Lockheed Martin (NYSE: LMT) announced on March 23, 2021, that it was entering into an agreement to work with the satellite startup, Omnispace, to build a space-based 5G network. This may not seem like big news, because other satellite companies have already been working on this. However, there’s a big difference with this new system that Lockheed Martin is jumping on board to help Omnispace deploy.
Unlike other space-based networks currently in development, the one from Omnispace doesn’t require a ground terminal or any special equipment for devices to connect to the network. This new network is able to connect directly to any standard mobile device that has 5G capabilities. This makes it much easier to roll out.
On top of that, this isn’t just a concept or something that will work in theory. Omnispace successfully demonstrated the capabilities of this network to the National Security Innovation Network (NSIN), the U.S. Navy, and the U.S. Marine Corps earlier this month. During this demonstration, the company was able to connect to Omnispace’s on-orbit satellite with several off-the-shelf 5G mobile devices.
Access to this sort of 5G network will mean users will have a cellular connection virtually anywhere and dead spots will be a thing of the past. Can you hear me now?
What this means for cell tower REITs
So what does a space-based 5G data network mean for the cell towers already scattered around the planet and the billions of dollars infrastructure REITs have already invested in building a 5G network?
As it stands right now, the satellite network will be utilizing the company’s 2GHz S-band spectrum rights, which means data speed will be just slightly faster than the 4G mobile networks people have become used to.
The ultra-fast internet speeds everyone has been waiting for from 5G networks will use c-band to achieve those speeds, and to buy any meaningful amount of bandwidth in that spectrum costs billions. The FCC just auctioned off 5,684 c-band licenses in February for over $81 billion.
With the race to provide true 5G coverage nationwide and small cell and tower development already underway, it’s unlikely that the companies who won bids in this auction are going to sit on these licenses waiting for a satellite network to become available to use them.
The most likely scenario is that the major wireless carriers will eventually use the satellite network to supplement their existing network of small cells and towers to provide broader coverage to rural areas.
This also seems to be Omnispace and Lockheed Martin’s plan as well, as opposed to replacing the ground network. The space-based network is being designed to allow devices to seamlessly transition between satellite and tower.
However, this doesn’t necessarily mean the infrastructure REITs that own cell towers will be completely unphased in the long term. With the push to provide greater mobile data coverage in rural areas, the satellite network may provide a more sensible option for carriers opposed to leasing additional towers. With the Omnispace network expected to enter into service in 2022, they just might be ready in time to steal some of this future business away from the cell tower REITs.
The Millionacres bottom line
Technology is advancing at an increasingly rapid pace, leaving today’s best solution obsolete by tomorrow. Satellite technology is no exception, and it’s been receiving a greater amount of attention as companies like SpaceX have been making more investments into it. Even though satellite technology hasn’t come far enough to be able to disrupt our massive on-the-ground data infrastructure yet doesn’t mean it won’t happen in the near future. If somebody can convince the IRS to classify space-based satellites as real estate, we just might see our first space infrastructure REIT before long.