A New Space Race Targets the Smartphone

Apple Inc.

made a down payment on that dream in September when it unveiled Emergency SOS via satellite, an iPhone feature that can send distress signals from anywhere in the U.S. and Canada. Apple agreed to pay satellite company

Globalstar Inc.

up to $230 million next year for most of its network capacity, according to securities filings. Apple plans to launch the feature in November.

Apple is just one company getting into the satellite-smartphone business. Globalstar rival

Iridium Communications Inc.

has said that it is developing a smartphone-capable service of its own with an unnamed partner. And smartphone maker Huawei Technologies Inc. says its newest handsets can send one-way emergency messages through China’s Beidou global positioning system.

Such virtual emergency flares are a far cry from phone calls and text messages, let alone 5G service, provided from space. Squeezing high-speed internet access into an affordable satellite-linked smartphone is an even steeper technical challenge. Smartphones could also need better components and software to effectively reach moving targets.

“I’m personally a bit of a skeptic,” says Iridium Chief Executive

Matt Desch,

calling such seamless connections “not a service that the public will see for at least a few years.” A more feasible goal, he says, includes satellite-based text messages that work as well on a smartphone as they do on the specialized satellite phones available today.

Cash in orbit

The stakes of such a wager are high for satellite ventures that typically spend several billion dollars apiece just to launch their networks. The potential rewards from reaching even a sliver of the world’s more than six billion smartphones are likewise rich, assuming that companies are able to make their services work on a global scale. 

Several other satellite companies are trying to grab a share of the cellular market. SpaceX, the rocket company led by entrepreneur

Elon Musk,

in August said it will join with

T-Mobile US Inc.

to make its Starlink service compatible with the U.S. cellphone carrier’s network. The companies said they would begin testing the service before the end of 2023.

Startups including

AST SpaceMobile Inc.,

Omnispace LLC and Lynk Global Inc. are launching new businesses targeting the mobile-device opportunity. Older satellite companies Inmarsat Inc. and

Viasat Inc.

have justified a proposed merger partly on the mobile opportunity, arguing their combined scale will help them compete. And OneWeb Ltd. and

Telesat Corp.

executives have also discussed expanding their services to address cellphones. 

The challenges

Any true mobile-to-satellite service must overcome basic challenges. Today’s satellite phones demand big battery packs powering large antennas to reach their targets in the sky. Companies will need more-powerful smartphones, more-sensitive satellites or a combination of both to make high-speed data from space fit into a regular consumer’s palm.

Engineers say improved satellite technology and cheaper rockets are the key factors enabling satellite companies to target the mobile-device market en masse. But the proposals still demand billions of dollars of investment to succeed.

The first space-based communications satellites in the 1960s followed geostationary orbits perched more than 22,000 miles above the equator. The first successful internet satellites occupied the same lofty space. That position maintains a constant position in the sky by syncing with the Earth’s rotation, allowing for a wide coverage area. But the long-distance links put high power demands on both satellites and the devices linking to them on the ground. The signals also take more than 500 milliseconds to make a round trip—an eternity for modern internet applications. 

Other companies split the difference through medium-Earth orbits closer to the surface. Those spheres often demand heavy, hardened equipment to protect against solar radiation in a zone known as the outer Van Allen belt.

Most of the space companies now targeting the mobile market operate in a low-Earth altitude of 1,200 miles or less that lets them fly close to their customers on the ground. Such orbits hurtle through space at more than 17,000 miles an hour, requiring a swarm of satellites to keep any spot on Earth covered for more than a few minutes.

Companies like Iridium and Globalstar maintain a few dozen satellites to reach their customers, who rely on them for phone and text-message services for planes and ships, in disaster-stricken areas and on off-road adventures. More data-intensive internet services like Starlink and Kuiper, a planned constellation from

Amazon.com Inc.,

will require thousands of satellites operating in tandem.

Starlink already provides broadband internet access to customers in homes, boats and recreational vehicles. That service requires users to install a pizza box-sized dish with a view of the sky to connect. 

Starlink had more than 3,000 satellites active in early October, but even that figure might not be enough to satisfy its data-hungry customers. Starlink’s download speeds dipped in several countries over the second quarter, a likely side effect of users crowding the network in areas with strong customer growth, according to measurement company Ookla Inc.

A SpaceX spokesman didn’t respond to requests for comment.

Companies with an ample supply of cheap satellites still face a technical challenge listening for small devices designed to talk to cell towers that are only a few miles away. Satellites whirling at least a couple of hundred miles above the ground need especially sensitive antennas, and many of them, to serve a large number of connected devices.

Aerospace companies are taking different approaches to the power-over-distance problem. AST plans to deploy more than 100 foldable satellites nearly as wide as a tennis court to pick up relatively faint signals on the ground. Omnispace plans midsize satellites as big as small cars, while Lynk’s plan calls for more than 5,000 smaller satellites about a yard across.

License to bill

Satellite executives need more than just engineering know-how and bundles of cash to get their networks off the ground. They also need permission.

Companies must navigate a thicket of domestic and international regulations that control not only the satellites they launch but also the voice and data services they plan to offer.

