Most direct-to-device (D2D) satellite services reach end users through one route: mobile network operators (MNOs). That makes sense, because D2D adds value to land-based mobile services, and MNOs are the obvious partners.

Enrico Ottolini, Co-founder and Executive Director of Planet Earth Connect, thinks that route alone won’t be enough. In a recent opinion piece for Telecoms.com, he argues that D2D satellite operators need to look past MNOs. They should also sell to the vertical and niche markets underneath them if they want to reach their full business potential.

Enrico will moderate the D2D session at MVNO Nation Europe in Alicante on Day 2, Wednesday 4 November. Here are the main points of his argument before the debate.

A growing share of the market sits outside the MNO

Ottolini points out that new kinds of telecoms provider have appeared in recent years. MVNOs, enterprise providers, mobile private networks (MPNs) and IoT solution providers all build services for specific market segments. As a result, they carry a growing share of the global mobile business.

He describes these as high-growth, high-value, high-revenue and high-margin segments. His conclusion is that D2D operators who sell only through MNOs will miss them. They need a wider mix of sales partners, including solution providers, system integrators and original equipment manufacturers (OEMs) that serve particular verticals and niche markets.

Why verticals and niches matter to D2D operators

He gives four reasons:

• Geopolitics. Regulators in countries with close ties to China and Russia may limit or block D2D services from Western satellite operators. Instead of chasing mass markets in the Global South, he says, operators should get the most out of Western markets by serving every segment, including verticals and niches.
• Higher ARPU. Enterprise customers generally bring in more average revenue per user (ARPU) and more total revenue than residential customers. That matters for profitability.
• Competing on quality, not price. In enterprise, providers can win on service quality, which avoids the fast price erosion common in residential mass markets.
• Lower churn. Telecoms services built into enterprise applications are less likely to churn. That protects revenue and avoids paying high customer acquisition costs over and over.

What solution providers need

Ottolini argues that each D2D operator can only cover part of the full mobile services portfolio at the best price and performance. So a single route through MNOs won’t work for solution providers that serve specialist segments.

Instead, he says, these providers should be able to buy a range of D2D services from different satellite operators. They could buy directly or through an intermediary platform that aggregates traffic. That would let them:

• fill gaps between the D2D services their usual host MNO supports and what their customers actually need
• depend less on host MNOs, which, as they move from telco to techco, are increasingly going after the same enterprise customers with similar solutions
• compete better for enterprise customers by using the service tailoring that intermediary platforms independent of MNOs can offer

The hard parts

The article doesn’t present this as simple. It names three issues:

1. Spectrum. If end users get D2D services without a local MNO involved, the mobile services spectrum won’t come from an MNO. It would have to come from the satellite operator, or from an enterprise customer that holds spectrum for private network use. Where D2D runs in mobile satellite services spectrum, the satellite operator always provides it.
2. Managing more partners. More sales partners mean more contacts and higher management costs for satellite operators. Ottolini argues that, if this is well managed, the extra revenue will more than cover the cost. If intermediary platforms handle the whole network of solution providers underneath them, operations barely get more complicated.
3. More tailored services. Enterprise customers may need more custom development. He suggests charging that work as special projects to the solution provider, the enterprise customer or both. That would bring in new revenue, broaden the operator’s portfolio and help protect against churn.

The neutral host gap

Ottolini sees independent neutral host platforms as critical for the whole industry. These would be independent of any MNO or D2D satellite operator and would supply a wide range of tailored D2D services to many types of partner.

In his view, the neutral host projects announced so far don’t meet that test. He names Vodafone’s Satellite Connect Europe platform, the planned D2D joint venture of the three leading US MNOs, MDA’s SpaceRAN platform and Space 42’s multi-tenant platform. He says these focus only on serving MNOs and aren’t independent of D2D satellite operators. So there’s still room for new independent players.

No one-size-fits-all answer

Ottolini accepts that it made sense for D2D operators to sell only through MNOs in the early days, because it kept distribution effort and cost low. But he argues that this route can’t serve a large part of the market, especially enterprise. Operators will have to widen their sales channels, and doing so will give them more control over distribution and end-user services.

Based on his experience building distribution strategies for land-based mobile and satellite operators, he says the key is balance: complexity against reach, extra cost against extra revenue, and control over partners against giving them freedom. Some D2D services suit enterprise better than others, so the right mix will be different for every operator. As he puts it, there’s “no easy way out.” Handing all distribution to MNOs isn’t the answer.

Take the debate live in Alicante

Day 2, Wednesday 4 November, 12:45 Presentation and panel: Growth via satellite: what’s the potential of D2D connectivity?

The session will cover:

• an overview of the D2D market, with its risks and opportunities
• how LEO, MEO and GEO satellites affect telecoms market positioning, pricing and customer value
• the go-to-market strategies of LEO, MEO and GEO operators in Europe and beyond
• the D2D opportunity for MVNOs and IoT service providers
• how MVNOs and IoT providers can work with D2D operators to grow and improve their services

Moderator: Enrico Ottolini, Co-founder and Executive Director, Planet Earth Connect

Speakers:

• Carlos Valenciano Moyano, Managing Director, Alai Secure
• George Giagtzoglou, Vice President Strategy & Marketing, Elveo Mobile
• Miguel Rodriguez, Head of MVNO, Roaming and Capacity, Orange Spain
• Jason Abott, Executive Director & General Manager EMEA, Iridium

The panel brings together D2D satellite operators (Elveo and Iridium), an MNO (Orange Spain), a specialist secure M2M/IoT operator (Alai Secure) and an independent D2D consultancy (Planet Earth Connect). That puts the people Enrico’s argument affects most in the same room.

Before the session, read Enrico’s full article on Telecoms.com.

Be in the room when it happens. Learn more.