ReutersThe race between two of the world’s richest men, Elon Musk and Mukesh Ambani, is intensifying as they prepare to face off in India’s satellite broadband market.
After the Govt of India DESIGNATED Last week that satellite spectrum for broadband was to be allocated administratively rather than through auction, this battle has only heated up.
Musk had previously criticized the auction model championed 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 such as DSL – a connection that uses telephone lines to transmit data – or cable are not available. It also helps to bridge the hard-to-reach digital divide.
India’s telecom regulator has yet to announce spectrum pricing and commercial satellite internet services are yet to launch.
However, satellite internet subscribers in India are expected to reach two million by 2025, according to credit rating agency ICRA.
The market is competitive, with about half a dozen major players, led by Mr. Reliance Jio. Ambani.
After investing billions in airwave auctions to dominate the telecom sector, Jio has now partnered with Luxembourg-based SES Astra, a major satellite operator.
Unlike Mr Musk’s Starlink, which uses low Earth orbit (LEO) satellites positioned between 160 and 1,000 km above the Earth’s surface for faster service, SES operates medium Earth orbit (MEO) satellites in a much higher height, providing a more cost effective. the system.
Receivers on the ground receive satellite signals and process them into Internet data.
Mr Musk’s Starlink has 6,419 satellites in orbit and four million subscribers in 100 countries. He has been aiming to launch services in India from 2021but regulatory hurdles have caused delays.
If his company enters India this time, it will boost 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, countering claims that its policies favor top Indian businessmen such as Mr Ambani.
Getty ImagesWhile auctions have proved profitable for him in the past, The Indian government defends its decision to allocate satellite spectrum administratively this time, claiming it is in line with international norms.
Satellite spectrum is not usually auctioned off as the costs involved can affect the financial rationale or investment in the business, says Gareth Owen, a technology analyst at Counterpoint Research. In contrast, administrative unbundling would ensure that spectrum is distributed fairly among “eligible” players, giving Starlink a chance to enter the race.
But Ambani’s Reliance says an auction is necessary to ensure fair competition, given India’s lack of clear legal provisions on how satellite broadband services can be offered directly to people.
In letters written to the telecoms regulator in early October, seen by the BBC, Reliance repeatedly called for a “level playing field between satellite and terrestrial access services”.
The firm also said that “recent advances in satellite technologies… have significantly blurred the lines between satellite and terrestrial networks” and that “satellite-based services are no longer limited to areas not served by terrestrial networks.” A letter said spectrum allocation is done through auctions under India’s telecom laws, with administrative allocation allowed only in cases of “public interest, government functions or technical or economic reasons that prevent auctions”.
At X, Musk noted that the spectrum “had long been designated by the ITU as common spectrum for satellites.” The International Telecommunication Union (ITU), a UN agency for digital technology, sets global regulations and India is a member and signatory.
When Reuters news agency reported that Mukesh Ambani was lobbying the government to reconsider his position, Musk responded to a post on X, saying: “I will call [Mr Ambani] and ask if it wouldn’t be too much of a problem to allow Starlink to compete to provide internet services to the people of India.”
The resistance of Mr. Adherence to the administrative method of pricing may derive from a strategic advantage, suggests Mr. Owen. The tycoon could be “preparing to outdo Musk”, using an auction to potentially drive Starlink out of the Indian market, he says.
Getty ImagesBut it is not only Mr. Ambani who supported the auction route.
Sunil Mittal, chairman of Bharti Airtel, has said that companies aiming to serve high-end urban customers must “get telecom licenses and buy spectrum like everyone else“.
Mr. Mittal – India’s second-largest wireless operator – along with Mr. Ambani, control 80% of the country’s telecom market.
Such resistance is a “defensive move aimed at raising costs for international players who are seen as long-term threats,” says Mahesh Uppal, a telecoms expert.
“While not immediate competition, satellite technologies are advancing rapidly. Telecom companies [in India] with big terrestrial businesses fearing that satellites may soon become more competitive, challenging their dominance.”
At stake, clearly, is the promise of the vast Indian market. Nearly 40% of India’s 1.4 billion people still do not have access to the Internet, with rural areas accounting for the majority of cases, according to EY-Parthenon, a consulting company.
For context, China is home to almost 1.09 billion internet users, which is almost 340 million more than India’s. 751 millionaccording to DataReportal, which tracks global internet trends.
India’s internet adoption rate still lags behind the global average of 66.2%, but recent studies show that the country is closing the gap.
If the price is right, satellite broadband can help bridge some of this gap, and even help the internet of things (IoT), a network that connects everyday objects to the Internet, allowing them to talk to each other.
Pricing will be crucial in India, where mobile data is among the cheapest globally – only 12 cents per gigabyteaccording to Modi.
“A price war [with Indian operators] it is inevitable. Musk has deep pockets. There’s no reason why he can’t offer a year of services for free [some] countries to gain a foothold in the domestic market,” says Prasanto K Roy, a technology analyst.
Starlink has already cut prices in Kenya and South Africa.
AFPHowever, it may not be easy. In the year 2023 REPORTEY-Parthenon noted that Starlink’s higher costs – almost 10 times those of major Indian broadband providers – could make it difficult to compete without government subsidies.
Many more LEO satellites – the type Starlink operates – are needed to provide global coverage than MEO satellites, increasing launch and maintenance costs.
And some of the fears of Indian operators may be unfounded.
“Businesses will never fully switch to satellite if there is no terrestrial option. Terrestrial networks will always be less expensive than satellite, except in sparsely populated regions,” says Mr Owen.
Mr Musk may have a first-mover advantage, but “satellite markets are extremely slow to evolve”.
The battle between two of the world’s richest men for the internet of space has really begun.