Industry remarks reflect the evolving reality of satellite services overlapping with terrestrial networks, particularly in urban areas. This shift mirrors the case of SpaceX’s Starlink in the U.S., which initially targeted underserved rural regions but is now eyeing wealthier, urban customers. In the U.S., the Federal Communications Commission (FCC) has historically allocated spectrum differently for satellite and terrestrial operators. Terrestrial companies like Verizon and AT&T acquire spectrum through auctions, whereas satellite operators have often relied on administrative allocations. Some analysts align with the growing consensus that as satellite companies like Starlink seek to expand into urban markets, they should acquire spectrum via auctions, just as terrestrial telecom companies do.
The Technological Divide: Comparing Viasat and Verizon's 5G Network Rollouts
The technological differences between satellite and terrestrial services are evident in the comparison of Viasat, a satellite broadband provider, and Verizon’s 5G network. Viasat, which operates in higher-frequency bands, faces difficulties in providing mobile services that can compete with Verizon’s extensive 5G network. Verizon, utilizing a mix of low-frequency sub-GHz bands and high-frequency millimeter waves, can provide seamless mobile coverage that satellite services cannot match. Viasat’s strength lies in rural areas where terrestrial coverage is lacking, but its ability to serve mobile users in urban areas is limited by the laws of physics. This distinction highlights some analysts argue that satellite companies, if entering urban markets to compete with terrestrial providers, should be subject to the same licensing and spectrum allocation processes.
Fixed Wireless Access (FWA) and the Urban Market: Case of OneWeb’s Rural Focus vs. AT&T’s Urban Dominance
The limitations of satellite services in fixed wireless access (FWA) solutions are illustrated by comparing OneWeb’s rural focus to AT&T’s urban dominance. OneWeb, like many satellite operators, has concentrated on providing internet access to remote areas where terrestrial networks are sparse or non-existent. In contrast, AT&T’s vast infrastructure of cell towers and base stations allows it to offer extensive coverage and capacity in urban markets. AT&T’s ability to reuse frequencies across thousands of towers gives it a distinct advantage over satellite operators like OneWeb, whose limited number of satellites restricts their capacity to serve dense urban populations. This disparity in capabilities supports some analyst calls for satellite operators to be treated the same as terrestrial operators when acquiring spectrum if they wish to compete in urban environments.
Economic and Business Model Constraints: The Starlink High-ARPU Model vs. T-Mobile’s Low-ARPU Strategy
Starlink’s business model exemplifies the economic challenges that satellite operators face, particularly when competing with terrestrial operators like T-Mobile. Starlink charges an average revenue per user (ARPU) of around $100 per month, which is far higher than T-Mobile’s ARPU, which hovers around $45. T-Mobile thrives on high customer volumes with lower ARPUs, while Starlink must rely on fewer customers paying significantly more due to the high costs of launching satellites and manufacturing expensive user terminals. This stark difference in business models underscores why many say satellite companies should be required to acquire spectrum through auctions and pay license fees like terrestrial operators, especially if they aim to serve the same urban customer base.
Auction and Spectrum Usage Charges (SUC) in Perspective: Lessons from U.S. 5G Spectrum Auctions
The 5G spectrum auctions in the U.S. serve as a useful reference for understanding the financial impact of spectrum acquisition on terrestrial operators. Companies like Verizon, AT&T, and T-Mobile have invested billions in spectrum auctions to secure their 5G networks. In return, the FCC has reduced the regulatory burden through policies such as lower Spectrum Usage Charges (SUC). If satellite operators like SpaceX or Amazon’s Project Kuiper are required to participate in spectrum auctions, they could similarly benefit from lower SUC rates, though the value of spectrum for satellite services may be lower due to operational limitations. These examples from the 5G auctions provide a potential roadmap for how spectrum allocation could be structured for satellite services if industry suggestions are adopted.
Conclusion: Satellite Services as Complementary to Terrestrial Networks
Looking at the strategy of SES Networks in the U.S. market illustrates how satellite services complement terrestrial networks. SES has focused on connecting remote regions where building terrestrial infrastructure is not feasible or economical. Meanwhile, terrestrial networks like those of AT&T and Verizon dominate in urban areas, offering high-speed, low-latency services that satellites struggle to match. Industry remarks suggest that while satellite services are crucial in remote areas, they should not be allowed to compete in urban markets without adhering to the same spectrum and licensing rules as terrestrial networks. This balanced approach ensures both satellite and terrestrial services can thrive in their respective domains while maintaining a level playing field in competitive urban areas.
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