New satellite communications operators such as TerreStar Networks and SkyTerra Communications will offer dual-mode (satellite and cellular) services in North America that are enabled with next-generation satellite technologies and supported by dual-mode smartphones. Subsequently, new ABI Research forecasts suggest, some three million satellite-capable LTE smartphones will be shipped in North America in 2012. But, according to the same research, the promising forecast is contingent upon the 4G strategies of US cellular network operators.
“Taking the market opportunity at face value, it’s puzzling,” says practice director
Kevin Burden. “The likely number of public safety, law enforcement and government market adopters is not enough to support a viable, high growth market. But when you dig deeper, there appears to be a hidden agenda related to using the spectrum for 4G cellular services over the long-term.”
A key US regulation, the US FCC ATC (Ancillary Terrestrial Component) Order of 2003, uniquely permits satellite operators to offer simultaneous satellite and cellular services over their licensed satellite spectrum. Intriguingly, the spectrum is also enough to provide 4G cellular services in a region where that dedicated spectrum is scarce and valued at a premium.
However, the niche market’s potentially lucrative exit strategy is burdened with the requirement that satellite services must continue to be provided per the ATC Order. Handset vendors seem to be preparing for that “satellite tax” by embedding “dormant” satellite connectivity in their LTE chipsets and handsets, and US cellular operators will likely factor it into their otherwise viable acquisition models.
The valuable “4G real estate” will be coveted by North American mobile cellular operators. Burden comments: “We believe that the greenfield satellite companies’ plan is to forge short-term roaming partnerships with AT&T and other cellular operators and then, when LTE services are deployed, position themselves to be acquired by these major players, including their prized spectrum. It’s unorthodox but clever."
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