Even as carrier strike partnerships and push forward with testing of Non-Terrestrial Network (NTN) connectivity, there are some big questions that are being asked about the underlying business fundamentals of the convergence of cellular and satellite.
Is there a large-scale, viable business in providing NTN service to consumers? Or it is an IoT play? How many new players can actually build sustainable businesses when satellite is technically challenging and—despite new innovation and lower launch costs with the advent of LEO technology and SpaceX—an expensive business to be in? Ultimately, who will pay for NTN?
Sit long enough with folks in the satellite industry, and you hear a lot of numbers being offered up in answer to the size of the potential market opportunity. Five and a half billion—the rough number of smartphones in circulation globally that could be served by standards-based NTN services. Ten percent—the number generally thrown out as the percentage of the globe that is served by terrestrial cellular networks.
Skylo CEO and Co-Founder Parth Trivedi has some thoughts on satellite-related numbers. Direct-to-device service provider Skylo, which partners with GEO satellite providers for capacity and doesn’t own or operate its own satellites, launched its NTN ervice in the United State and Canada in January of this year, and it has a few notable numbers of its own: 17 (the 3GPP Release its tech is compatible with); four (the number of chipset makers with Skylo-certified modules); $37 million (raised in a funding round in February 2024).
Here are the significant numbers that came up in conversation with Trivedi about the NTN market and Skylo’s strategy.
Two: The number of steps in Skylo’s approach to solving transmission/reception disparities in serving unmodified cellular devices. “The first step was choosing a cellular protocol, which was extendable to satellite in the most power-efficient, spectrum-efficient way possible,” Trivedi said. “It turns out that narrowband IoT as a cellular protocol was devised for very, very small and low-power devices to communicate from uncertain environments. … Those same features are very valuable when it comes to satellite connectivity.”
He goes on: “The second piece is, we had to actually build certain IP above and beyond the standard, because we realized that not everything will be in the 3GPP standards.” Some simple examples he offers: “When you are trying to connect over a standard cellular network, there are a lot of handshakes that happen between your cell phone and the cell tower. Those handshakes, even to authenticate a phone on a network, can chew up your radio resources and can chew up spectrum; that implies it’s costly. So we eliminated a lot of those handshakes, and in certain cases, we reduced it to two. We preserved attached context; in many cases, [when a device] is roaming in between cellular and satellite, it doesn’t need to reestablish a full authentication flow to our core. That’s extremely valuable, because it allows us to be a more efficient network. It allows devices on our network to be far more power-efficient.” More efficient, he says, than devices using standard NB-NTN protocols as opposed to NB-NTN plus Skylo’s certification requirements—which it refers to as “standards-plus.”
Three: The number of hypothetical consumer go-to-market strategies that Trivedi offers as potential avenues for mobile network operators to consider. First: A “connectivity insurance” model, where customers pay a monthly fee in exchange for a guarantee that they will always have access to at least a basic level of service. He points out that this isn’t necessarily limited to people who venture into remote areas. “To me, it’s not just about Death Valley, or Utah. This is about holes in coverage also in the suburban areas and in areas that you wouldn’t expect, in an RF-dense environment like the Bay Area. This ensures a consistent layer of connectivity around the planet.” A second option would be to bundle that service into an operator’s most premium rate plans. A third way would be entirely usage-based, similar to how carriers charge a per-day rate or usage rate when a user is roaming internationally. “There’s no particularly right answer,” Trivedi says—or at least, not one that is obvious quite yet, in a nascent market.
Two, again: The categories of groups that Skylo is seeing interest from, according to Trivedi: Customers and competition. “Frankly for the past two or three years, a lot of folks were testing the market, trying to understand, what is this all about,” he says. “Up until last year, people did not believe this was possible.” He fielded a lot of skepticism about how—or even whether—Skylo’s system worked, about link budgets and so on. “All of those questions have now melted away. People are convinced it works. People are convinced it works well,” he adds. “People then move on to the next question around, hey, how do I use this and how do I get access to it and so on. And we’re now seeing maturity come in.” Maturity in this case means a shift from information-gathering to buying behavior, he says. “We are now starting to see that happen, where curiosity has turned into conviction around an application, around a use case—whether that’s a consumer use case or whether that is a non-consumer, enterprise use case. We’re seeing both simultaneously.”
