Telecommunications Hub
Q2 2024

No, satellites aren’t going to make terrestrial towers obsolete

Given the hubbub over new and emerging satellite constellations – including those that will be used to send signals to unmodified cell phones – it’s no wonder people are questioning the need for new terrestrial-based cell towers. With satellites acting as cell towers in the sky, why do we need more on the ground?

It’s not a new question. Earlier this year, the Wireless Infrastructure Association (WIA), which represents tower companies, published a blog titled: “Satellites Are Taking Off, But Cell Towers Are Sticking Around.” The title says it all: Terrestrial networks will continue to serve more consumers and provide services at a lower cost than satellites.

The reasoning goes something like this. Satellites are farther away and their signals aren’t nearly as strong as the towers on the ground. Even with newer low Earth orbit (LEO) satellite constellations that are closer to the Earth than the older geosynchronous (GEO) satellites and provide lower latency, they’re still no match for terrestrial coverage. 

“Even if the power put out by the satellite is not dissimilar to one tower on the ground, the signal is vastly more attenuated by the time it gets to your handset compared to how it is coming from a tower down the road,” said Tim Farrar, founder of TMF Associates.

Several sources gave similar explanations.

“You’re always going to have higher capacity, lower latency communications capabilities from terrestrial-based systems. It’s just physics,” said WIA President and CEO Patrick Halley.

What about rural areas, where it’s more expensive to build towers? Could satellites be better there?

“I think it’s a great technology. It’s a supplemental coverage, which is really important in areas that don’t have coverage now. But I don’t think it’s ever going to be a replacement,” Halley told Fierce.

“There’s a reason the FCC calls it supplemental coverage from space,” he said. “It’s supplemental. It’s great technology but it’s absolutely supplemental to the existing network.”

Lynk maintains advantage

Executives at mobile network operators all over the world have told Lynk Global, one of the many emerging direct-to-device (D2D) satellite players, that they will shut down their most expensive ground-based cell towers when Lynk’s service becomes available, according to Lynk Global Chairman Charles Miller.

The most expensive towers tend to be the ones in rural and remote areas where they’re costly to operate and maintain and fewer potential customers are there to pay for services. Because Lynk’s operational costs are much lower than those of ground-based towers, it can undercut them on price, he told Fierce.

“The op-ex costs on cell towers add up,” he said. “We have an advantage in lower marginal costs of services.”

To be clear, he didn’t say that Lynk will be putting tower companies out of business. “We see them doing well in dense areas, but the rural, remote communities where it’s really expensive to operate cell towers – we think that the satellite cell towers [in space] will, over time, be able to take away that business,” he said. “We’ll be able to lower the cost of coverage out in those communities.”

American Tower invests

Acknowledging the limitations of using ground-based towers to serve remote areas, American Tower is an investor in and holds a board seat at AST SpaceMobile, which last month reached a major milestone when it launched five Bluebird satellites that will support beta testing with AT&T and Verizon.

“At American Tower, we believe that direct-to-device satellite could be a compelling infrastructure solution that complements, rather than competes, with macro tower infrastructure in low-population density or remote areas, much in the same way fiber/small-cells complement, rather than compete, with macro tower infrastructure in dense-urban settings,” American Tower CTO Ed Knapp said in a statement to Fierce.

Besides giving American Tower a front row seat to developments in the industry, its relationship with AST SpaceMobile allows it to determine “whether there could be any long-term risk associated to our business with the proliferation of LEO networks,” he said.

ABC: Always best connected 

According to Steel in the Air President and CEO Ken Schmidt, towers will continue to be built because carriers need additional sites to meet the growing demands for mobile data and video. But Schmidt admits to getting a lot of questions about satellites negating the needs for towers. 

The bottom line is the consumer always wants to be best connected – or “ABC, always best connected,” he said. “If you have access to a terrestrial-based network, you’re going to connect to it first, almost always,” with the exception of places that are underdeveloped or not developed at all – primarily rural areas.

“It’s not that satellite won’t do what a cellular phone will do, provided you’re outside of your car or outside of your house and you have a line of sight to a satellite,” Schmidt said. “It’s that the network demands on a traditional cellular network are substantially higher than what the satellite constellations can handle.”

“The way we think of satellites is yes, it does help. It eliminates the need for the carriers to build out the really rural areas where there’s not much of a business model to do so,” and it might have a minor effect on how many new towers are developed, “but it’s fairly insignificant” in the U.S., he said.

Suffice it to say: “I’m not giving up my cell phone for satellite coverage anytime soon,” he said.

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