Forecast: Challenges in securing return on D2C investment
September 10, 2024
A study by Juniper Research anticipates that the first year of commercial direct-to-cell (D2C) services will be 2025; generating a modest $30 million (€27.2m) in revenue globally. However, they further forecast that operators will generate almost $1.7 billion by 2029.
Despite this impressive 8,000 per cent growth, the study predicts that operators will face challenges in securing a return on their substantial investment into the creation of D2C networks.
D2C services enable cellular connections to access network services directly from satellites in orbit. These services are enabled by satellite-capable radios in devices and partnerships with satellite network operators.
How Best to Monetise Direct-to-Cell?
The study identified two key challenges in maximising return on investment:
- The low cost of low-power IoT connections.
- The commoditisation of connectivity.
Owing to the demand for connectivity and remote monitoring from nomadic industries, such as maritime, the report predicts that low-power connections will represent the most prominent use case for direct-to-cell. However, these connections will generate an average of less than $2 per month; diminishing operators’ ability to secure a return on investment.
Given the commoditisation of mobile connectivity, the study also predicts that operators will struggle to convince mobile subscribers to adopt an additional subscription for direct-to-cell services on top of existing cellular plans. As such, we urge operators to focus on tailoring direct-to-cell services specifically to nomadic travellers and remote subscribers.
Research author, Sam Barker, commented: “Operators must promote the substantial coverage their direct-to-cell networks serve and apply premium pricing for data-intensive connections for broadband and consumer use cases. This will attract users of profitable direct-to-cell services, such as mobile broadband and smartphone subscriptions.”