Satellite Operators and IoT MVNOs Are a Match Made in Heaven, Despite Network Rollout and Regulatory Concerns

By Elizabeth Stokes | 4Q 2024 | IN-7514

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Japanese-based Mobile Virtual Network Operator (MVNO) Soracom announced this summer the initial service rollout of its integration with satellite service provider Skylo. The rollout will allow select Soracom users to access Skylo's 3rd Generation Partnership Project (3GPP) Non-Terrestrial Network (NTN) using Soracom Subscriber Identity Modules (SIMs) and Embedded SIMs (eSIMs). Users will also be able to manage their satellite-connected devices on the Soracom platform.

Soracom is a digital innovator in the MVNO market notable for its cloud-native cellular network and ability to blend several network types, from Low-Power Wide Area (LPWA) networks to Ethernet and Wi-Fi, on its platform. The company's limited commercial release of this satellite service is another way Soracom looks to the future, with similar partnerships emerging among MVNOs as satellite Internet of Things (IoT) networks slowly form.

Since the standard's completion in 2022, the telecoms market has buzzed with excitement over IoT-NTN's potential to offer ubiquitous, global coverage. Though this excitement has sometimes taken on the often-derisive label of "hype," the telecoms market is rightfully optimistic about the many verticals and use cases that will be positively impacted by satellite connectivity's reach.

In this hype cycle, discussions of how satellite connectivity will impact the IoT MVNO market have received less attention, which is surprising given that satellite vendors and MVNOs have very similar value propositions. IoT-NTN operators strive to offer ubiquitous global coverage; MVNOs' main mission is to provide uninterrupted, global connectivity-agnostic to carrier types. Both operators' main pitch is to bridge different network types to give customers always-on connectivity.

In May 2024, just 2 months before Soracom and Skylo announced the limited rollout of its integration, French MVNO Transatel announced it would partner with satellite operator OQ Technology. Transatel, an MVNO owned by telecommunication operator NTT, will add OQ Technology's non-terrestrial Narrowband IoT (NB-IoT) network to its platform. Such partnerships between MVNOs and satellite operators benefit both types of vendors and bolster their respective (and often intertwined) goals. By partnering with satellite IoT operators and service providers, MVNOs can bolster their claim of providing international connectivity, now in areas outside the reach of their usual cellular partners. By partnering with MVNOs, satellite operators have access to new customers and can bolster their connection numbers. It is obvious why MVNOs would race to get satellite profiles on their SIMs, likely hoping that they can form many such partnerships in the future so they might offer the same multi-carrier coverage for satellite networks as they already do with cellular.

Once relegated to small IoT deployments with simple requirements, most IoT MVNOs are now equipped to service large customers with complicated connectivity needs. Expanding their network portfolios to include NTNs is another way these organizations are upgrading their connectivity expertise and clientele.

However, the range of MVNOs' satellite coverage entirely depends on the maturity of the available operators. Most IoT-NTN operators are in their infancy, with satellite deployment times, costs, and regulations interrupting their ability to provide widely available service. These factors could keep MVNOs from currently benefitting from satellite connectivity's value-add, but they are also reasons for MVNOs to start searching for partnerships now. In forming relationships at this stage, MVNOs can have time to work out the kinks that might occur in supporting a satellite-linked device on their platform before satellite's Time to Market (TTM) eventually shortens.

The current TTM length for satellite vendors is a particular concern for Low Earth Orbit (LEO) satellite operators. Unlike Geostationary Earth Orbit (GEO) operators, which only need a few fixed-point satellites to offer global coverage, LEO operators require many orbiting satellites to cover the entire Earth. This is one of the reasons that establishing a global LEO satellite network can take years-sourcing a satellite, putting it in space, and ensuring it can service global customers could take half a decade. This might mean LEO network operators take a more targeted approach in the satellite IoT market. Rather than launching a huge constellation for maximum coverage, LEO operators can strategically tailor satellite placement and quantity to their most profitable, regional customers. In this way, LEO operators can be reactive to market trends and customer demand, meaning they could be specialized satellite partners for IoT MVNOs once LEO startups are more established.

In addition to TTM concerns, international regulatory requirements could also inhibit satellite operators and their eventual MVNO partners from truly offering worldwide satellite coverage. Some countries like Brazil and India have stricter mandates for the telecommunications companies operating within their borders, often requiring a more thorough regulatory process that could take years for a satellite operator to participate in and negotiate. This could undercut the current value of a satellite partnership for an MVNO, particularly if a virtual operator plans to target deployments in such countries.

These inhibitors prove that MVNOs like Soracom and Transatel are right to start setting up these partnerships now, knowing that such partnerships might take a lot of trial and error as satellites' commercial availability matures. As an indicator of timing, Soracom first announced its partnership with Skylo last year and is only now opening the service to select customers. The incremental release allows Soracom to identify and serve customers who are already ready for this new connectivity approach-"qualified" customers for the release would include those who have already acquired the correct hardware, are located in areas with Skylo coverage, have identified appropriate use cases that can withstand satellite's latency and bandwidth capacity, etc. Given this learning curve, MVNOs should start assessing their satellite strategy now, knowing that, in the future, satellite connectivity could significantly benefit their mission of providing worldwide coverage.