The competition between billionaire moguls Elon Musk and Mukesh Ambani is heating up as both gear up for a confrontation in India’s burgeoning satellite broadband sector.
This rivalry intensified following India’s government announcement last week that satellite spectrum for broadband will be allocated administratively rather than through auction.
Previously, Musk had voiced his disapproval of the auction model championed by Ambani.
Satellite broadband offers internet connectivity across wide areas, making it an ideal solution for rural and remote locations where traditional services like DSL and cable are often unfeasible. This technology plays a crucial role in bridging the persistent digital divide.
The Indian telecom regulator has yet to disclose spectrum pricing, with commercial satellite internet services remaining in development. However, projections from industry analysts forecast that satellite internet subscribers in India could reach two million by 2025.
The competitive landscape includes multiple players, with Ambani’s Reliance Jio leading the charge. Having invested heavily in auctioning airwave rights to dominate telecommunications, Jio has now formed a partnership with SES Astra, a prominent satellite operator based in Luxembourg.
Musk’s Starlink employs low-Earth orbit (LEO) satellites positioned at altitudes of 160 to 1,000 km, providing high-speed service, while SES’s medium-Earth orbit (MEO) satellites operate at greater heights, offering a more economical alternative.
As Starlink has its sights set on the Indian market since 2021, its entry could bolster Prime Minister Narendra Modi’s initiatives to attract foreign investment, potentially enhancing the government’s pro-business reputation amidst scrutiny of its policies favoring local tycoons.
Despite the previous auction successes, the Indian government defends its decision to adopt administrative allocation for satellite spectrum this time, stating it aligns with global practices.
Technology analysts argue that traditional auction methods could negatively affect investment and financial viability, while administrative distribution could facilitate equal access for qualified contenders, potentially paving the way for Starlink’s entry.
Reliance Jio advocates for an auction to foster fair competition, citing unclear legal frameworks surrounding satellite broadband service delivery in India.
In a communication to the telecom regulator, Reliance emphasized the importance of creating a “level playing field” between satellite and terrestrial services, highlighting the advanced capabilities of modern satellite technology that extend beyond underserved regions.
On a social media platform, Musk conveyed his willingness to engage with Ambani for fair competition in the Indian internet market.
Industry analysts suggest that Ambani’s opposition to administrative pricing may be a strategic maneuver to outbid Musk through auctions, potentially sidelining Starlink in this lucrative market.
Support for the auction model is echoed by Sunil Mittal, chairman of a prominent telecommunications firm, who argues that firms targeting urban demographics should engage in traditional auction processes to obtain spectrum rights.
Indian telecom titans like Mittal and Ambani control roughly 80% of the market, leading to concerns over international rivals potentially disrupting their dominance.
The stakes are high, with significant opportunities in the Indian market as nearly 40% of the 1.4 billion population currently lacks internet access, particularly in rural regions, according to recent findings.
In comparison, China boasts almost 1.09 billion internet users, surpassing India’s current total of 751 million.
Although India’s internet penetration remains below the global average of 66.2%, there are indications that growth is accelerating. Affordable satellite broadband could play a significant role in closing this gap and enhancing the internet of things (IoT).
Pricing strategies will be critical, especially as mobile data rates in India are among the lowest worldwide.
An industry analyst suggests that a price war is likely, with Musk potentially leveraging his financial resources to secure a foothold, including potential offers for free or discounted services to consumers.
Starlink has previously implemented price reductions in select international markets as it aims to expand its subscriber base.
Challenges persist, as noted in a recent report indicating Starlink’s costs could be significantly higher than those of Indian broadband providers, making competitiveness difficult without government support.
Operating a network of LEO satellites necessitates more units compared to MEO satellites, elevating launch and maintenance expenses.
Concerns among Indian operators could be overblown, as complete migration to satellite services is unlikely in the presence of terrestrial options, which typically remain more cost-effective in densely populated areas.
Musk may enjoy a first-mover advantage, but analysts caution that the satellite market has a history of slow development.
The battle between Musk and Ambani for leadership in satellite internet services is just beginning, marking a pivotal moment in the expanding digital frontier.
