The satellite industry's biggest challenge isn't up in the stars, but rather, it's a ground-based issue that's hindering progress. As we strive to connect the world through space-based cellular networks, a critical roadblock has emerged: the outdated financial system that governs partnerships between satellite and mobile network operators (MNOs).
In an era where we're witnessing the rapid deployment of satellites for global connectivity, it's ironic that the real bottleneck lies in our terrestrial systems. With over 275 partnerships enabling connectivity for phones, vehicles, and IoT devices, the industry is thriving. Yet, the lack of a modern payment processing system is stifling growth and preventing the realization of a fully connected world.
The Disconnect Between Industries
The satellite and telecommunications industries, despite their shared goal of global connectivity, operate in vastly different realms. When they do collaborate, the potential is evident. Pilot projects showcase the promise of space-based cellular networks, and investment is flowing. However, the industry is stuck in a catch-22 situation. MNOs aren't seeing a significant return on investment, primarily due to the one-way traffic flow of satellite roaming, which means they're always paying out to satellite operators.
This lack of incentive has led to a stalemate. MNOs aren't investing in upgrading their billing and settlement infrastructure, which is still based on an outdated clearing standard. Satellite operators, on the other hand, charge differently, and this mismatch in processes creates workarounds that can't be scaled, keeping traffic volumes low.
A Historical Perspective
Interestingly, the satellite operators' lack of entrenched assumptions can lead to innovative solutions. They propose commercial models, such as charging per satellite connection, which MNOs haven't considered. However, MNOs, with their decades of experience, instinctively push back, even though they faced a similar challenge with mobile roaming in the past.
Back then, they had to create frameworks and standards to handle roaming traffic across borders. Over time, they developed a system that ensures interoperability and manages billions of dollars in settlements. This is why your phone works seamlessly when you travel internationally. Today, we have over 900 Voice over LTE roaming agreements, and the worldwide roaming market is valued at over $80 billion annually.
The Need for Evolution
The industry must learn from this history and commit to the GSMA's Billing and Charging Evolution (BCE) framework. BCE supports the flexible charging models required for satellite connectivity, but its adoption has been slow. MNOs don't see the immediate satellite revenue to justify the change, but they must realize that terrestrial roaming revenue only took off after common settlement processes were established.
Industries that hesitate during pivotal moments often pay a price. Take the German automakers who thought they could afford to wait on electric vehicles. They were wrong, and their market dominance suffered as a result. The same fate could befall MNOs if they don't adapt and embrace the necessary changes.
The Future of Satellite Communications
Within the next five years, we'll see a standard voice call made over satellite from the open ocean on a regular phone. The technology is already being tested, and the key to making this a reality is collaboration between two industries that have never truly depended on each other. The longer this collaboration takes, the fewer players will be left to drive this innovation.
In my opinion, the satellite industry's most expensive problem isn't a technical challenge but a systemic one. It's a reminder that sometimes the biggest obstacles to progress are not in the stars but right here on Earth, in our own systems and processes. It's a fascinating insight into the human element of technological advancement and a call to action for industries to adapt and evolve together.
