With both the satellite industry and the cellular industry trying to figure out which use cases, services and business models should shape their approach to converged 5G Non-Terrestrial Networks (NTN), what do analysts have to say about the market opportunity?
There have already been a number of notable developments in the 5G NTN market over the past two years, from Apple’s deal with GlobalStar to support the smartphone maker’s direct-to-device emergency service offering, to Qualcomm pulling out of a deal with Iridium to develop an NTN chipset that would have only worked with Iridium’s proprietary network.
Here are four takes from analyst firms on the 5G NTN market, including one that looks specifically at the direct-to-device opportunity and how it is likely to evolve.
-ABI Research has predicted that there will be $124.6 billion worth of annual service revenues from satellites by 2030 and that the specific NTN-Mobile segment “has the potential to reach a market value of around $18 billion with up to 200 million connections by 2031.”
“The emergence of satellite-enabled mobile devices from major consumer smartphone manufacturers and chipset makers like Apple, Qualcomm, Motorola, MediaTek, Huawei, and ZTE indicates satellite communications services breaking into the mainstream consumer market,” said Andrew Cavalier, satellite communications industry analyst at ABI Research, who also added that “The possibilities for global IoT connectivity have expanded, driving further innovation in the satellite industry.”
“We are seeing that the market is evolving quickly, and many services are finding enhanced deployment through strategic alliances and from increased bandwidth supply in LEO,” added Jake Saunders, VP of Asia Pacific at ABI Research. “With satellites becoming smaller, more affordable, and reaching closer orbits, the barriers to entry have been lowered, fostering innovation and expanding the scope of satellite-based services and applications. The market is revealing new development paths that will influence the Terrestrial and Non-terrestrial connectivity markets and shape enterprise opportunities throughout the telecommunications value chain.”
-Market analysis firm Lucintel released a report in January 2024 on its forecasts for the 5G NTN market, saying that the future of the market “looks promising” with opportunities anticipated in the maritime, aerospace, defense, government and mining markets. The firm predicts that the 5G NTN market will reach $27.7 billion by 2030, with a compound annual growth rate of more than 33% from 2024 to 2030.
Lucintel expects the maritime market to have the highest rate of growth “due to multitude of applications and services are possible on board yachts” and the seamless connectivity and high data rates that are expected from 5G NTN. In terms of regions, North America is expected to see the highest growth rate.
-Global Market Insights pegs the 5G NTN market at about $4.2 billion as of 2023 and expects a CAGR of 35% through 2032, with the market reaching nearly $80 billion at the end of the forecast period. The firm cites “increasing demand for ubiquitous and high speed connectivity worldwide” as the driving factor for the market. Aerospace and defense uses account for an estimated 35% of the market, with maritime, government and mining constituting the other major market segments. 5G NTN will be “a crucial enabler for innovation and efficiency in the aerospace and defense domain,” the firm concludes, with 5G NTN offering “enhanced data transmission, improved reliability and extended coverage” that align with aerospace and defense operational needs and the ability to support autonomous systems including UAVs, remote sensing and mission-critical communications. GMI also sees North America as the dominant region for the 5G NTN market at this time.
-NSR (which is part of Analysys Mason and focuses on the satellite market) expects that NTN revenue for telcos is set to grow by USD32.5 billion between 2022 and 2027, according to forecasts produced as part of Analysys Mason’s Satellite Strategies for Telcos program.
However, in a March 2024 blog post on the direct-to-device opportunity, NSR Principal Analyst Lluc Palerm laid out four distinct phases for the D2D market—and not all of them are particularly profitable, especially in the near-term. Palerm says that “the direct revenue opportunity in the early years [of NTN D2C] is low,” and notes that currently available systems limit offerings to basic emergency alerts and messaging.
For systems that use pre-Rel. 17 technology, “the amount of bandwidth available is not big enough to support advanced voice and data services direct to unmodified phones at scale,” he concludes—and adds that even for companies that plan to use terrestrial spectrum from space for direct-to-device offerings that are compatible with existing phones, “the early offerings of these constellations will also be limited to emergency alerts and messaging.”
That’s a tough situation, because he goes on to say that “the willingness of mainstream users to pay for emergency alerts and messaging services is limited.” Analysys Mason predicts that the potential revenue for NTN-based emergency alerts will be less than $100 million globally through 2032. Revenue from direct-to-device messaging is expected to be only a bit higher at $500 million globally. Instead, NTN emergency services are expected to be a service differentiator for competitive purposes. “The direct revenue opportunity might not be significant for mobile network operators (MNOs), but end users value these potentially lifesaving features. MNOs should focus on incorporating these satellite D2D services as a differentiator from competitors,” he wrote.
But the outlook isn’t entirely without hope of revenue—Palerm thinks the much more substantial revenue opportunity will come with voice and broadband data. When those become available via NTN, “a vast and accessible market will emerge” consisting of “demand from recreational travellers, rural residents, IoT, first responders and many others who want to stay connected when out of the reach of the limited terrestrial network coverage will boost market penetration and adoption rates. Huge revenue opportunities await when coverage is worldwide, connections are reliable and data speeds are consistent.”
However, this will mean that far more satellites will have to be launched in order to scale voice and data services. As telcos think about partnerships in this arena, Palerm points out that they have to make important decisions about spectrum strategies (terrestrial or MSS? Which frequencies and how much spectrum to dedicate, in which areas?), proprietary vs. standardized solutions and whether they will serve consumers or enterprise/industrial IoT.
“Successful partnerships will probably be those that acknowledge the importance of the members of the value chain, and those that can coordinate and garner support from players across the value chain,” he writes.
