The Fourth Industrial Revolution, as described by the World Economic Forum, anticipates a future where billions of people are connected through mobile devices, empowered by unprecedented processing power, vast storage capacity, and seamless access to knowledge. A key enabler of this ubiquitous connectivity is the rapid advancement of satellite communications, particularly Direct-to-Cell (D2C) and Direct-to-Device (D2D) technology. These innovations are crucial in bridging the global connectivity gap. D2C primarily facilitates direct connections between existing mobile phones and satellites, while D2D focuses on the broader Internet of Things (IoT). Together, these technologies offer a promising path toward comprehensive global coverage.
The Growing Demand for Global Connectivity
In today's world, the demand for ubiquitous connectivity has never been greater. As of 2023, mobile broadband networks cover 95% of the global population, demonstrating the insatiable demand for extensive and reliable cellular coverage. However, despite this broad coverage, significant gaps remain, particularly in low-income countries where 55% of the population lacks access to 4G networks. In the age of the Fourth Industrial Revolution, connectivity has become the cornerstone of progress, driving innovations across industries and enhancing the way people live and work.
The chart above highlights key metrics like the exponential rises in global internet users and the explosion of connected devices, yet linear surge in global internet traffic. It also marks significant milestones in satellite communication, such as the introduction of geostationary satellites and LEO satellites and the rollout of mobile network generations (2G, 3G, 4G, and 5G). As Founder of Kognitive, Michael Small says, “We often talk about the other 3 billion people to connect, but there's perhaps 30 billion devices that some enterprise would like connected, but remain unconnected.”
Recent advances in satellite technology, such as the reduction in launch costs due to reusable rockets and the development of more powerful satellites, have accelerated the capabilities of D2C and D2D. These advancements are exciting because they enable direct communication between satellites and standard mobile devices without the need for additional hardware. This is a significant leap forward, making it possible to provide high-speed, reliable connections to even the most remote and underserved areas of the world.
How It Works
LEO satellites, which orbit much closer to Earth than traditional geostationary satellites, function like cell towers in the sky. They directly connect with mobile devices using advanced antennas and beamforming technology to transmit voice, text, and data signals, even as they move rapidly across the Earth's surface.
Major players in this field, such as SpaceX's Starlink, AST SpaceMobile, Lynk Global, Iridium, and Globalstar are leading the charge in bringing these technologies to market. These companies are not only developing the necessary satellite infrastructure but also forming strategic partnerships with telecommunications firms like T-Mobile and AT&T to integrate D2C and D2D services into existing networks. This collaboration is essential for scaling, as it allows satellite operators to leverage the existing infrastructure and spectrum licenses of terrestrial providers.
The competitive landscape is heating up as companies race to establish dominance in various regions for cellular and IoT services. This "great race" for D2C leadership is driven by the need to secure early market share, much like the early days of fiber network rollouts. Companies that can quickly establish partnerships and secure spectrum access are likely to gain a significant advantage, positioning themselves as frontrunners in this emerging market.
Timeline For Adoption
Despite the promising potential of D2C and D2D technologies, their global adoption faces significant regulatory challenges. The process of securing the necessary spectrum allocations for these technologies is complex, involving coordination among numerous international bodies and national regulators. Based on ITU approval cycles, this regulatory landscape is one of the primary reasons why widespread adoption of D2C and D2D is expected to take ten years before being fully implemented across various use cases.
The International Telecommunication Union (ITU), along with regional regulators such as the Federal Communications Commission (FCC) in the United States, play a critical role in managing the allocation of spectrum for satellite communications. These organizations must balance the needs of various stakeholders, from traditional telecom operators to emerging satellite service providers, while ensuring that the spectrum is used efficiently and without interference.
The expected timeline for D2C and D2D technologies reflects these regulatory challenges. While the ITU and other bodies are making progress in developing frameworks for these new services, the organization meets every four years, taking an additional four years to set the item on the agenda, another four for voting, and two more for countries to implement regulations—totaling 14 years. We are currently four years into this cycle, experts indicate it will be another 10 years before direct-to-cell spectrum rules can be in place. However, continuous innovation in satellite and communication technologies means that when these regulations are finally in place, the technology will be well-positioned to meet the demands of the future.
