Last week, the FCC adopted a Notice of Proposed Rulemaking proposing a new regulatory framework to address the growing convergence of satellite and terrestrial-based networks, titled the “Single Network Future: Supplementary Coverage from Space” proceeding.
The FCC proceeding is just the latest development in a seemingly endless news cycle of high-profile announcements showcasing new satellite and mobile partnerships across the 5G ecosystem. These exciting developments range from Apple’s announcement that the Emergency SOS texting feature on iPhone 14 would be provided by Globalstar’s satellites, to the partnerships between OneWeb/AT&T and SpaceX/T-Mobile to extend terrestrial network coverage, to the longstanding plans of satellite operators like Lynk, AST SpaceMobile, and Omnispace to provide direct to handset connectivity from space.
The proceeding highlights ongoing efforts by the current administration to stake out a key leadership role for the U.S. and the FCC on the world stage and should be of keen interest to satellite and wireless stakeholders across the global 5G ecosystem.
Background – The Evolution of Satellite to Handset Services
Satellite-based connectivity to mobile handsets is not a new phenomenon. In the 1990s and 2000s, companies including Iridium, Globalstar, Terrestar, and Ligado launched services facilitating satellite-based voice connectivity to mobile handsets, called “mobile satellite service” or “MSS.” Later, some MSS operators proposed to add an ancillary terrestrial component to these services, allowing the integration of terrestrial spectrum complementary to their space-based networks. These standalone MSS services—offered over allocated satellite spectrum—were often fraught with commercial and technological challenges, resulting in several satellite operator bankruptcies.
The current proceeding kicks off at a very different moment in the market for satellite-based connectivity, where there are strong commercial incentivizes for satellite operators and mobile network operators (MNOs) to work together to deliver seamless end-user connectivity. Decades of rapid evolution across satellite networks and mobile handset ecosystems have created an environment where technologically-savvy consumers demand access to high-speed broadband connectivity to power a suite of bandwidth-intensive mobile applications at all times—and all locations.
These consumers are typically agnostic to the network architecture delivering this connectivity, driving the current dynamic where satellite and mobile partnerships offer attractive customer synergies and opportunities to scale and densify connectivity networks. Moreover, as MNOs face significant capital costs to build out “last-mile” terrestrial infrastructure serving end-users in remote and hard-to-serve regions, new non-geostationary orbit (“NGSO”) satellite networks capable of serving these underserved regions are evolving to provide connectivity whose performance is increasingly competitive with terrestrial networks.
The NPRM – Three Core Areas of Focus to Facilitate the Provision of SCS
As the name of this proceeding suggests, and unlike the first-generation of standalone MSS services described above, the FCC views the current proceeding as an “enhancement to the provision of existing terrestrial service,” designed to fulfill “the Commission’s immediate goal of closing coverage gaps in terrestrial service, particularly to consumer handsets.” In other words, the supplementary coverage from space (“SCS”) will rest on two distinct pillars going forward: (i) dedicated, “flexible-use” terrestrial spectrum exclusively controlled by an MNO, and (ii) a satellite operator providing satellite spectrum allocated for MSS, with the MNO and satellite operator working together to facilitate these enhanced capabilities to a subscriber’s existing smartphone, not a specially provisioned satellite phone.
While the NPRM comprehensively addresses the potential updates to its rules necessary to accomplish this potentially seismic shift in regulatory approach, connectivity stakeholders should pay close attention to the potential changes to three core components of the FCC’s regulatory framework necessary to facilitate SCS:
- Entry Criteria/Licensing. As noted above, the FCC views the current proceeding as an opportunity to develop a framework to facilitate the continued growth of satellite operator and MNO partnerships. To that end, the FCC proposes specific licensing criteria necessary to effectuate these new SCS services. First¸ SCS can only be authorized in areas where (i) an MNO holds (directly or indirectly) all co-channel licenses on the relevant spectrum band in a Geographically Independent Area (“GIA”)[1] and there are no primary, non-flexible-use legacy incumbent operations (whether federal or non-federal) in the band; and (ii) an NGSO operator[2] has an existing Part 25 license (or grant of market access) covering this GIA.
- Second, once this baseline criteria is established, a satellite operator may modify its authorization to add MSS services, if the satellite operator has an application on file to lease the exclusive-use terrestrial spectrum[3] from the MNO, and the MNO partner has applied for a blanket earth station application to allow its subscribers’ handsets to receive transmissions from the satellite operator. The foundation of this regime reflects the FCC’s expectation of ongoing, close collaboration between a satellite operator and their MNO partner.
