Suddenly, everyone is mad about space. The astronauts of Artemis II have broken records by flying farther from Earth than anyone has before. An unshaven, tousle-haired Ryan Gosling glares out of billboards promoting Project Hail Mary, the story of an astronaut with amnesia who doesn’t know what solar system he’s in. Closer to home, tech bros Elon Musk and Jeff Bezos are busy launching communications satellites and dropping billions on unprofitable satellite players as they fight for low-Earth orbit (LEO) supremacy. The idea of space-based data centers has even gained propulsion. Terrestrial just got dull(er).

Behind the satellite race are two massive egos (less charitable descriptions are available) who conceivably spy a chance to do what the Bill Gates-backed Teledesic failed to pull off in the 1990s and build an Internet in the sky, beaming broadband services around the planet. Mwah haha, go Musk and Bezos in unison, stroking furry pets next to shark-infested swimming pools as they separately plot dominion over the world’s airwaves. AI, e-commerce and Mars are evidently not enough.

Related:Amazon nets Globalstar for $11.5B, signs new Apple pact

The notion that Musk, Bezos or both aim to build a global telco, challenging terrestrial providers but unshackled from the ground, is taken seriously enough to have prompted LinkedIn analysis recirculated by the boss of an American broadband vendor. It is the subject of a recent tongue-in-cheek blog by a long-serving telco CTO in Europe, imagining a 2045 in which “the last cellular towers have been turned off, and LEO satellites are handling all communication.”

If satellite’s destiny is limited to serving a few keyboard warriors in remote locations, and enabling hikers to text an SOS after they have fallen down a crevasse or come under bear attack, why would it interest men who sleep on bigger mountains of riches than Smaug the dragon?

And yet the numbers are piddly in the context of a global telecom market worth more than $2 trillion in annual service revenues, according to Omdia, a Light Reading sister company. Starlink, the part of Elon Musk’s business empire that is supposed to fund travel to Mars, reportedly earned revenues of less than $12 billion last year, making it even smaller than Swisscom, the incumbent operator in a European country home to about 9 million people. In a world of 5.5 billion Internet users (Telefónica’s estimate), Starlink has about 10 million customers.

Amazon Leo, the rival Bezos affair, has yet to lift off the ground. The sole reference to it in Amazon’s last filing with the US Securities and Exchange Commission (SEC) was in guidance about operating profit for the recently ended first quarter, noting that Leo will add $1 billion in costs. That has not stopped Amazon from this month offering about $11.57 billion to buy Globalstar (or GSAT), a satellite company that has been around since the days of Teledesic. Last year, it made just $273 million in revenues and suffered a net loss of around $8.7 million. It finished the year with fewer than 800,000 direct customers of its mobile satellite service.

Related:Here comes Starlink, the next telecom giant

Globalstar’s most valuable asset, from Amazon’s perspective, is probably its spectrum, according to Rohit Kulkarni of Roth Capital Partners. “While GSAT’s balance sheet has been constrained by debt and ongoing capex needs, its spectrum and satellite network offer Amazon a shortcut to spectrum access and hybrid-satellite terrestrial offerings, rather than building entirely from scratch,” he said in a research note. That spectrum includes the 1610-1618.725MHz, 2483.5-2500MHz, 5091-5250MHz and 6875-7055MHz licenses.

Star wars

The satellite opportunities that have captured the interest of Musk and Bezos fall into two broad categories. The first, popularized by Starlink, transmits LEO signals to a dish mounted on a rooftop, or at least an outdoor part of the building with a clear line of sight to the heavens. Indoors, that ultimately manifests itself as a broadband service for the customer. More recently associated with Globalstar is what the industry has taken to calling a “direct-to-device” (D2D) or “direct-to-cell” service, supporting connectivity between a LEO satellite and a smartphone. Today, the probability of either displacing terrestrial is roughly the same as the survival prospects of an unhelmeted astronaut on a spacewalk.