Industry experts, such as those from SpaceX and Amazon’s Project Kuiper, suggest that while regulatory approval may be slow, the pace of technological advancement will ensure that D2C and D2D services are ready to deploy at scale once the necessary frameworks are in place. This ongoing innovation includes improvements in the next generations of satellite design, the development of more efficient launch vehicles, and the integration of AI and edge computing to optimize network performance. These advancements will help accelerate the adoption of D2C and D2D technologies, ensuring that they are not only feasible but also highly effective in meeting the world's growing connectivity needs.
Capitalizing on the Opportunity
D2D and D2C technologies are positioned for global adoption: at core it is driven by what experts describe as the universal human need to connect, so it comes as no surprise the technology translates into a variety of industries. The graph below highlights the market capitalization of the 24 largest industries in the world. Among these, the industries highlighted in green represent those we view as directly impacted by D2C and D2D technologies. Remarkably, 70% of the total market capitalization is applicable, equating to over $34.8 trillion of market cap.
Looking ahead to the 10 year adoption timeline, the global market potential for these technologies is predicted to reach up to $168 billion, with a projected market penetration rate of 5-15%. Forecasts suggest that the number of users for satellite-based D2D services could grow to 386 million within the next six years, generating cumulative revenues of approximately $66.8 billion for the satellite sector over the coming decade as seen in Figure 2.
The significant capital expenditures in D2D and D2C markets are justified by the vast market potential and the strategic advantages these technologies offer. In fact, we view this linear growth as a conservative forecast in relation to the exponential connectivity demand in 2030. Early movers that secure partnerships, spectrum access, and technological leadership will be well-positioned to not only dominate this emerging market, but also influence the standards and practices that will shape the future of global connectivity.
Government, enterprise, and consumer applications of D2C and D2D technologies are vast and varied as referenced in the chart above. For governments, these technologies can enhance defense communications, improve disaster response capabilities, and extend the reach of public services to remote regions. Enterprises can leverage D2C and D2D for supply chain management, real-time monitoring of assets, and seamless global operations. Consumers, on the other hand, will benefit from uninterrupted connectivity, enabling new experiences in mobile gaming and healthcare.
Early Adopters
D2D technology is revolutionizing various sectors by providing reliable, real-time connectivity in even the most remote locations. In the defense sector, it enhances autonomous systems like UAVs and ground robots, enabling seamless operation and real-time intelligence gathering in contested environments. Companies like Krucial are at the forefront, ensuring continuous communication in harsh conditions, which is vital for security and defense operations. In enterprise sectors such as supply chain management and oil and gas, D2D ensures continuous communication and efficient resource management, even in isolated areas. Kognitive Networks plays a key role in this, selecting the best available networks across satellite and terrestrial, allocating bandwidth to high-priority uses. Their partnership with KVH Industries demonstrates this network management capability in applications like Starlink and in maritime connection. Additionally, Armada’s edge computing platform, combined with D2C and 5G technologies, is enabling real-time data processing in critical scenarios such as manufacturing. For consumers, D2D technology is transforming healthcare by enabling remote medical monitoring and emergency response, while Zephr uses D2D for enhanced GPS positioning accuracy and continuous connectivity using mobile phones as ground stations, enhancing experiences like augmented reality. Xona’s PNT service, leveraging dual frequency L-band and with future ambitions in C-band, positions it as a key player in D2D technology for autonomous vehicles and beyond. D2C technologies are also making a significant impact by improving connectivity in remote tourism destinations and supporting smart city initiatives, making urban spaces more responsive and efficient.
Conclusion
In today's data-driven era, connectivity is essential for modern economies and societal progress. D2C and D2D satellite technologies are crucial for meeting the increasing global demand for seamless connectivity. They address the needs of governments, businesses, and communities, ensuring universal access to communication networks as a cornerstone of the Fourth Industrial Revolution.
Space Capital conducted eight interviews with leading D2D/D2C providers such as SpaceX, Amazon Kuiper, Lynk, NASA, Khasm, Iridium, The Aerospace Corporation, Northwood, and Stellar Solutions. Space Capital extends its gratitude to the industry leaders, policymakers, and researchers who contributed to this article.
