A new frontier of connectivity: Regulating direct–to–device services in Australia

Australians may soon need to start preparing new excuses for avoiding SMSs other than ‘I was out of service’, as more partnerships between Australian mobile network operators and direct-to-device service providers are revealed.

On 9 January 2025, Telstra announced a ‘partnership’ with Starlink aimed at bringing direct-to-device (D2D) services to their customers using Low-Earth Orbit (LEO) satellites. This makes Telstra the second Australian national mobile network operator (MNO) to do so. Optus’ announcement predated Telstra’s by over a year, announcing its partnership with Starlink for D2D services as early as July 2023. However, both services are yet to go live.

The Government is also doing its part to facilitate the use of D2D services with the current Labor Government proposing to introduce a Universal Outdoor Mobile Obligation.

That begs the question: will Australia’s existing regulatory framework suffice?

What are direct-to-device services?

D2D services involve a method of communicating in which mobile phones do not need to engage with a mobile phone tower on the ground. Instead, any communication from the ground is directed straight to a satellite, which will then direct the message (or call) to another device. D2D services come in two forms: mobile-satellite services (MSS) or international mobile telecommunications (IMT) services. MSS services require additional telephone hardware such as satellite phones. They are already comprehensively regulated and are not the subject of this article. IMT satellite services, such as those proposed by Telstra and Starlink, do not require any additional hardware to be built into phones. Most mobile phones already have the capacity to access the LTE frequencies which D2D services rely upon.

What are the benefits of direct-to-device services?

One big advantage of D2D services is that mobile phone coverage will improve in areas which it has been previously difficult or even impossible to provide mobile connectivity to. In Australia, D2D services will have the potential to improve mobile connectivity for tens of thousands of people, especially those living in or travelling through rural, regional and remote areas.

It is a little known fact to those outside of Australia, but approximately 81.4% of the population reside in just 50,000 km², with 17.4% living in a further 1.5 million km², approximately 0.7% of the population residing in 1 million km² while the remaining population resides in approximately 5 million km² without mobile coverage (see Statement of Facts, Issues and Contentions, ‘Applications by Telstra Corporation Limited and TPG Telecom Limited,’ February 2023, page 2). Understandably, the capital expenditure needed to provide traditional mobile coverage to the entire country is not justified by the size of the population in very remote Australia. For those people, and indeed for MNOs and the Federal and State governments, D2D is a game changer.

D2D is also a potential game changer for other countries with sparsely populated or difficult to access areas.

Between 2021 and 2024, the Telecommunications Industry Ombudsman advised that they received 51,854 phone and internet complaints from consumers relating to mobile service issues, with those in regional, rural and remote Australia overrepresented amongst their number (see Telecommunications Industry Ombudsman, Submission to the 2024 Regional Telecommunications Review, July 2024, page 4). The impacts of not having access to phone service can be far-reaching, with reports of disruption to regional businesses, family relying on radios to communicate, and difficulties contacting health care professionals in emergency situations. As such, D2D may play a significant role in bridging the ‘digital divide’ between Australian metropolitans and rural or regional Australians (See Parliament of Australia, House of Representatives Standing Committee on Communications and the Arts, Connecting the country: Mission critical, November 2023).

A further benefit of D2D services is its capacity to operate impervious to natural disasters, as it does not rely on terrestrial sources of radio waves. This potential has already been realised by the USA during Hurricanes Helene and Milton, when T-Mobile was provisionally approved to provide D2D services to increase access to emergency contacts. While satellite services can be affected by atmospheric issues or solar flares, that is intermittent and extremely rare.

How will direct-to-device services be regulated in Australia?

Following a consultation process, the Australian Communications and Media Authority (ACMA) released a regulatory guide for D2D services in September 2024 together with a response to submissions on regulatory issues associated with satellite direct-to mobile services. The ACMA appears to be primarily concerned with the potential for D2D services to interfere with existing services, and its regulatory guidelines reflect this concern. It suggests that the onus is on D2D service providers and their partner spectrum licence holders (i.e. the MNO’s) to ensure that the service is compliant with Australia’s pre-existing spectrum licensing regulations, and the International Telecommunications Union’s (ITU) Radio Regulations.

The Australian Government has also recently announced plans to introduce legislation to expand the existing Universal Services framework to include a Universal Outdoor Mobile Obligation (UOMO) and expects mobile operators to use D2D services to achieve this.

