Ready for launch: commercial and customer-facing considerations for UK direct-to-device satellite services

Direct-to-device satellite (D2D) services technology enables consumer devices, such as smartphones, to receive satellite signals directly, bypassing traditional satellite ground stations and mobile base stations.

D2D technology relies on low Earth orbit (LEO) satellites, which offer lower latency and higher data throughput compared to traditional geostationary satellites that operate at a higher altitude above the Earth. As LEO satellites are closer to Earth, they have a smaller field of view, requiring a large number of satellites, known as a constellation, to enable continuous coverage. When using terrestrial mobile spectrum, the satellite's payload acts as a mobile base station in space, enabling direct communication with consumer devices. This evolution of LEO satellites is well suited to communications applications and is driving the growth in commercial D2D services.

Partnerships and collaborations

Many D2D services have launched through partnerships and collaborations between organisations in different areas of the value chain. A recent example is the US partnership between MNO T-Mobile and Starlink satellite provider. Starlink satellites have "direct to cell" capabilities, which means that the satellite's modem acts like a mobile base station in space and allows T-Mobile users to use D2D services on their mobile devices. Another notable example is the partnership between Vodafone and AST Space Mobile who have announced their intention to launch a D2D service in Europe as early as this year.

D2D services bring together the collective expertise of satellite manufacturers, ground-station operators and mobile network operator (MNOs). With this comes a great deal of vital intellectual property and its associated rights – all of which needs to be considered and appropriately managed through contractual arrangements.

The commercial model of these partnerships and collaborations will also have to factor in how the end-user commercial model will change as adoption becomes more widespread and how they may differ depending on the market expectations. One common partnership model is revenue sharing, where MNOs and satellite providers split the revenue generated from D2D services. Another model involves joint ventures, where both parties invest capital and resources to develop and market the service.

These partnerships require careful consideration of risk and allocation of responsibilities. For example, in the UK the regulatory framework that applies to electronic communications services, including those provided by satellite, has a differentiation between the retail and wholesale provision of these services. The retail provider, particularly when selling to consumers and small businesses, has a higher regulatory burden but may need to rely on the wholesale satellite operator to support its compliance obligations.

End-user considerations

There are a range of different uses for D2D services from consumer mobiles to commercial Internet of Things devices in remote locations. These can enable real-time monitoring and data collection, which is crucial for industries such as agriculture and mining. They will all have different power, data consumption and location requirements. How these aspects are impacted by receiving a direct satellite service will vary.

Launching D2D services will require educating first adopters on the limitations and benefits of satellite services, especially for consumer services; for example, the first services may not support voice or video calls and reception will be reduced when in built-up areas without a clear view of the sky. While D2D technology can provide communication in remote areas and serve as a backup during emergencies, it may not yet offer the same level of service quality as traditional mobile networks in urban areas. Users may experience latency issues when using D2D services for real-time applications like gaming or video conferencing. Clear communication about these limitations will be essential to manage customer expectations and ensure satisfaction. 

Initial D2D services may also have more limitations on capabilities compared to terrestrial mobile networks. Again, this will require public education as to how they can best use the benefits of a satellite-enabled services. An aspect of this is the commercial model for providing the D2D service and whether there are separate satellite tariffs or bolt-ons, a consumption-based model or one that is just provided within existing tariffs.

UK developments

For example, in the UK, which is not expected to be a prime satellite market given its relatively small geography, less than 50% of respondents to a survey by CCS Insight were willing to pay for satellite voice and data services where there are "not spots" in mobile networks. This is expected to be different in prime markets such as the US, Canada and Australia and may also change as the UK market matures. Any limitations that may apply to the use of the satellite service will also need to be set out clearly for the end users.

The UK regulatory framework that applies to electronic communications services (ECS) is technology neutral, it therefore does not differentiate between a terrestrial or non-terrestrial-based network. The end-user obligations and requirements for customer contracts will remain the same; however, customer sales journeys and contracts will need to be reviewed to ensure that essential limitations on these services are made clear, both to avoid user disappointment and potential liability for service-quality claims.

While the EU is considering how best to harmonise the licensing of D2D services, full harmonisation for the provision of electronic communications services is yet to occur across the UK and EU. This can pose challenges when the investment case for a satellite service is often based on regional or global access. Providers must comply with and stay informed about regulatory changes across multiple jurisdictions and ensure compliance to avoid legal issues, regulatory enforcement action and service disruptions. 

Service performance

The performance of D2D services will be a critical factor in their commercial success. Providers must ensure that the service meets the promised standards and delivers reliable connectivity. This includes monitoring and managing the network to prevent service interruptions and addressing any issues promptly. Performance metrics should be clearly defined in service level agreement, and providers should have robust mechanisms in place to compensate customers in case of underperformance.

Coordination with regulatory bodies

To launch a D2D service using an MNO partnership, regulatory approval in each jurisdiction must be obtained to use the MNO's terrestrial band from orbit, compliance with regulatory bodies in all countries where the service is to be used is essential. This coordination is crucial to ensure seamless service delivery and avoid legal complications.

Providers can ensure compliance by conducting regular audits and compliance calendars and staying updated on regulatory changes. Partnering with local legal experts can also help navigate complex regulations.

Osborne Clarke comment

Launching D2D services involves navigating complex commercial and customer-facing considerations. Effective partnerships, robust contractual agreements and clear communication with end users are essential for success. With thorough planning, securing strategic partnerships and execution, D2D services have the potential to revolutionise connectivity, especially in remote areas and during emergencies.

Future trends in D2D services include the integration of artificial intelligence for better network management and the expansion of services to support voice and video calls. As technology advances, we can expect to see more seamless integration with terrestrial networks.

Navigating the commercial and customer-facing aspects of D2D services is essential for their successful launch. However, these efforts must be complemented by a thorough understanding of the regulatory and legal requirements. From licensing and spectrum allocation to international regulations, these factors are critical to ensuring compliance and smooth operation.

For further insights in this area, read our companion article on navigating the regulatory landscape for D2D satellite services.