Direct-to-Cell Service Emerges into Focus

The burgeoning direct-to-cell service sector has recently expanded, as cable companies partner with satellite providers to boost service coverage.

The U.S. has more than 500,000 square miles with no cellular coverage, due to topography challenges, national park restrictions and other factors . Direct-to-cell services provide an alternative method for communicating in these areas.

Direct-to-cell technology relies on low earth orbit (LEO) satellites and devices with satellite-capable radios to enable communication. For example, a cell phone that supports direct-to-cell can communicate directly with a LEO satellite to send text messages. This process eliminates the need for cell towers, which is beneficial for remote and rural areas as well as first responder emergencies and natural disaster communications.

T-Mobile and SpaceX Pair Up for Direct-to-Cell

Carriers are pairing off with satellite fleet providers to launch LEO satellites and expand their infrastructure. One such partnership is between T-Mobile and SpaceX, which uses its Starlink satellites.

The tandem announced its beta direct-to-cell offering for text messaging and has plans to add voice and low-speed data options in the future. T-Mobile customers don't need to take any action to use direct-to-cell service, as their phones will already connect to Starlink satellites. The beta is also available for Verizon and AT&T customers.

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Beyond beta testing, the current timeline for direct-to-cell availability is the following:

Starlink has launched satellites equipped with eNodeB modems to form a constellation around the earth. These satellites operate like cell phone towers and don't require extra equipment or software for LTE phones.

While SpaceX currently holds the lead in fleet size, AST SpaceMobile and Globalstar are working to close the gap. Globalstar has 1ドル billion in funding, while Google and AT&T have invested in AST SpaceMobile.

Skylo Offers Alternative Approach

Skylo, a non-terrestrial network service provider, employs a different model for delivering satellite services. The company leases spectrum from satellite fleet operators, such as Viasat, EchoStar, Ligado Networks and Terrestar Solutions, and does not own the satellites. Skylo partners with numerous operators, including Verizon, to provide direct-to-cell offerings. This approach cuts expenses and time to market, increasing flexibility.

Where is the ROI for Providers?

According to a September 2024 study by Juniper Research, 2025 will be the first year of commercial direct-to-cellservices, with an expected 30ドル million in global revenue. By 2029, the firm expects operators to generate almost 1ドル.7 billion in revenue. However, Juniper predicted that operators might find it difficult to experience a substantial ROI from their direct-to-cell network investments.

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According to Daniel Hays, principal and head of PwC's Technology, Media and Telecom Strategy consulting team, MNOs might be able to justify the costs of deploying direct-to-cell services by replacing their traditional network infrastructure upgrades with satellite services.

"With direct-to-cell, you could argue that some of that terrestrial infrastructure becomes unnecessary and might change for operators the composition of their networks," Hays said. "That's because operators may no longer need to have the low-density rural coverage that they've spent billions of dollars on in the past."

As a result, Hays said providers could reduce the amount they spend with cellular tower companies and radio vendors, instead buying from satellite operators who provide direct-to-cell services.

Due to the commoditization of mobile connectivity, however, the Juniper Research study noted that operators might struggle to convince customers to adopt an additional subscription for direct-to-cell services.

"As such, we urge operators to focus on tailoring direct-to-cell services specifically to nomadic travelers and remote subscribers," the study said.

Hays said he believes direct-to-cell should be a feature, not a product. One concern is that service providers could charge consumers an extra 20ドル per month for the capability. For now, however, interested parties can begin evaluating, testing and using these fledgling services, as top telcos, satellite operators and cable companies buy in to the technology.