Australia’s pre-existing spectrum licensing regulations

Ordinarily, a foreign satellite operator must apply to the ACMA to be listed in the Foreign Space Objects Determination for its satellite system to lawfully operate in Australian radiofrequency bands, as Starlink has previously done to introduce their broadband services (see ACMA, Update to Foreign Space Objects Determination, October 2019, page 6). However, the frequency bands contemplated for IMT services are not currently within the scope of the Foreign Space Objects Determination for licencing purposes (See ACMA, Operation of an IMT satellite direct-to-mobile service: Regulatory Guide, September 2024, page 4). As such, the ACMA’s view is that D2D service providers do not need to apply for inclusion in the Determinations. This view appears to be correct.

Rather, the ACMA requires D2D services to be operated within the boundaries of spectrum licences, which are granted by the Australian government, usually via an auction process after consultation with the ACMA and ACCC. The licences allow MNOs to operate their services over a demarcated geographical area and at a specified frequency band, to avoid interference with other services.  Complaints can be made to ACMA if any interference occurs with another MNO operating within its spectrum licence.

In practice, this means that D2D services can only operate once in agreement with an MNO which holds a spectrum licence. To do otherwise would expose the D2D service to potential complaints to the ACMA for interference with the MNO’s spectrum licence. D2D services operating in Australia may also have further regulatory responsibilities to consider outside of spectrum licensing regulations, including responsibilities as telecommunications carriers or carriage service providers under the Telecommunications Act 1997.

ITU radio regulations

The ACMA also places the onus on D2D services to ensure compliance with the ITU Regulations to guarantee non-interference with stations from other countries.

Australia is not alone in finding that D2D services are likely to be best regulated by existing radiofrequency licensing frameworks. In the USA, on 26 November 2024, the Federal Communications Commission approved SpaceX to provide satellite coverage for the proposed D2D services involved in a partnership between T-Mobile and Starlink. The approval appears to operate in a similar regulatory framework to that of Australia, as Starlink has been provided approval to operate within the existing cellular frequencies which T-Mobile is licensed to use.  Many other comparable jurisdictions internationally, including the UK, are also yet to provide a regulatory framework for D2D services but that may be because they are so new.

The proposal for a Universal Outdoor Mobile Obligation

On February 25, 2025, the federal government proposed introducing a Universal Outdoor Mobile Obligation (UOMO), which would require mobile carriers to provide access to mobile voice and SMS almost everywhere across Australia. This extends Australia’s Universal Service Obligation (USO)—a long-standing consumer protection that guarantees access to landline telephone services, NBN, and payphones nationally—to include mobile phones.

In a press release, the federal government stated that mobile operators will be expected to use their existing mobile coverage as well as D2D services that use LEO satellites to meet this new obligation. The stated policy objectives are to expand emergency call access, reduce mobile blackspots, and improve the availability of mobile signals during disasters and power outages.

So far, the proposed reforms are simply general policy statements with limited detail. While the federal government plans to consult with industry and introduce legislation in 2025, no such legislation will be forthcoming until after the election (which must take place no later than May 17, 2025). The federal opposition has also released a statement criticising the funding model and asserting that further regulation will equate to higher mobile bills as a result of the obligation. The future of such reforms will likely depend on the outcome of the election and any future solution will rely upon D2D to enable it.

What issues are there with regulating direct-to-device services?

A number of issues were raised in submissions to the ACMA on its regulatory guide. The most significant issues with regulating D2D services appear to be uncertainty over jurisdiction and whether the ACMA has sufficient regulatory tools to regulate these services, together with some uncertainty over how these services will operate in practice. The ACMA has considered these issues in its response to submissions on regulatory issues.

The jurisdiction of Australian regulatory bodies over the actual operation of the satellites is limited to Australia’s atmospheric boundaries, significantly hampering the available methods of regulation. For example, the ACMA considers that it cannot enforce third-party authorisation agreements under section 68 of the Radiocommunications Act as the satellite is not within Australian territories (See ACMA, Satellite Direct-to-Mobile Services: Regulatory Issues, Response to Submissions, September 2024, page 7).

Similarly, some submissions advocated for D2D services to be made available in non-Australia-wide spectrum licence areas on the basis that this would better promote competition. There seems to be real merit to these arguments. In addition, the ACMA has flagged that whether D2D services can be limited to specific locations remains unclear and considers that use of D2D services may only be practical under an Australian-wide spectrum licence, as a result (see ibid, page 8-9).

Another issue concerns the potential impact of D2D services on radio astronomy and the potential for harmful interference. The ACMA has expressed a preference for industry participants to resolve these issues directly rather than introducing additional regulation itself but has left the door open for future regulation if that is required (See ibid, page 11-12).

D2D services continue to be a ‘hot topic’ and should be monitored closely as an area which may be rife for further regulations in the near future. On an international scale, in 2027, the next World Radiocommunication Conference (WRC27) is set to take place. The WRC27 will likely address whether the D2D services are adequately regulated by the existing provisions, or whether there exists a need to introduce further international regulations in this space.