Competition is also heating up, with Apple establishing an NTN service supported by GlobalStar, AT&T and Google backing AST SpaceMobile, and so on. Trivedi sees multiple strategies being played out, but he points to what he sees as a particular advantage for Skylo not relying on terrestrial spectrum and relationships with carriers—which involve an MNO having to dedicate a certain amount of its spectrum holdings to NTN (AT&T is testing with AST SpaceMobile using 10-megahertz channels of 700 and 800 MHz spectrum; Starlink is gaining access to T-Mobile US’ 1.9 GHz spectrum as part of service expected to be launched this year). To build a business with that approach which spans the globe, Trivedi said, “there are going to be challenges around every single carrier agreeing to give up essentially 10 megahertz of their spectrum.” (Or more, if they want eventual high bandwidth NTN services—which could take up as much as 40 megahertz of bandwidth.) Carriers will have to think hard about the economics and ROI of giving up that valuable spectrum for unproven new services, Trivedi pointed out. Meanwhile, he touts Skylo’s strategy as involving “zero CapEx, zero spectrum”. He says that key to success in NTN will be not requiring customers — either end-users or carriers — to change their behavior in order to use NTN.
80/20: The 80/20 rule guides what Skylo considers optimizes for and where it sees its value proposition: What provides 80% of the value for customers? First, being able to serve devices which are not specialized satellite phones, but regular smartphones with far more availability than expensive, satellite-specific technology, Trivedi says. The trade-off there is that there isn’t a large antenna or extra power for the connection.
Another part of that 80/20 consideration, he says, is: What are users willing to pay for? And how much are they willing to pay? “No one really talks about pricing around NTN,” he points out. “Spectrum is a scare resource, and if you talk about broadband-type services from space over MSS bands, that’s expensive! So to me, the sweet spot practically stops at streaming voice-type services.
“Two-way texting, honestly, solves 80% of the use cases that we encounter,” he adds. Consumers often prefer texting to voice calls anyway, and Trivedi says that Skylo also sees NB-NTN as addressing 80% of IoT use cases. “We’re not seeing, for instance, the need for live streaming cameras on autonomous vehicles over NTN,” he continues. “A lot of that is done on-board, on the device itself or on the car itself.” Instead, he sees automotive-related use cases as being emergency calling and notifications, breakdown notifications and “very pragmatic use cases like locking and unlocking your door, finding the nearest electric vehicle charging station … very pragmatic use cases that really eliminate a lot of friction for customers in their daily lives.”
“Not all devices are smartphones. People get excited about smartphones because it’s a use case we can relate to, but frankly I see this market being quite burgeoning also for IoT devices and wearables,” Trivedi said. Skylo already supports a number of modules, with the newest announcement coming in early April from Semtech, which has integrated Skylo NTN access into two of Semtech’s HL78 modules. Those modules also support terrestrial LPWA using Cat-M and NB-IoT. Semtech said that the NTN access can be enabled with a software update which is expected to be commercially released this quarter, pending testing and certification with Skylo’s network. “Giving customers the option to connect using NB-IoT over a satellite network when traditional terrestrial coverage is not available is a major advantage,” Semtech said.
2024: A year for OEM conversations and commercialization around NTN use cases. “You’re going to start seeing new use cases emerge and commercialize in 2024 that frankly we hadn’t thought of previously, like cattle tracking,” he said. “You’re going to see devices that are deployed on farms. You’re going to see devices that are deployed on trucks that have this capability—not just in smartphones. Those are the conversations we’re having right now, with carriers [and] OEMs, and that to me is what success looks like: when adoption happens and realization of applications happens, without you really having to do anything differently.
Between the number of certified devices and the geographic regions where its network is available, Trivedi said, “I think we feel pretty good about having built the prerequisites for scale in 2024 and 2025.”
Hear more from Trivedi and other NTN experts in this RCR Wireless News webinar, available on-demand.
