Iridium/Qualcomm Breakup Seen Pointing to SCS Challenges

The breakup of the Iridium/Qualcomm mobile supplemental coverage from space (SCS) partnership (see 2311090077) could point to ongoing questions about monetization of the direct-to-handset service. Globalstar's SCS service partnership with Apple failed to drum up notable interest in iPhone 14s, and the Iridium/Qualcomm deal seems to have followed a similar path, satellite and spectrum consultant Tim Farrar told us Monday. He said Android OEMs likely foresee a challenge to selling more phones as a result of the messaging capability.

“The writing was on the wall that something was amiss” with the deal, given that Iridium in August said no phones were expected this year and in October it became clear Iridium service wouldn’t be part of Samsung’s Galaxy S24 phone, which launches early next year, William Blair’s Louie DiPalma wrote investors last week. He said Qualcomm indicated that even though the Iridium service was ready to be incorporated into smartphone OEM's handsets, the manufacturers "did not have a 'line of sight on the monetization models.' This implies that smartphone manufacturers were concerned about the economics and were objecting to the price Qualcomm was charging." He said Qualcomm also indicated that smartphone makers preferred a standards-based satellite connectivity option instead of Iridium's proprietary one.

With Samsung not adopting the Iridium-enabled service, and the U.S. being primarily served by Apple and Samsung smartphones, that undercut the point of the Qualcomm/Iridium partnership, Tantra Analyst's Prakash Sangam told us. He said OEMs are likely more interested in doing something directly with satellite systems, rather than relying on a relationship with Qualcomm.

The Qualcomm deal involved Android phones using Iridium's spectrum. Farrar said the alternative SCS model of satellite operators using mobile carriers' spectrum could face different business prospects because a mobile carrier "has more levers" for monetizing SCS service. A more robust SCS service that supports more than just emergency messaging but can also offer voice and even moderate data speeds could see higher demand, he said.

The Iridium/Globalstar breakup could make fundraising by SCS startups such as AST SpaceMobile and Lynk more challenging, Farrar said. He said SpaceX's partnership with T-Mobile seemingly has traction at the FCC and SpaceX's pending license modification to allow it to offer SCS service could get agency approval by year's end. Farrar and a lawyer with a client involved in SCS activity said the Space Bureau's questions to SpaceX (see 2311090019) indicate progress toward some kind of approval of either the license mod or SpaceX's pending special temporary authority request (see [Ref 2310100055]).

"Smartphone OEMs have indicated a preference towards standards-based solutions for satellite connectivity in mobile devices," Qualcomm emailed in a statement. "We expect to continue to collaborate with Iridium on standards-based solutions while discontinuing efforts on the proprietary solution that was introduced earlier this year." The company said it "continues to support [narrowband non-terrestrial network connectivity] powered by Qualcomm 212S and Qualcomm 9205S modem products."

Android providers "didn't really want to pay much extra for satellite access," or be locked into a single chip provider, Iridium CEO Matt Desch said last week in a CNBC podcast interview. "Or a single satellite provider, for that matter." He said the smartphone/satellite emergency messaging marketplace is being largely ceded to Apple. Desch said it's developing a standards-based interface, and while that will take time, Iridium's entry into the SCS market is being merely delayed by the Qualcomm dissolution.