In “A New Space Race Targets the Smartphone,” the Wall Street Journal summarized how the satellite communications industry has recently seen a sharp uptick of businesses trying to leverage communications between satellite constellations and the smartphones that many people on Earth carry in their pockets. While smartphones have traditionally communicated with each other using cell phone towers and terrestrially-provided internet signals, the new business model foresees a greater role for satellites—providing an additional “antenna” for communication. Although cell phone towers are still the fastest and most reliable means for smartphones to communicate in urban areas, satellites can unlock the ability for everyday consumers to communicate in rural areas with little to no existing cellular communication infrastructure.
The idea is no longer speculative—numerous businesses have recently moved forward with satellite-to-smartphone communications architectures. In September 2022, Apple announced a partnership with Globalstar, which will facilitate an “Emergency SOS” feature on Apple iPhones. Expected to launch in November 2022, this feature is designed for iPhone users to send emergency messages when their phones cannot establish a reliable connection with a cell phone tower. In August 2022, SpaceX announced a partnership with T-Mobile to launch a service similar to the Apple and Globalstar plan. The SpaceX and T-Mobile partnership is expected to begin testing by the end of 2023. Other companies such as Iridium, Huawei, AST SpaceMobile, Omnispace, and Lynk Global have announced similar variations of the smartphone-to-satellite connection.
Despite the lofty aspirations of these companies, there are several significant challenges which stand in the way of a profitable business venture. The first challenge is technology. Since legacy satellite communications systems typically involve large and high-powered receiver terminals, these companies are required to either develop more powerful smartphones, or to construct satellites with antennas which are much more sensitive to signals. The second challenge is environmental. Particularly for companies expecting to leverage Low Earth Orbit satellite constellations, the massive increase in the number of satellites could result in an unsafe congestion issue for which there is no clear solution. The third challenge is money. A satellite-to-smartphone architecture requires the investment of billions of dollars. Such investments can initially be highly speculative and involve high risk. Additionally, investors should expect substantial periods of time before they will see positive cash flow, even once the systems are operational. For instance, both Iridium and Globalstar have previously emerged from bankruptcy proceedings due to other high-risk satellite communications architectures which took years to realize profitability.
The final significant challenge is licensing. Since any satellite architecture is inherently global, any operator of satellites must initially register each satellite with the International Telecommunications Union (ITU), a United Nations agency. Subsequently, operators must acquire licenses from every single country they expect to conduct operations.
Even in the United States, acquiring a license can be daunting for companies trying to introduce new technologies in the marketplace. All satellite “space station” and communications licenses are awarded by the Federal Communications Commission (FCC). Since the enactment of the Communications Act of 1934, the FCC has organized “blocks” of spectrum uses and has licensed the privilege for users to operate in such blocks accordingly. Through auctions and rule-makings, the FCC can provide initial applicants with an assurance that they can communicate in specific slivers of spectrum to facilitate their business plans. Unfortunately, the FCC’s regulations typically favor “first movers that have already launched satellites.” In other words, once a company acquires a license to operate in a sliver of spectrum, it can be very difficult for other companies to enter the marketplace and operate in the same or similar slivers of spectrum.
When a new company petitions for a license to operate in a sliver of spectrum, the incumbent company will naturally be expected to oppose the onset of new competition (and less profits for the incumbent). Accordingly, the most readily-apparent argument for incumbent companies against petitioners is “interference.” Moreover, different slices of spectrum can stipulate different standards for what constitutes interference. As a result, there are numerous existing interference rules which satellite-to-smartphone companies must address when attempting to get their satellite architectures licensed by the FCC.
As satellite-to-smartphone technology becomes more of a reality, the FCC should consider creating a more standardized rule to govern all these architectures. Unfortunately, the FCC appears to consistently lag behind the advancement of technology—a “catch-up as you go” paradigm. Once a new technology becomes a viable business opportunity, the FCC can take years to consider new applications and deliberate on new or amended rules. However, once companies adapt to the onset of these new rules, newer technologies can arise which supplant the relevance of the old rules.
The existing rules governing the implementation of satellite-to-smartphone are ill-suited to govern such operations going forward. The FCC should consider new rules which specifically apply to this new technology. First, the FCC could require incumbent spectrum users to provide evidence of objective proof of the interference they claim will cause irreparable harm to their operations. Moreover, the standard should not be that petitioners should avoid any interference; rather, it should be that petitioners’ systems only provide an acceptable level of interference which can be mitigated through technology and coordination. Such relaxed interference standards, tested and verified by disinterested third-party engineers, could allow for greater competition and ultimately serve the public welfare.
Second, the FCC could consider requiring petitioners or incumbents to move altogether to a different frequency. If the level of interference introduced by petitioners is unacceptable, perhaps they can be moved to a sliver of adjacent spectrum. If the level of interference is acceptable, and the incumbent has not proven to make productive use of the spectrum it currently occupies, perhaps the incumbent could be required to vacate the petitioner’s requested spectrum.
By statute, the FCC is required to regulate the spectrum under the standard of “public interest, convenience, or necessity.” If the satellite-to-smartphone architecture is significantly hindered by the spectrum monopolies currently exercised by incumbent companies, then it is ultimately the American public who will lose.