Vodafone and Rakuten's satellite JV could serve as an early model for telecoms integrating disruptive tech

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Vodafone and Rakuten led investment in SpaceMobile, a collaborative venture by Avellan Space Technology & Science (AST & Science) that aims to close the mobile connectivity gap using satellites. AST & Science - which now has $128 million in funding - developed technology to send satellite signals directly to standard 4G and 5G handsets, eliminating the need for consumers to purchase specialized satellite phones.

Vodafone indicated that it would use the network to expand the footprint of its mobile network coverage across Europe and Africa, while Rakuten said it hopes to do the same for its forthcoming service in Japan. Vodafone CTO Johan Wibergh told Mobile World Live the SpaceMobile network would be launched within a few years, initially offering 4G service and later expanding to 5G.

SpaceMobile highlights the potential for low-earth orbit (LEO) satellites to accelerate the rate at which telecoms expand their network footprints. As they orbit the earth, satellite networks can cover much larger swaths of land compared with terrestrial infrastructure. But satellite connectivity offerings have typically been slower and more expensive than traditional networks.

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For instance, Viasat, a leading US satellite broadband provider, offered 30 MBps service for $1900 per year; by comparison, AT&T offered 300 MBps broadband service for $480 per year, according to GSMA Intelligence. Advancements in LEO technology promise to reduce - but not eliminate, at least not any time soon - this gap in both broadband and now mobile network service.

Traditional network infrastructure will still be superior for those with access in more populated areas in the foreseeable future. This is why promising players in the industry are aiming to use LEO to supplement land-based network footprints rather than supplant them. For example: SpaceX, which plans to invest $10 billion in its Starlink LEO network, intends to launch a network by mid-2020 targeting rural areas in the US that have no existing connectivity.

LEO satellites have long-term disruptive potential, which is why traditional telecoms such as Vodafone are wise to adopt the tech early in its lifecycle. The satellite communications market was largely static for the twenty years prior to 2016, at which point SpaceX and OneWeb received FCC approval to launch their first few batches of LEO satellites, per GSMA Intelligence.

An increasing number of big tech companies - including tech giants Amazon and Facebook - recognize this disruptive potential and have invested accordingly. We don't know when or if LEO satellite technology will ever evolve to a point where they can replace traditional telecom infrastructure, but in many ways that is beside the point: There are still an estimated 3.8 billion people who lack connectivity, many of whom live outside the reach of traditional telecom infrastructure.

Furthermore, the SpaceMobile project demonstrates that network operators can adopt LEO to supplement traditional infrastructure, improving the customer experience through an expanded network footprint and additional layer of coverage.