Related:Telecom outsources big ideas to Elon Musk at MWC

“LEO can be great for those who have no alternative, but it is unlikely to be a material competitor to terrestrial incumbents in most developed world markets,” said analysts at Deloitte last November in a set of telecom predictions for 2026. They cite another paper written by James Ratzer of New Street Research, arguing that Starlink’s current service could support only about 200,000 homes in the UK. Even an upgrade of the whole constellation to V3, the latest generation of Starlink satellites, would not increase the size of the addressable market to more than a tenth of homes, and that “would likely require over a decade and substantial technical progress,” they wrote.

A tenth, nevertheless, will sound to many like a decent number if it is replicable across the world. The outlook for D2D is far less rosy. Should you one day find yourself on the Appalachian Trail, like former Napatech executive Charlie Ashton, you must hope a canopy of trees does not obstruct the sky when accident looms and service is required. Make sure the battery is charged, too.

In this scenario, at least, a satellite phone connection may be the only choice. When a ground-based service is available, satellite will nearly always disappoint. “Every phone has a little brain for received signal strength and if it sees two basestations and different frequency bands it scans and picks the one with the strongest signal,” said Earl Lum, the founder of analyst firm EJL Wireless Research. “If you have a basestation that’s 400 miles in the sky and one that’s 200 feet down the street, which signal do you think is going to be stronger and which signal do you think your phone’s going to want to use?”

That’s outdoors, too. Indoors, minus line of sight, D2D has not been an option, although most data usage on phones happens over Wi-Fi, not cellular, when people are inside buildings. Even so, Musk clearly thinks he can mount a challenge. During a podcast last September, he talked about using the AWS-4 spectrum purchased from EchoStar to pipe high-speed connectivity from Starlink satellites to smartphones. Customers, he said, will be able to watch videos anywhere. As you slide into hypothermia on a desolate track, waiting for the helicopters to arrive, you can spend your final moments streaming Project Hail Mary – or perhaps something more fitting like The Revenant.

All this, however, would demand new chipsets, new devices and new satellites, none of which is going to materialize quickly. And there is doubt a satellite player using a 40MHz spectrum allocation could be genuinely disruptive in the mainstream mobile market. Deloitte’s analysts say that “it’s unclear what density of simultaneous users can be supported and how well the service will work indoors.”

Clash of the egos

None of this means Starlink is a dumb idea. When he showed up (on screen) at the slimline version of MWC held during the pandemic of 2021, Musk talked of addressing only a small percentage of the global population in the hardest-to-reach places. An investment of $30 billion might ultimately be needed, and avoiding bankruptcy would be the first objective, he said (this was Musk in his more thoughtful and modest phase before he became a mob-goading friend to right-wing thugs).

Even a tiny percentage of the population could equal a quarter of a billion people. And while most of those would presumably not be a viable target, Starlink’s reported growth has been impressive and is not expected to end soon. That growth contrasts with the moribund appearance of the main terrestrial sector and is an obvious draw for investors and a reason for their excitement.

But the real spur for Musk and Bezos could be each man’s determination to beat the other and rule the skies. And having launched only about 200 satellites so far, Amazon looks light years behind Starlink with its constellation of more than 10,000. “We think Amazon is entering the capital-intensive ‘catch-up phase,’ where execution risk is highest,” said Kulkarni. To launch another 1,600 satellites by July, and satisfy regulatory requirements, it will need to invest about $6 billion in capital expenditure and pump another $4 billion into operating costs, according to the analyst’s estimates.

Space, to your average tech bro billionaire, looks cooler than Ryan Gosling in an astronaut’s suit. It’s sexier than a Tesla and far sexier than a book delivered by an Amazon courier or a rack of servers in a data center on Earth. There are easier ways to make a profit but few that are so noticeable from any part of the planet. With satellite’s broadband renaissance, Musk and Bezos can etch their names among the stars. But from the day-to-day perspective of most telecom users, it will make not the slightest difference.