Ambani meets his match in Musk, Indian stage set for major disruption

In June, Elon Musk introduced a portable dish kit, Starlink Mini, in Kenya and offered the service at $10 a month for home or on-the-go, bringing down the price of entry-level satellite broadband in the country and giving a boost to subscriber numbers. This also brought Musk’s company Starlink into a headlong battle with Kenya’s largest telecom and internet provider, Safaricom, which has urged the regulator to mandate foreign players such as Starlink to partner with local players and not give them independent licences.

Kenya is not alone. Incumbent telecom and internet operators in other African countries such as Nigeria, Cameroon, and Zimbabwe, and in Southeast Asian countries such as Indonesia and Malaysia are building moats against Starlink’s onslaught.

Joining the chorus are Indian telcos, which have buried their mutual differences to put up a common front. Last week, in a surprise move at the Indian Mobile Congress (IMC), Bharti Airtel Chairman and OneWeb promoter Sunil Mittal said satellite players should need a licence, as telcos do, to service “elite retail customers” in urban areas and buy spectrum through auction.

Mittal was for the first time speaking in the same voice as Mukesh Ambani, whose Reliance Jio has been pushing for auctions. For two years, Mittal and Ambani were in separate camps, with Mittal asking for administrative allocation of spectrum and Ambani opposing it.

Mittal however has stuck to his stance that for remote and rural areas or maritime and aviation, spectrum should be administratively allocated.

The government, for its part, swung into action.

Administrative only
Communication Minister Jyotindra Scindia confirmed at a press conference that satellite spectrum will only be given administratively as it is done across the world, though he did not specify the geographies nor how.

Musk, who has always advocated administrative allocation and criticised auctions, posted on X, the social media platform he owns: “Much appreciated, We will do our best to serve the people with Starlink.”

Domestic telcos say Starlink’s old stance that it will use satellite broadband to “connect the unconnected” does not make a business case anymore, because broadband coverage is no longer an issue especially with the rollout of 5G. Musk, they say, will compete against their terrestrial services such as Reliance Jio’s Air Fiber and Airtel’s 5G powered fixed wireless access (FWA) all across the country, including in cities and towns that are big revenue earners.

“Satellite broadband and what we offer are the same services. In FWA you have an antenna outside your room looking up to a BTS tower; in satellite the antenna will look up at the satellite. The two need a level playing field,” says a senior executive of a domestic telco.

Domestic telcos are using 5G spectrum won in auction to provide FWA. Of course, the government could define two different strategies for assigning spectrum, but that matter is now with the Telecom Regulatory Authority of India (TRAI).

Tech game
Meanwhile, technology has changed the game. Domestic telcos, in a presentation at the IMC, said 96 per cent of the 650,000 villages in India were covered with 4G or 5G services, and that meant mobile broadband. The remaining 25,000 villages, with a population averaging 500 people, or 100 homes, will be getting connectivity soon through the USO fund-led programme or by the state-owned BSNL. USO (universal service obligation) fund finances telecom services in rural and remote areas.

GSMA research reveals that only 1 per cent of India’s population is unconnected or has no coverage. Domestic telcos say that is too small a market to make a business case.

But there is another way to look at India. According to Ericsson, India will end up with 85 million to 100 million homes on 5G powered FWA by 2030, and the country will soon overtake the United States, which has 6 million FWA broadband subscribers.

Started slightly more than a year ago, Jio and Airtel already have more than 3 million FWA customers in 1,700 cities and towns. For Musk, whose Starlink has 6 million satcom subscribers worldwide, the Indian market is not to be underestimated.

Pricing game
The challenge will be for Starlink to offer satellite broadband at prices competitive to Jio’s and Airtel’s FWA, which start at Rs 599 a month with free installation in an annual plan. The last time Starlink offered a satellite service in India, in 2021, it cost Rs 37,400 for the kit and more than Rs 7,400 a month for the service.

Despite this pricing, thousands of Indians pre-booked the service at $99, only to have their money refunded because Starlink did not have the licence.

Musk’s experience in Africa has shown that despite an internet penetration of 39 per cent and more than 600 million Africans not using the internet, the price of kits ($599) and service — far higher than terrestrial internet — has kept subscriptions low.

Musk has already dropped prices in Kenya to get volumes. In India he can subsidise the price of the kit. Even in the US, his wholesale broadband price offered to enterprises is a seventh of what rival satellite players with GEO and MEO satellites are offering.

More importantly, Starlink is building a huge capacity.

Capacity game
Starlink has already put in more than 6,400 LEO satellites in the sky and in the next two years is looking to take this number to 42,000. Its new satellites have a huge capacity of up to 200 GBPS each. Amazon Kuiper, which wants to get into the game, is looking at satellites with 1,000 GBPS capacity.

In contrast, each tower of domestic telcos has a capacity to handle 2-4 GBPS of data, and therefore hundreds of thousands of those are needed.

Satellite capacity can be more efficiently shared across the country whether it is rural, urban, remote areas or dense metros. In mobile, it is restricted to the area where the tower radiates. That gives satellites a cost advantage.

A top executive of another domestic telco, which has planned its own satellite broadband service, says 2 to 3 per cent of the satellites in the constellation, such as Starlink, will offer coverage in India. That could ensure that Musk’s company will have as much bandwidth capacity to offer as India’s largest telcos have on their terrestrial networks.

“Just like Jio, which built a huge 4G bandwidth capacity which helped it in giving data at rock bottom prices, Starlink can do the same,” says the executive.

But what will OneWeb and Jio do?

The battlelines have been drawn.

Taking on musk

• Domestic telcos fear Musk will directly compete with their FWA services in cities and towns, not only in remote areas
• If Musk gets spectrum administratively, domestic telcos fear a non-level-playing field
• Musk’s Starlink is already dropping prices in countries such as Kenya
• India is a large market expected to be 85-100 million homes by 2030
• Cost of making satellites and launching them is falling dramatically
• Musk will not have to make investments in creating a tower and fibre infrastructure

Wireless broadband sweepstakes

• 96% of India’s villages have coverage of 4G and 4G mobile broadband
• The remaining 25,000 are getting connected through USO and BSNL
• GSMA reckons only 1% of India’s population has no coverage of mobile broadband
• Serving this market, say domestic telcos, does not make business sense
• The issue is not coverage of broadband but affordability of devices, use cases, and digital knowledge

Business Standard