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Optus & Telstra Compete In A SpaceX Race With Elon Musk Already The Winner

Optus has become the second major Australian telco to partner with Elon Musk’s SpaceX to offer low earth orbit satellite services to customers.

Customers in remote areas of Australia will make calls by directly connecting their regular smartphone to a passing low orbit (LEO) Starlink satellite. These satellite calls will be part of a regular phone service: customers won’t have to use a specialised satellite phone with a bulky antenna.

Optus’s move is in line with telcos around the world who are forming partnerships with LEO satellite providers to extend their terrestrial networks. In the US, AT&T has a partnership with AST SpaceMobile, T-Mobile has gone with SpaceX.

In a statement, Optus said it had forged an agreement with SpaceX to deliver “mobile connectivity” using the Starlink satellite constellation. Optus and SpaceX planned to cover 100 percent of Australia, the statement said.

“Optus has always thought differently about what it means to deliver connectivity to our customers, and today we proudly provide mobile coverage to 98.5 per cent of Australia’s population through our existing network,” said Matt Williams, Optus managing director, marketing and revenue.

“However, Australia’s vastness and terrain can make it difficult for any operator to provide mobile coverage everywhere it is needed – especially in remote or hard-to-reach locations. Our work with SpaceX aims to bring the coverage capabilities of satellites direct to compatible mobile handsets without the need for customers to buy additional equipment.”

He said the move was “a significant evolution beyond the services SpaceX has provided in Australia to date”.

SpaceX’s senior director of satellite engineering, Sara Spangelo, said the new satellite-to-phone coverage would be extensively tested before launch, with further information on its characteristics and accessibility provided closer to availability.

Clusters of low orbiting satellites will provide comprehensive communications in regional and remote communities.

The new service is more than a year away, with Optus committing to roll out SMS from late 2024, with voice calls and data coming in late 2025.

Telstra announced its partnership with SpaceX just over a week ago, putting its emphasis on phone and broadband services to rural Australia. It aims to have some satellite voice call services operating by the end of this year, earlier than with Optus.

Telstra also has a deal with OneWeb to supply a commercial mobile network and move its backhaul to OneWeb’s LEO service. It was announced in June this year.

In these cases, customers will be able to text and make calls on regular grade smartphones to LEO satellites, but the phones will need newer chips manufactured mainly by MediaTek or Qualcomm. The alternative is to carry a small Bluetooth connector that works with current Apple and Android phones, such as the Motorola Defy 2 announced earlier his year.

Motorola Defy 2

Other devices such as laptops and more powerful wearables are expected to connect directly to LEO satellites.

British phone maker Bullitt announced it would offer satellite texting in Australia using a regular smartphone before the end of 2023; their phones have a MediaTek chip.

It is relatively easy for phones to transmit calls and data to LEO satellites which travel just a few hundred kilometres above the ground. In contrast, traditional geostationary satellites orbit at more than 35,000km and require more power for two-way connectivity.

The merging of LEO satellites into telco’s terrestrial networks will cause a shake-up of the Australian telco industry and some challenges particularly for Telstra, which has dominated coverage in regional and remote Australia due to its superior network and greater reach.

LEO satellite partnerships threaten to level the commercial playing field. Any user on any network can make calls from anywhere in the country. Telstra is no doubt working on how it will dissuade its customers from defecting to Optus or Vodaphone if the difference between the services is just price. Customers could be the great beneficiaries of a price war.

The big winner already is Musk, with two of Australia’s biggest telcos partnering with his SpaceX company. Not only is he a kingmaker and player in the provision of new age Australian telecommunications, he already stands to cream revenue via both Telstra and Optus – a considerable double.

The Optus deal also tells us that SpaceX’s Starlink is not offering exclusivity when forging deals in the Australian market.

The losers are the nation’s astronomers who face their pristine night sky view being littered with thousands of these small, low orbiting satellites crossing the continent continually. The Southern Cross in the sky will never look the same.

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