AT&T, Vodafone, Nokia and AST SpaceMobile continue to hit satellite connectivity milestones, including the latest tied to 5G technology that could feed into a rapidly expanding market.

The latest non-terrestrial mark was a successful 5G-based connection of voice and data services between a pair of unmodified smartphones linked by AST SpaceMobile’s BlueWalker 3 test satellite. The test used 5G technology based on the 3GPP Release 16 specification.

The 5G connection was between a Samsung Galaxy S22 smartphone sitting on a “wireless dead zone” in Hawaii and a Vodafone engineer in Madrid. It used spectrum that AT&T is leasing to AST SpaceMobile to beam the signal to the test satellite sitting in low-Earth orbit (LEO).

AT&T entered into a long-term lease agreement with AST that will allow the satellite entity to use those spectrum assets for the private use of AT&T services. The carrier added that AST’s service would be able to smoothly integrate into AT&T’s current offerings.

“AST intends to provide broadband access directly to AT&T customer handsets that operate on the leased spectrum, without any modifications or the use of special chipsets, and without the buildout of any additional terrestrial wireless infrastructure,” according to the filing AT&T shared with SDxCentral. “This is expected to allow AT&T to provide space-based broadband coverage in its licensed areas, including temporary coverage following natural disasters.”

AT&T’s leasing of low-band spectrum highlights the seriousness of the effort as those bands are highly prized by telecommunication operators for their propagation characteristics.

The spectrum lease boosts AST’s ongoing satellite efforts in the telecommunication market. The Texas-based company is building a satellite constellation that can transmit data between standard cellular devices.

Last year it placed its BlueWalker 3 satellite into orbit. That satellite was used as part of an earlier test that facilitated a two-way voice call between a pair of Samsung Galaxy S22 smartphones. One of the phones was on AT&T’s network in Texas with the other on Rakuten Mobile’s network in Japan, with Vodafone also part of the test.

In a separate test, AT&T, AST SpaceMobile, Vodafone and Nokia were able to stream a 5G download data link between the satellite and a terrestrial terminal at speeds up to 14 Mb/s. This surpassed a 10 Mb/s space-to-ground link they were able to stream in June using a 4G LTE connection.

The speed mark is significant as it expands the broadband capabilities of satellite-based connections, especially as they are being looked at to support bridging the digital divide and supporting high-throughput enterprise applications like SD-WAN services. It also further opens up the possibility of traditional cellular operators tapping satellite systems to expand their 5G coverage.

“Telcos are also going to benefit from partnerships with satellite operators as they will aid in providing an enhanced experience for telco customers, reinforced by ubiquitous coverage,” MTN Consulting’s Arun Menon wrote in a report.

AST SpaceMobile, which has plans to launch the first of five commercial “BlueBird” satellites beginning early next year, has deals with a number of operators. This includes Vodafone, AT&T, Rakuten Mobile, Bell Canada, Orange and Telefónica.

Others in the space include Starlink’s SpaceX, which last year signed a high-profile deal with T-Mobile US and signed a more recent deal with KDDI; Verizon and Vodafone, which both have deals with hyperscaler Amazon Web Services (AWS) and its Project Kuiper; and NTT, which is working to integrate SES’s satellite network capabilities into its managed enterprise edge product.

ABI Research noted late last year that more than “70 satellite service providers [are] currently providing services worldwide,” which might be a few too many.

“For satellite operators … navigating the regulatory hurdles and ensuring constant capital flow are key concerns; several players from the current herd will vanish in the next three to five years,” MTN’s Menon wrote.

But the opportunity is sky high for those that survive.

ABI Research recently predicted there will be more than 175 million “non-terrestrial network” mobile connections by 2030, “driven by the deployment of satellite constellations for low-latency, high-throughput network applications and extending terrestrial network coverage.” The firm stated that this growth will drive nearly $125 billion in annual satellite service revenue by the beginning of the next decade.

“Satellite communications services have seen a new wave of enthusiasm and convergence with terrestrial networks looking to extend past their coverage zones and bridge the digital divide,” Andrew Cavalier, satellite communications industry analyst at ABI Research, wrote.

“We are witnessing a growing trend of operators leveraging software-defined satellites and multi-orbit solutions to meet the connectivity demands of the future.”