Benefits in regional LEO/mobile partnership

TLDR version: Regional telecommunications policy has been underpinned by the USO for decades, but the ground is now shifting. LEO satellite is opening up new service opportunities for both mobile and fixed communications. Our view is that partnerships between LEO operators and mobile operators have a big future, and give the mobile operators an opportunity to push back against proposals for mandatory roaming.

Regional comms regulation entering a new phase

The rise of LEO satellite as a commercial alternative to the NBN in regional and remote areas is now recognised as a disruptor, and it isn’t necessary to rehearse the growth trajectory of Starlink satellite broadband in these areas.

Less remarked are advances in mobile communications based on satellite-capable handsets. The Apple iPhone 14 now supports emergency messaging by satellite based on Qualcomm chipsets that natively support Iridium connectivity, and Android handsets are not far behind.

Potentially more disruptive are direct-to-device (D2D) operators like Lynk, whose satellite constellation will support standard 5G phones natively. Lynk has already trialled both messaging and voice services. Unlike Starlink, Lynk is working with established mobile operators, and will allow them to connect standard mobile phones to satellites outside mobile coverage areas.

Lynk has three commercial LEO satellites in orbit, and will commercially launch its intermittent SMS messaging service with 25 committed partners in the next few months. Optus has already collaborated with Lynk on a trial at 900MHz in Australia, while 2degrees is pursuing similar trials in New Zealand. Lynk plans to follow up with voice services in the future, presumably when it has grown its satellite constellation.

The emergence of these alternatives coincides with rising pressure for mandatory roaming in regional areas. The ACCC has examined the issue several times, in the past decade, each time finding that the benefits of marginally improved coverage could not outweigh the losses: higher costs of operation and reduced investment in regional infrastructure.

In Australia, roaming proponents have focussed their attention on a specific issue: emergency roaming, to be activated only in regional emergencies when communications become essential. In 2022 the Australian Government directed the ACCC to conduct an inquiry into the feasibility of providing mobile roaming during natural disasters or other emergencies.

There are precedents of a sort. For example, last year Canadian mobile operators signed an MOU to provide roaming in the event that one of their networks went out of operation; this was a response to a major outage on the Rogers network earlier that year.

But emergency roaming is no panacea. The costs are still high, and in an emergency situation capacity on alternative networks will likely be constrained. Preventing congestion (particularly voice congestion) will be a challenge. (Our view is that emergency roaming for messaging-only is a reasonable compromise: this allows users to stay in touch and receive emergency alerts without congesting networks).

Why does this matter?

If emergency roaming is imposed, further pressure for wider roaming rights will certainly follow. But in the context of rapid LEO satellite innovation, does this make sense?

The mobile operators will soon be in a stronger position to say no. Our view is that the Lynk approach to satellite mobile – standard devices, and a partnership rather than competition with mobile operators – has real legs.

This is a more synergistic approach than the go-it-alone approach of Starlink, but it has many advantages. Locking in a few dozen mobile partners is easier than dealing with the vagaries of the consumer market, and a supplementary service like Lynk offers no threat to these partners. Most of all, Lynk’s mobile partners will form a large and powerful global consortium with a strong interest in keeping Lynk going, something that will generate certainty as the cost of capital rises.

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