Are satellites the final frontier for telecoms, or just taking up space?

Telcos are increasingly partnering with satellite firms to offer direct-to-device services to customers. Will this replace terrestrial cellular infrastructure?

A flurry of satellite launches over the past few years has driven substantial improvements in service availability and latency, meaning that satellite-enabled communications can become a reality for the average consumer.

Enabling this are vast arrays of low-Earth orbit (LEO) satellites which move rapidly across the sky, much closer to Earth than geostationary orbit (GEO) satellites, providing low latency and wider global reach.

These networks can extend coverage without the costly groundwork needed for traditional infrastructure, meaning people in areas where laying fibre optic cables or building towers is not feasible can still access services.

Until now, satellite connectivity has primarily served:

1. On-the-go coverage: For boats, planes or nomads in need of a connection, satellites provide connectivity even in the most remote parts of the world, including across oceans. Elon Musk himself recently demonstrated this capability by livestreaming Path of Exile 2 on a private jet – the connection held strong, even if his gameplay didn’t.
2. Disaster recovery: When natural disasters such as earthquakes, hurricanes or floods damage terrestrial infrastructure, satellite networks ensure communication remains functional for emergency response and relief operations. The FCC authorised SpaceX’s Starlink and T-Mobile to activate satellite services for those impacted by Hurricane Helene last year.
3. Military use: Defence agencies rely on satellite connectivity for secure communication, surveillance and strategic operations. For example, Starlink provided terminals to the Ukrainian army in the early months of Russia’s 2022 invasion, although division president Gwynne Shotwell later sought to restrict their use for offensive purposes.

But it's direct-to-device (D2D) communication that’s the name of the game.

D2D could generate $137 billion in revenue by 2032, or about 3% of current total global cellular revenues. Though a relatively small share, that figure accounts for a quarter of the total predicted $140 billion increase in revenues by 2030.

According to the GSMA’s report Satellite 2.0: Going Direct to Device, D2D efforts should target those people living outside of areas with strong network coverage, including millions on the “edge” of coverage, who do not have constant, dependable services; this translates to some 570 million people globally, or roughly 8.7% of the adult population.

Vodafone recently made history by completing the first-ever smartphone video call over satellite, with CEO Margherita Della Valle and astronaut Tim Peake making a call from Vodafone’s Newbury headquarters to an engineer located on a mountain in Wales. The company aims to begin a phased commercial rollout of D2D services across Europe starting in late 2025 and into 2026.

Meanwhile, Verizon roped in another former astronaut (and second man on the moon), Buzz Aldrin, for a high-profile ad during February’s Grammy Awards, promoting its $100 million partnership with AST SpaceMobile to eliminate some of the 500,000 square miles of mobile “dead zones”:

Not to be outdone, Starlink ran an astronaut-free ad during this year’s Super Bowl announcing its D2D beta in partnership with T-Mobile, initially offering text messaging support, with plans to expand to MMS, data and voice in the near future:

With approximately four million subscribers worldwide, Starlink is the market leader in commercial satellite connectivity, with close to 7,000 satellites in orbit and around 200 more launched every year. Starlink’s network is designed for high-capacity, low-latency broadband. Each of the array’s satellites orbits at 550km above Earth and covers a relatively small area, enabling high-speed service by dramatically reducing the time it takes for signals to travel back and forth. It’s expected to lead in D2D services as well, though only about 100 of its satellites currently support D2D functionality.

Amazon’s Project Kuiper aims to provide similar coverage, having recently launched the first 27 of its expected 3,200 satellites by 2029, as the beleaguered Bezos pet project races to meet an FCC-imposed deadline to have 1,600 satellites in orbit by summer 2026. If reports of production troubles are to be believed, the long-delayed project may lag behind competitors for some time.

AST SpaceMobile uses massive phased array antennas capable of connecting directly to standard smartphones, without the need for ground terminals. Each satellite acts as a “cell tower in space,” supporting direct-to-device 4G/5G connectivity. AST currently has five commercial satellites in orbit, with plans to launch a total of just 168 satellites, thanks to their expansive ground coverage of 2,000–3,000 km in diameter. That means each satellite covers an area roughly the size of a small continent, albeit with lower capacity per square kilometre.