- Targeted Spectrum Bands. The recently-announced satellite/mobile partnerships comprise a wide variety of spectrum architectures, ranging from services exclusively relying on spectrum allocated for MSS to services provided primarily by terrestrial mobile spectrum to a combination of both satellite and terrestrial spectrum. In the NPRM, the FCC proposes to add a footnote to the U.S. Table of Allocations permitting MSS in the following flexible-use, terrestrial mobile bands: 600, 700, and 800 MHz bands, broadband PCS, AWS-H, and WCS bands. Once added, this footnote would provide flexibility for satellite operators and MNOs to offer bi-directional SCS to their subscribers.
- Consequential Regulatory Changes. The transformative nature of these proposals are not reflected in the FCC’s current “siloed” approach to the regulation of satellite and wireless networks. To account for the potential “downstream” regulatory impacts of the proposed SCS service, the NPRM addresses several potential modifications to the FCC’s regulatory framework. These include, among other contemplated changes, the regulatory status of satellite operators and MNOs implementing SCS, potential changes to spectrum leasing rules, and the appropriate application of the FCC’s E911, wireless alert, construction milestone, and spectrum aggregation rules to SCS. Necessarily, the NPRM also addresses technical rules to protect incumbent terrestrial operations, including out of band emission and power flux density limits, coordination requirements, as well as the mitigation of harmful interference in adjacent spectrum bands and with respect to cross-border operations.
Key Takeaways Going Forward
Although the FCC’s proceeding to facilitate SCS is in its very early stages, and satellite practitioners are still in the process of digesting the potentially transformative changes to the FCC’s regulatory regime, there are at least three key takeaways stakeholders should consider going forward:
- Just the Beginning of Satellite-Mobile Partnerships. While the current satellite-mobile partnerships seem to indicate a focus on emergency communications and text messaging capabilities, we expect to see innovative satellite/mobile partnerships—and consumer applications—continue to proliferate. For example, with the rise of private LTE terrestrial networks to service enterprise and government customers, could satellite connectivity play a pivotal role in this new ecosystem? Similarly, in the absence of net neutrality regulations, could satellite operators strike commercial agreements directly with content providers or social media companies to provide connectivity to consumers in the absence of robust terrestrial connectivity? The FCC’s proceeding seems designed to facilitate a broader role for satellite operators in the consumer connectivity space while also encouraging continued innovation on-orbit.
- Continued Pressure on Application Processing and Traditional Regulatory Silos. It is notable that this proceeding comes on the heels of the FCC’s reorganization of the legacy International Bureau and creation of a new Space Bureau to address the exponential increase in satellite-related applications and filings. Given the recognition of the need for process reform to address this dynamic, and the potential vast number of new applications—from both satellite operators and MNOs—contemplated by this proceeding, there may be continued pressures on both the FCC’s traditional, siloed approach to licensing and its ability to quickly act on SCS-related applications.
- Impacts on Standard Setting and Global Adoption of a Satellite-Mobile Framework. The FCC rightly notes in the NPRM that 3GPP’s Release 17 in 2022 sought to address satellite’s role in the 5G ecosystem and the broader role of non-terrestrial networks going forward. We anticipate the FCC’s Single Network Future proceeding will spur continued incorporation of satellite components into the 3GPP framework, driving OEMs and other 5G stakeholders to continue to innovate and expand the potential reach of satellite and mobile partnerships.
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This proceeding presents many novel issues and important strategic considerations spanning the 5G landscape. If you have any questions or want to consider participating in this proceeding, please reach out to Sheppard Mullin’s Telecommunications Team
FOOTNOTES
[1] The GIAs are CONUS, Alaska, Hawaii, American Samoa, Puerto Rico/U.S. Virgin Islands, and Guam/Northern Mariana Islands. The FCC also seeks comment on extending the SCS framework to scenarios where there are multiple unaffiliated flexible-use licensees in a given GIA, but all licensees in that area agree to jointly provide supplemental coverage from space to their customers in cooperation with a satellite provider.
[2] The FCC also seeks comment on extending the availability of SCS operations to geostationary satellite orbit operators, as well as new satellite entrants lacking a current Part 25 authorization.
[3] The Commission also seeks comment on whether an operating agreement between the satellite operator and MNO would be sufficient.