Issue Brief: Satellite connectivity

Satellites are back in the telecom industry conversation, as the topic of former last resort connectivity is now landing on the desks and strategic agendas of telecom operators around the world. Two markets are moving from “niche” to more mainstream and relevant at scale: (1) Low-Earth-Orbit (LEO) consumer broadband and (2) direct-to-device (D2D) connectivity. Both shifts ride the same recent supply-side step change: Cheaper launches, higher cadence, mass-produced spacecraft, and falling terminal costs are turning satellite capacity into something that can be scaled and packaged like a consumer product.

Satellites won’t replace terrestrial networks, but they will reset customer connectivity expectations at the “edges” of fixed and mobile, and those boundaries are expanding as LEO capacity scales. Because satellite players compete with a different economic model, they introduce new strategic uncertainty to the market and leave telcos with some key questions to grapple with: where to compete, where to partner, and where to ignore.

1. Consumer satellite broadband

As LEO capacity grows, consumer satellite broadband's target markets could expand significantly.

What’s on the horizon?

Geostationary Earth orbit (GEO) broadband served remote households because terrestrial last-mile economics were poor, but latency and quality of experience limited adoption. LEO changes the experience profile. Latency is structurally far lower than GEO, enabling more demanding applications. Performance still varies with cell loading and handovers, but the addressable segment is no longer limited to the fully unconnected.

Two main adoption axes will affect take-up:

• Strength of competing fixed alternatives: Where fiber-to-the-home (FTTH) and modern cable are widespread, LEO will skew to rural coverage. Where fixed access is scarce, slow to build, or low quality (legacy xDSL, congested fixed wireless access [FWA]), LEO becomes a credible primary option.
• Pricing sophistication and affordability thresholds in some markets: LEO constellations are deployed globally, but pricing can be highly local. Providers can flex prices to maximize beam utilization, for instance, discounting in underfilled areas and selectively undercutting incumbents. That could pressure telco pricing norms. Upfront terminal costs, however, remain a material barrier and will likely cap adoption in some emerging markets.

What are the challenges?

So far, LEO broadband has been capacity-constrained above a certain household density (beams saturate and peak-time performance degrades). But sector roadmaps—including Starlink’s V3 next-gen satellites—point to step-changes in capacity as larger spacecraft and higher launch cadence arrive; Amazon LEO and other entrants will add supply alongside Starlink’s existing fleet. As “capacity in the sky” rises, the density constraint should ease, pulling competition from rural into suburban markets (and selected urban niches).

What could happen?

• Capacity unlock plus local pricing. With next-gen capacity (such as Starlink V3) and new constellations, LEO pushes into suburban markets, using so-called beam fill, reduced pricing to discount selectively and win share.
• “Served-on-paper” broadband is vulnerable. LEO targets households with weak real-world experience (congested FWA, copper-based infrastructure), not just rural areas.
• “ARPU compression to fill the capacity. As satellite capacity scales and competition intensifies, increased satellite pricing erosion may anchor lower price expectations in competitive, non-fiber technologies.

2. Direct-to-device connectivity

The extent of D2D satellite connectivity market growth depends on which delivery models and commercial patterns become dominant and how the sector overcomes physical challenges.

What’s on the horizon?

D2D satellite connectivity is gaining attention not because it can replace terrestrial mobile service, but because it can cost-effectively close coverage gaps where propagation limits and site economics make towers impractical. Unlike consumer satellite broadband, D2D positions satellites as another mobile access layer, embedded in smartphones and integrated into spectrum, roaming, and plan design.

Two delivery models are emerging:

1. Mobile network operator (MNO)-spectrum (partnered) model: Satellites use an operator’s terrestrial mobile bands via commercial partnerships (such as Starlink–T-Mobile; AST SpaceMobile with different operators). While this has the ability to reach many existing phones with minimal user behavior change, scaling is limited by the number of partnerships and requires market-by-market deals with tight regulatory and interference coordination.
2. Mobile-satellite-spectrum (MSS) model: Uses dedicated mobile-satellite spectrum, typically enabled through OEM/chipset integration (such as Apple–Globalstar or Skylo). This has the advantage of clearer spectrum rights and more consistent cross-border footprint, but it depends on device penetration and multi-party ecosystem alignment (OEMs, chipsets, satellite operators).

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What are the physical challenges?

Three physical constraints define near-term D2D: (1) Handset uplink: Unmodified smartphones are built for nearby towers and are capped by power, antenna gain, thermal limits, and battery; satellites can boost downlink, but not the uplink. (2) Indoor coverage remains weak because building penetration and clutter erode link margin and users often lack clear sky view. (3) Dense, urban capacity is structurally limited: satellite “cells” are large and shared, so capacity per km² is far lower than terrestrial dense reuse. As a result, early D2D fits low-rate messaging, safety, and intermittent voice in rural/outdoor settings; high-rate data degrades quickly as user density rises.

What could happen?

D2D go-to-market models are defined by who owns the customer/brand, who controls the user experience, and how integration is delivered (direct versus hub/platform). Four primary commercial patterns are forming:

• MNO-led add-on/wholesale non terrestrial network (NTN): The operator owns the customer, sells D2D as a plan add-on, and buys satellite capacity directly from the provider.
• OEM-led feature: The device maker owns activation and UX (free safety first, likely paid tiers later); the operator plays a limited bundling role.
• Satellite-led retail/hybrid mobile virtual network operator (MVNO): The LEO player owns the customer under its own mobile brand, uses terrestrial networks as MVNO/roaming for most traffic, and adds satellite as edge coverage.
• Hub/platform-led enablement: A third party provides a “one integration” layer (authentication/routing/charging/APIs) and can aggregate multiple satellite networks, accelerating multioperator and multicountry rollout.

There are three main scenarios for operators to plan for:

• Safety becomes table stakes. As emergency messaging/location standardizes, operators bundle and resell the service, with customers expecting the feature as part of premium plans.
• NTN becomes “just another roaming layer.” Hubs normalize integration and accelerate cross-market launches.
• Spectrum and regulation set the pace. MNO model scales through partnerships; MSS scales with chipset penetration.

What can telcos do next?

1. Map “underserved but paying” pockets in fixed and mobile by micro-geography, where complaints, usage patterns, and churn signal a readiness to switch.
2. Choose posture by segment and market. Compete or partner (bundle/roaming) depending on market conditions and ignore altogether only where the market is genuinely saturated with high-quality fixed and mobile.
3. Protect the experience layer. Even when capacity is wholesale, telcos can win on packaging: plan design, billing, care, device programs, and predictable tiers.

Satellite connectivity won’t replace terrestrial networks. But it will change what “good enough” looks like at the edges, and who owns the customer there.