Reuters
Elon Musk's Starlink has 6,419 satellites in orbit and four million subscribers in 100 countries
The race between two of the world's richest men, Elon Musk and Mukesh Ambani, is heating up as they prepare to face off in India's satellite broadband market.
After the Indian government announced last week that satellite spectrum for broadband would be allocated administratively rather than through auctions, this battle has only intensified.
Mr. Musk had previously criticized the auction model supported by Mr. Ambani.
Satellite broadband provides Internet access anywhere within satellite coverage.
This makes it a reliable option for remote or rural areas where traditional services like DSL – a connection that uses telephone lines to transmit data – or cable are not available. This also helps reduce the digital divide, which is difficult to achieve.
India's telecom regulator is yet to announce spectrum pricing and commercial satellite internet services are yet to take off.
However, the number of satellite internet subscribers in India is expected to reach two million by 2025, according to credit rating agency ICRA.
The market is competitive, with about half a dozen key players, led by Mr Ambani's Reliance Jio.
After investing billions in on-air auctions to dominate the telecom sector, Jio has now partnered with Luxembourg-based SES Astra, a leading satellite operator.
Unlike Mr. Musk's Starlink, which uses Low Earth Orbit (LEO) satellites positioned between 160 and 1,000 km from the Earth's surface for faster service, SES operates Medium Earth Orbit (MEO) satellites at a much higher altitude, thus providing greater cost-effectiveness. system.
Ground receivers receive satellite signals and transform them into Internet data.
Mr. Musk's Starlink has 6,419 satellites in orbit and four million subscribers in 100 countries. It has been planning to launch services in India since 2021, but regulatory hurdles have led to delays.
If his company sets up shop in India this time, it will bolster Prime Minister Narendra Modi's efforts to attract foreign investment, many say.
It will also help his government's efforts to burnish its pro-business image, refuting claims that its policies favor high-profile Indian businessmen like Mr. Ambani.
Getty Images
Mr Ambani spent billions on auctions to dominate India's telecoms sector
While auctions have proven lucrative in the past, the Indian government is this time defending its decision to administratively allocate satellite spectrum, saying it is in line with international standards.
Satellite spectrum is not typically allocated through auctions, as the costs involved could impact the financial justification or investment in the business, says Gareth Owen, technology analyst at Counterpoint Research. In contrast, an administrative allocation would ensure a fair distribution of spectrum among “qualified” players, giving Starlink a chance to enter the race.
But Mr Ambani's Reliance says an auction is necessary to ensure fair competition, given the absence of clear legal provisions in India on how satellite broadband services can be offered directly to people.
In letters written to the telecommunications regulator in early October and seen by the BBC, Reliance repeatedly called for the creation of a “level playing field between satellite and terrestrial access services”.
The company also stated that “recent advances in satellite technologies…have significantly blurred the boundaries between satellite and terrestrial networks”, and that “satellite services are no longer confined to areas not served by terrestrial networks” . A letter said spectrum allocation was done through auction under Indian telecom laws, with administrative allocation permitted only in cases of “public interest, government functions or technical reasons or economics preventing auctions.
On X, Mr. Musk pointed out that the spectrum “has long been designated by the ITU as shared spectrum for satellites.” The International Telecommunications Union (ITU), a United Nations agency for digital technology, sets global regulations, and India is a member and signatory.
When the Reuters news agency reported that Mukesh Ambani was pressuring the government to reconsider its position, Mr Musk responded to a post on whether it would not be too complicated to allow Starlink to compete in providing internet services to the people of India.
Mr. Ambani's resistance to the administrative pricing method may stem from strategic advantage, Mr. Owen suggests. The tycoon could be “ready to outbid Musk,” using an auction to potentially exclude Starlink from the Indian market, he says.
Getty Images
A Starlink satellite on the roof of a house in New Mexico, USA
But it was not Mr Ambani alone who supported the auction route.
Sunil Mittal, chairman of Bharti Airtel, said companies wanting to serve high-end urban customers should “take telecom licenses and buy spectrum like everyone else”.
Mr. Mittal – India's second-largest wireless operator – together with Mr. Ambani controls 80% of the country's telecommunications market.
Such resistance is a “defensive measure aimed at increasing costs for international actors seen as long-term threats,” says telecommunications expert Mahesh Uppal.
“While not immediate competition, satellite technologies are advancing rapidly. Telecommunications companies (in India) with large terrestrial operations fear that satellites will soon become more competitive, challenging their dominance.
At stake is clearly the promise of the vast Indian market. Nearly 40% of India's 1.4 billion people still lack access to the internet, with rural areas accounting for most cases, according to EY-Parthenon, a consulting firm.
As a reminder, China has nearly 1.09 billion internet users, almost 340 million more than India's 751 million, according to DataReportal, which tracks global online trends.
India's internet adoption rate is still below the global average of 66.2%, but recent studies show that the country is closing the gap.
If priced correctly, satellite broadband can help close some of this gap, and even contribute to the Internet of Things (IoT), a network that connects everyday objects to the Internet, allowing them to communicate between them.
Price will be crucial in India, where mobile data is among the cheapest in the world – just 12 cents per gigabyte, according to Modi.
“A price war (with Indian operators) is inevitable. Musk has deep pockets. There is no reason why he can't offer a year of free services in (some) locations to gain a foothold the domestic market,” says Prasanto K Roy, a technology analyst.
Starlink has already reduced its prices in Kenya and South Africa.
AFP
Many remote parts of India are still not connected to the Internet
But it may not be easy. In a 2023 report, EY-Parthenon noted that Starlink's higher costs – nearly 10 times those of major Indian broadband providers – could make it difficult to compete without government subsidies.
Many more LEO satellites – like those operated by Starlink – are needed to provide global coverage than MEO satellites, increasing launch and maintenance costs.
And some fears of Indian operators could prove unfounded.
“Businesses will never completely move to satellite unless there is no terrestrial option. Terrestrial networks will always be cheaper than satellite, except in sparsely populated areas,” says Owen.
Mr. Musk might have the advantage of being first-mover, but “satellite markets are notoriously slow to develop.”
The battle between two of the world's richest men over the spatial Internet has begun in earnest.