So, are we heading into a post-terrestrial era for telecoms?

Despite its many advantages, satellite communication still faces major challenges:

Latency
Even with LEO satellites, latency remains a barrier for real-time applications like video conferencing and online gaming. Coverage also depends on satellite orbit patterns, and the total capacity for connections.

Cost
Starlink’s internet service can cost up to $250/month, not including equipment fees. However, surveys indicate that around 40% of customers are unwilling to pay more for satellite services. And for urban dwellers with strong fibre or 5G access, there’s little incentive to switch, especially considering Starlink’s “congestion charge” for new users in crowded regions. Maintaining satellite networks is also more expensive than expanding terrestrial infrastructure. While lower satellite pricing is often available in developing and low-income countries, affordability remains a challenge in remote, rural areas.

Signal interference
Satellite receivers must be placed outdoors, and have an unobstructed view of the sky, meaning tall buildings or inclement weather can lead to service disruptions. Furthermore, LEO satellites’ high velocity causes frequency shifts that must be compensated for dynamically to maintain signal integrity.

Limited bandwidth
Unlike cell towers, which can handle a high number of simultaneous connections in densely populated areas, LEO satellites offer much lower overall bandwidth. In dense cities, simultaneous connections can quickly overwhelm capacity – estimates suggest Starlink may support only 485,000 concurrent users across the entire US.

Device limitations
Sustained satellite communication also drains phone batteries rapidly, which is why current applications are limited to texting or emergencies. Since LEO satellites orbit quickly, devices must frequently switch between different satellites to maintain connectivity, and ensuring smooth handover remains a major challenge.

Satellite life expectancy 
SpaceX is currently “retiring and incinerating” four or five Starlink satellites per day, up from just one daily before May 2024. In January 2025 alone, 87 Starlink satellites re-entered Earth’s atmosphere.

However, the reason remains unclear.

Risks from solar flares and geomagnetic storms, general orbital decay, and space debris, means that the life expectancy of LEO satellites is far below the two to three decade average of a cell tower, with a lifespan of seven to ten years – Starlink satellites are even shorter, at only five years.

In February 2024, SpaceX forcibly retired and de-orbited 100 first-generation satellites due to an unspecified flaw in their design, disintegrating as they re-entered Earth’s atmosphere gradually over a period of up to six months. Prior to this, over 400 other Starlink satellites had been de-orbited.

As these satellites burn up during re-entry, they produce aluminium oxides, depleting the ozone layer. The byproducts generated by the re-entry of satellites are increasing; burn-ups from a future mega-constellation could reach over 360 metric tons per year. Aside from the negative environmental consequences, these greenhouse gases could also cause a reduction in satellite carrying capacity.

SpaceX also has another factor not working in its favour – its CEO.

Though the satellite wing of Musk’s empire has so far avoided being caught up in his many controversies, the blowback is now spreading to Starlink. Canada has recently cancelled a $100 million contract in response to American agitation, and América Móvil has dropped Starlink in favour of AST SpaceMobile following disparaging comments by Musk about the company’s CEO, Carlos Slim.

More revenue opportunities will be unlocked as D2D capabilities evolve and when voice and wideband data services become commercially available. However, whilst still in the early stages of the technology, services will be basic and confined to emergency and text messaging.

In short, the majority of customers living and working in fibre-rich places have no reason to switch to satellite, which will remain a niche service until significant strides in handset and satellite technology are made, acting as an extension of existing coverage rather than terrestrial replacement.

Away from remote areas, masts remain the most cost-effective way of providing the fastest and lowest latency mobile connections. Nevertheless, if paired with an effective, reliable satellite partner, telcos could offer satellite connectivity as an ancillary service for customers who would otherwise struggle to maintain consistent service, if any service at all.

As satellite capabilities expand, telcos that integrate them smartly into their service portfolios could differentiate themselves in an increasingly competitive connectivity landscape.

Cerillion is delighted to join TM Forum’s “Moonshot” catalyst project to help solve the problem of integrating terrestrial networks and satellite communications for real-time monitoring of high-value shipments like perishable goods, pharmaceuticals, and defence supplies.