Marketplace Logo Donate

Daily business news and economic stories from Marketplace

Apple and Starlink compete to turn your smartphone into a satellite phone

Heard on:
SpaceX launches a rocket in April 2019. In the foreground, several people stand and watch the rocket take off.

SpaceX launches a rocket packed with satellite machinery in April 2019. Joe Raedle/Getty Images

get the podcast

When far away from cellphone towers, people in remote locations or in emergencies rely on satellite phones. These are devices that connect to satellites in orbit to send messages or make calls.

But convincing more urban consumers to buy an additional phone just for adventuring or emergencies has been a hard sell. Until last week, when Apple announced a feature for its newest iPhone that will allow some users to send emergency texts through a satellite connection.

Elon Musk’s Starlink, the satellite internet section of SpaceX, also has a plan to turn your cellphone into a sat phone.

Tim Farrar, president of consulting firm Telecom, Media and Finance Associates, talked to Kimberly Adams about why big tech and telecom companies are getting into satellite communications and how much consumer demand there is for sat phones. The following is an edited transcript of their conversation.

Tim Farrar: Both [Apple and SpaceX] are looking to get into this business of communicating with a regular phone. So to do that they need a big antenna in space. Also, they need to have spectrum to communicate in — though there’s two different ways of doing this, one of which is to use an existing satellite service. That’s what Apple is doing. They’re collaborating with Globalstar, that’s been in the satellite phone business for over 20 years and has satellites in orbit. It has access to spectrum around the world. And so Apple is really adapting that service to their needs and integrating that into the iPhone. The other way of doing this is what Starlink has talked about: collaborating with a cellphone company that brings spectrum that’s already used by those phones, and Starlink would then include that spectrum on its next generation of satellites.

Kimberly Adams: Why are these big technology and telecom companies getting into satellite communications when some of the companies that have tried to make this business more profitable, more common, haven’t done so well?

Farrar: A lot of people would say that these companies previously haven’t done that well, because the phone is so big and so heavy, and you have to buy a separate phone. Whereas today, the aim is to include this in a phone where it’s the phone you use every day. So that’s likely to encourage a lot more usage. But really, the question for all of these players is, “What are they trying to achieve in terms of their own revenue goals?” If you’re Apple, what you want to do is sell a lot more iPhones. And if you can add these sorts of capabilities, maybe some people will buy an Apple iPhone instead of buying a Samsung phone. That is a different model from, say, T-Mobile, which wants more people to subscribe to T-Mobile’s service rather than someone else.

Adams: How much consumer demand though is there for satellite phone coverage?

Farrar: Well, I think that’s what we don’t know yet. If all you’re doing is an emergency message for when you fall over and break your leg, then you’d hope not to use that an awful lot of the time. If what you’re doing is being able to use your phone fairly normally and make and receive calls, potentially use the data services that you’d use every day, there may be people who will pay more money and use it more often.

Adams: With Apple adding these features to its iPhone, what does that mean for Apple’s relationship with mobile carriers?

Farrar: When Apple introduced iMessage a decade or more ago, it really undermined the cellular operators’ business that was getting a lot of money every month on people using SMS text messaging. You could see this as the first step by Apple to undermine some of the voice calls or text messaging if they advance the service. But if it’s a limited service that you’re using via satellite, then it probably won’t shift the balance of power too much.

Adams: But there’s a potential future in which Apple doesn’t even need to work with mobile phone carriers anymore if you can just use your iPhone to make satellite calls.

Farrar: They will still need your cellular carrier in 99% of circumstances. If you’re in your building, in a car, you’re gonna rely on terrestrial networks. This is not a substitute for those in most circumstances in most parts of the country.

Adams: Apple says it will fund satellite infrastructure to the tune of $450 million as a part of the rollout of this new service. How do you think that’s going to affect the satellite industry and the industries around it more broadly?

Farrar: It’s very helpful to have someone like Apple helping to pay for new satellites. At the moment, what they’ve committed to is replenishing the constellation that Globalstar has in orbit because some of those satellites are quite old, and they’re going to reach the end of their life in a few years’ time. So Apple’s paying to keep the service pretty much as it is for the next decade or more. The real question is, are they going to invest a lot more to upgrade that service to one that delivers more data, potentially voice calls, potentially the ability to send things like photos? And if they do that, it’s going to cost an awful lot more than $450 million.

Adams: So these companies are just getting their ventures to incorporate satellite calls into regular phones off the ground, shall we say. What are some of the biggest challenges you can anticipate for them?

Farrar: The biggest challenge is, a lot of the time, if you want to use new spectrum, if you want to do what SpaceX and T-Mobile have proposed, then you need permission from regulators to use terrestrial spectrum that was allocated for use on cell towers. You need permission from the [Federal Communications Commission] to use that in space. The FCC needs to come up with those ground rules for people to make use of the spectrum, and that needs to happen before any of these systems are going to get launched. So in the near term, you know, it’s relatively easy for Apple to work with Globalstar, who already has satellites and spectrum and permission to use that. But for a lot of these other projects, it’s going to mean a long process at the FCC.

If you need a quick explainer on satellite communication and the various spectrums our calls and messages travel, check out this Mobile World Live video that compares various spectrum bandwidths to roads.

Space.com also has an article on the SpaceX venture and its most recent launch. Besides Starlink satellites, a different satellite called BlueWalker 3 was part of the cargo. It’s from company AST SpaceMobile, which aims to connect satellites directly to cellphones to increase coverage in areas underserved by traditional mobile networks.

What's Next

Latest Episodes From Our Shows

Listen
3:52 AM PDT
8:38
Listen
2:28 AM PDT
8:42
Listen
2:59 AM PDT
1:50
Listen
6:12 PM PDT
16:40
Listen
4:14 PM PDT
27:04
Listen
Sep 29, 2022
2:55
Listen
Aug 9, 2022
24:46
Exit mobile version