Low Earth Orbit (LEO) satellite constellations providing direct to device (D2D) services rely on terrestrial mobile spectrum to operate. This is only possible through an agreement with a mobile network operator, as regulated by national frameworks governing such services. This was the case until recently, when AST SpaceMobile and SpaceX acquired Mobile Satellite Spectrum (MSS) with the intention to operate independently of mobile network operators using an over the top model. They join Globalstar, which already operates D2D services in partnership with Apple.
This development carries important implications for competitive dynamics in the wireless industry. It allows the Satellite Network Operator (SNO) to operate without relying on a partnership with a mobile network operator or being tied to the mobile operator for revenue generation. We explore these shifts in this Insight Note, along with the potential consequences and new opportunities emerging in the market.
Download the full Insight Note “Friend or Foe: Rethinking Mobile Strategy in the Age of Non-Terrestrial Networks” with additional content covering EchoStar’s Spectrum Unwind, The Business Case for NTNs, and MSS Spectrum Value.
NTN Operational Challenges
The operation of Non Terrestrial Networks (NTN) offering cellular services through LEO or other satellites is governed by national regulatory frameworks for accessing mobile spectrum. This includes the Supplemental Coverage from Space (SCS) framework in the United States and the Supplemental Mobile Coverage by Satellite (SMCS) framework in Canada. These frameworks define the frequency bands where satellite services are permitted to operate, the geographic area requirements, and the technical specifications needed to protect terrestrial systems from interference.
The challenge with this operating model include:
- Global Regulatory Adoptions. The D2D service concept is relatively new. Only a few countries, including the United States with FCC’s SCS, China, Canada with ISED’s SMCS, and Australia, have defined regulatory frameworks for D2D services. Australia’s ACMA issued guidance in 2024 to enable D2D under existing spectrum licenses, supporting partnerships like Optus and Telstra with Starlink. Ofcom in the United Kingdom is developing a framework, aiming to be the first in Europe to enable satellite-to-smartphone connectivity. Most other jurisdictions lag in defining specific D2D frameworks, limiting global proliferation due to regulatory and technical challenges.
- Stringent Technical Co-Existence Requirements. Coexistence of satellite and mobile services in the same frequency spectrum requires close coordination to avoid both co channel and adjacent channel interference. This has led to requirements such as the Geographically Independent Area (GIA), which defines the region where a SNO can provide service, and the power flux density threshold needed to prevent interference. These requirements have a significant impact on satellite design considerations, including antenna configuration and radio frequency power, as well as operational behavior such as service coverage and performance. These limitations affect both the potential service revenue and the cost of deploying a satellite constellation, with far reaching consequences.
- Business Model Constraints. SNOs need to partner with MNOs to provide D2D services due to spectrum access requirements. The most common model involves revenue sharing between the satellite and mobile operators. Since MNOs hold the spectrum licenses, they may be seen as having leverage over the SNOs, who must offer real or perceived exceptional value to gain bargaining power. Many mobile operators remain uncertain about the value of partnering with a D2D satellite operator, despite several incentives. These include improving network reliability and resiliency during outages, gaining a competitive edge over other mobile operators, and earning favor with regulators who are focused on enhancing the reliability of emergency services. These factors are especially important in a saturated mobile market that increasingly resembles a zero sum game in terms of customer acquisition and revenue growth.
Advantages of MSS Spectrum.
The regulatory framework for providing mobile satellite services in MSS frequency bands is well established across many jurisdictions. One advantage in the context of D2D services is that it allows the SNO to operate without entering into a special business partnership with a MNO, since spectrum subordination is not required. In this arrangement, the satellite operator can act as a roaming partner, which simplifies service testing, integration, and the business model, which is already well understood.
Globalstar, in partnership with Apple, operates under this model and was the first to launch services in November 2022 with the introduction of the iPhone 14. In recent months, both AST SpaceMobile and SpaceX have acquired MSS spectrum.
MNOs in the Crosshair?
There is a common misconception that by acquiring MSS spectrum, SpaceX would offer direct to device services that compete directly with MNOs. This belief overlooks fundamental laws of physics that govern wireless communications. The distance between a satellite and a mobile device, which ranges from 300 to 1500 kilometers for LEO satellite constellations, is far too great to deliver a strong and reliable signal compared to terrestrial towers, which typically serve cells with a radius of less than 20 kilometers. Satellite communication also relies on a single antenna system. The line-of-sight nature of satellite links makes multi antenna techniques, which drive large capacity gains in terrestrial networks, ineffective. In addition, satellite services are limited to open and unobstructed environments and generally do not function indoors.
Given the high price SpaceX paid for S-band MSS spectrum, it is likely that the company has specific applications in mind that justify the valuation. These applications are not only focused on personal D2D services. Instead, SpaceX may intend to use these frequencies for automotive use cases such as telemetry for autonomous vehicles or for advanced future applications in robotics and automation. High-value Internet of Things (IoT) connectivity and emergency services round out the potential use cases. The key point is that MSS spectrum would be deployed in high value use cases that offer strategic advantage in emerging markets rather than in consumer applications that already exist in some form. For example, Iridium and Globalstar already offer personal communication services via LEO satellites, while Orbcomm provides IoT connectivity solutions.
We emphasize this to encourage MNOs, who continue to face challenges in growing revenue, to think beyond traditional models and consider how emerging NTN services could reshape future business opportunities. While there are areas of overlap, mobile and satellite networks are largely complementary across cost and performance parameters. This creates fertile ground for collaboration in developing new services and revenue streams.
Key Takeaways
- Shift Toward Independent Satellite Operations. The acquisition of MSS spectrum enables satellite operators like SpaceX and AST SpaceMobile to bypass traditional MNO partnerships, operating via an over-the-top model under existing regulatory frameworks.
- Regulatory Frameworks Are Critical but Limited. Only the U.S. and Canada have established formal frameworks (SCS and SMCS) for D2D satellite services; others like the UK and Australia are still developing theirs. This limits the global proliferation of D2D services.
- Technical Coexistence and Business Challenges for D2D Services. Operating satellite and mobile services in the same spectrum requires strict coordination to avoid interference. On the business side, SNOs partner with MNOs for spectrum access, through revenue-sharing models where MNOs hold leverage. Many remain skeptical about the value of D2D partnerships despite benefits like improved network reliability, competitive differentiation, and regulatory favor for emergency services.
- High Valuation Reflects Strategic Intent. SpaceX paid approximately $1.12 per MHz-pop for its MSS spectrum, far exceeding typical satellite valuations. This suggests ambitions beyond consumer connectivity, potentially targeting automotive, robotics, or IoT applications.
- MNOs Not Directly Threatened. Despite concerns, MSS-based D2D services are unlikely to compete directly with MNOs due to physical limitations of satellite communication , including low throughput from long distances, line-of-sight constraints, and the inability to leverage multi-antenna techniques. Satellite connectivity is better suited for open environments and specialized use cases such as automotive telemetry or robotics, rather than indoor consumer applications.
- MNOs Should View NTN as Opportunity, Not Threat. Rather than seeing NTNs as disruptive, mobile operators should explore synergies in resilience, emergency services, and new verticals (e.g., autonomous vehicles, automation), especially in saturated markets where growth is stagnant.