The International Telecommunication Union, a United Nations agency, oversees the registration of satellite fleets that by their nature cover many countries. Companies that want to put up a satellite fleet must go to the ITU to register themselves, then usually they must get a license from the countries that their satellites cover. National agencies also govern service through regulations that tend to benefit first movers that have already launched satellites.

Globalstar and Iridium have amassed licenses in many countries to transmit data over lower frequencies that are considered better suited for reaching the smallest gadgets on the ground.

ITU registration doesn’t prevent new satellite companies from using the same airwaves, though it often creates a new hurdle for companies that must show their new fleets won’t interfere with other satellites already using the airwaves. That leeway has allowed SpaceX’s broadband business to flourish despite its lack of primary licenses.

But many countries require newcomers to demonstrate that their plans won’t interfere with existing space networks already operating. Established satellite companies say the approvals they accumulated over the years put them ahead of newer startups.

“What they’re trying to do from a regulatory perspective is totally avant-garde,” Globalstar Chairman

Jay Monroe

says. “They have to go to regulatory authorities across the globe. It’s a heavy lift and you have to go about it country by country by country.”

Scott Wisniewski,

AST SpaceMobile’s chief strategy officer, says his company’s growing list of deals with big cellphone carriers like

Vodafone Group

PLC will pave the way for worldwide service. 

“All of telecom is regulated and getting licenses is normal course,” he says, adding that “regulators are accustomed to talking to satellite operators in ways that they weren’t 10 years ago.”

The rivalry between cellphone carriers and satellite operators has eased as new technology allowed them to offer more appealing services, says

Patricia Cooper,

a former SpaceX executive who previously led the Satellite Industry Association. 

“They’re two sectors that have kind of been pitted against each other in the early spectrum-acquisition wars,” she says. “There was this sense of a zero-sum game.”

Beware falling rockets

Capital markets aren’t the only crowded sphere for satellite startups; space itself is filling up. The expanse is littered with dead satellites and debris that haven’t yet fallen to Earth.

Such junk traveling at thousands of miles an hour could knock out active satellites without careful planning. The coveted low-Earth segment is an especially tricky place for transmitters that must be close enough to the surface to reach customers yet far enough away from the atmosphere to avoid prematurely burning up.

“The big challenge right now is environmental. Low-Earth orbit is just a massive dandruff of orbital debris,” says

Gerry Oberst,

a senior counsel at law firm Hogan Lovells who deals with telecom regulations. A cascading series of collisions could create a bigger field of junk that “could ruin access to space in the first place,” he adds.

Government authorities worldwide are tackling the problem with new regulations. The Federal Communications Commission in September proposed new rules that would limit the lifespan of low-Earth orbit satellites to five years, after which they must drift or move themselves into a controlled burn-up in the atmosphere. Earlier, ad hoc rules set no common limits for the satellites.

“Given an unlimited time, there will be a lot of satellites—as long as we don’t turn space into an asteroid belt,” says

Greg Wyler,

a longtime satellite-industry executive who now leads a startup called E-Space.

Cash crunch

The history of the satellite business is littered with high-cost financial failures. Teledesic, a satellite constellation backed by

Bill Gates

and telecom entrepreneur

Craig McCaw,

collapsed after then-partner

Motorola

pulled out of the project in 1999. TerreStar, another satellite-internet startup, filed for bankruptcy protection in 2010 and was later swallowed by TV company

Dish Network Corp.

Iridium and Globalstar’s networks both avoided liquidation only after the companies trimmed their debt loads through the bankruptcy process. They also depend heavily on revenue from the U.S. military and other government customers to keep the lights on.

Deeper-pocketed

Amazon.com Inc.

has said its planned 3,200-satellite network will cost more than $10 billion to start. And Mr. Musk has said SpaceX, which pioneered the business of low-cost launches partly with help from government contracts, will need to lower the cost of sending payloads aloft even further for Starlink to become cash-flow positive.

SpaceX, formally called Space Exploration Technologies Inc., already generates revenue providing broadband to homes, businesses and other users with a satellite dish for monthly rates of $110 or more. Expanding that business to phones, cars and other moving targets costs more to maintain and could generate less revenue per user, though it would serve a bigger pool of potential customers.

“What are you going to charge them for it if you’re spending $10 billion to provide it?” Iridium’s Mr. Desch says. “There are a lot of people thinking about how to best price this.”

Iridium doesn’t have to solve the pricing problem because its partners will offer the mobile service, Mr. Desch says. Several industry executives say future satellite service could come as an add-on subscription that smartphone makers or cellphone carriers charge.

More-bullish market analyst New Street Research estimated that a truly “seamless” satellite-to-phone service with voice and data would be worth as much as $20 billion a year in the U.S. and many times that around the world. Recent interest from SpaceX and Apple shows the market’s promise, the firm wrote in a recent note to clients.

“With Apple joining the fray,” the firm said, “two trillion dollar companies would now seem to agree that the opportunity could be massive.”

—Micah Maidenberg contributed to this article.

Mr. FitzGerald is a Wall Street Journal reporter in Washington, D.C. He can be reached at [email protected]. Mr. Maidenberg, a Wall Street Journal reporter in Washington, D.C., can be reached at [email protected].