Why Apple is spending $450 million on satellites for its new iPhone

This year, Apple took the aspirational wisdom of shooting for the moon and landing among the stars a bit more seriously than the average firm.

The new feature is called Emergency SOS via satellite, and it was unveiled as a headline feature of Apple’s new iPhone 14 during the company’s “Far Out” event earlier this month. Apple plans to offer the service for free for at least two years, and it will initially only be available In the US  and Canada.

Apple is putting $450 million from its advanced manufacturing fund toward building out the infrastructure for the project, most of which is going to its partner, satellite operator Globalstar. The tech giant has agreed to pay for 95% of the costs required to spin up the new satellites it needs, with Globalstar raising debt to fund the rest. In exchange, it’s stipulated that Apple gets exclusive access to 85% of Globalstar’s current and future network capacity to support its satellite features.

Jeff Fieldhack, research director at Counterpoint Research, told Emerging Tech Brew that one potential reason Apple is shelling out such a huge sum for the partnership is that its end goal could be eventually monetizing stronger connections in cellular dead zones like air travel, some rural areas, and other places where service is currently weak or nonexistent.

Fieldhack predicted that the ability to send emergency messages via satellite is only “goal number one” of Apple’s plans, with step two being service within airplanes, followed by a third phase where satellite connections could help provide access to cellular data when roaming internationally or in cellular dead zones.

“Any dead zone you have could switch to a satellite,” Fieldhack said. “I think that’s years down the way, but it will happen eventually.”

Apple did not return a request for comment.

Zoom out…Apple isn’t the only company making interstellar bets on the future of telecommunications.

T-Mobile announced its own partnership with SpaceX last month, which it could use to provide near-complete coverage throughout the US, while Verizon entered into a partnership with Amazon’s Project Kuiper that aims to provide connectivity in rural and remote locations. Starlink is also courting airlines—it struck Wi-Fi partnerships with Hawaiian Airlines and charter carrier JSX earlier this year.

“Satellite [and] cellular are very complementary. They fit in nicely. Where one is very powerful, the other’s not,” Fieldhack said. “I think there are going to be many partnerships being penciled in here. All major carriers could be looking to partner so they get money from roaming agreements for their big subscriber bases. This is kind of a small investment for global operators, because they have a lot of roaming and big, huge installed bases of users that could use these technologies.”