was a cell phone has basically replaced the RadioShack catalog. If you're a kid, that RadioShack catalog had music, voice recorders, answering machine, calculators, et cetera. This is just another device now for the majority of the people, right?

Jeff: Right, that's exciting. We've sure come a long way. Let's talk a little bit about the business model here. You mentioned earlier, and I certainly agree with this, it's not as if these satellite networks are going to displace the terrestrial-based wireless networks from Verizon and T-Mobile. It's more of a complement, but it does add, I think, an interesting little twist to their business.

If we look at what Apple is doing, for the first two years, their satellite services are free. Then after that, presumably, there's going to be some charge for that. How do you see that kind of playing out? Do you think that Apple will be just charging customers for this service? Do you think that there could be a tie-in with wireless operators?

Tim: I think there's going to be a couple of different models. One, where you could just pay an Apple direct, for example, or bundling. I see bundling, right? Almost any carrier today, you can get video services glued to your cell phone plan. T-Mobile offering free Netflix, for example, and other video services. If I was a carrier and I was spending billions and billions of dollars with Apple to buy their phones to resell them to you and I, I might say, "Hey, look, can you bundle in another two years of service for my customers?" That might be one of the ways to do it, or Apple selling their own subscription services.

You could build it into an iCloud, an AppleCare, Apple One. They have their own bundling strategies with different services glued together. I could see it being attacked by Apple. Apple plays really nice with their carrier partners, right? I could see them possibly. Again, I have no idea how they're going to do this and they probably don't. They've got two years to figure this out working with the carrier. Maybe it could be other retailers too, right? Who’s to say there's some version of Amazon Prime that would give you X number of years of satellite connectivity. There are all sorts of different models that could be contemplated here.

Jeff: As I think about Apple, it's a pretty nice differentiator that they have right now, this first-mover advantage because you're not getting this anywhere else. I think maybe in China, I think Huawei launched a device, but that's obviously not for this market. Do you buy into the notion that it behooves Apple to keep this service as cheap as possible as a way to ultimately drive more iPhone sales?

Tim: Yes, I suspect. If they charge for it, my guess would be in the single-digit dollars for just a text messaging, an SOS type thing. Again, I hope they try to bundle it in with something so you just don't have to buy SOS by itself.

Jeff: All right. Tim, let's talk a little bit about the carriers and what all this means to them, and how they should be thinking about this and positioning their businesses for this new technology.

Tim: Right now, SpaceX is with T-Mobile. T-Mobile said they're going to try to get the rest of the countries across the world to get into the club, which is going to dictate them giving up their spectrum to get into the club. Apple is taking a lot of the heavy lifting off the carrier. At the end of the day, does a carrier even really want to worry about this, and do they want to worry about their multi-billion, tens of billions, hundreds of millions of revenue as it relates to mobile and fixed wireless or let Apple-- and I suspect Samsung. We haven't talked about Samsung. Samsung, I would guess, is going to have to do something.

Wall Street is speculating on who's the next person up in terms of who might be a partner for a service like this. As you mentioned, the Chinese, I think they've got their partners. Apple got their partner. Samsung is out there by themselves right now. Keep an eye on what Samsung are go going to do to counter this.

The carriers, as I said, they can either lend their spectrum to a satellite provider or let the handset makers do it or both. T-Mobile users in the next year, early 2024, might have the option to use two satellite services on their device. It's exciting times. I suspect in a couple of years, every new phone will be able to communicate with some sort of satellite network. This is a forever solution, I would say.

Jeff: Well, exciting times. Lots to look forward to. Tim, we're going to leave it there. Thank you so much for your time today and great to have you on.

Tim: You're welcome, Jeff. I enjoyed it. Looking forward to doing it again. Thanks.

Jeff: A special thanks to Tim for taking time out of his busy schedule to share his thoughts and insights with us.

I think being able it use your phone anywhere in the country is pretty darn exciting and could go a long way in connecting the unserved in rural American. I mean it’s not the same as having a home broadband connection, but to be able to send text messages, make voice calls, and run data applications anywhere in rural America is pretty powerful. And I agree with Tim, this service is not a substitute for wireless service from the incumbent carriers, but it could accelerate landline losses in rural America when voice services are rolled out.

Hey, thanks for joining us today and please watch out for our next episode. 

Disclaimer: The information provided in this podcast is not intended to be investment, tax, or legal advice and should not be relied upon by listeners for such purposes. The information contained in this podcast has been compiled from what CoBank regards as reliable sources. However, CoBank does not make any representation or warranty regarding the content, and disclaims any responsibility for the information, materials, third-party opinions, and data included in this podcast. In no event will CoBank be liable for any decision made or actions taken by any person or persons relying on the information contained in this podcast.

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