Elon Musk battles Mukesh Ambani over India’s satellite internet

As they prepare to square off in India’s satellite broadband business, Elon Musk and Mukesh Ambani, two of the country’s richest men, are getting more and more competitive.

After India’s government announced last week that satellite spectrum for broadband would be allocated administratively rather than through auction, this battle has only heated up.

Mr. Musk had previously criticized the Mr. Ambani-backed bid type.

Satellite broadband provides internet access somewhere within the spacecraft’s policy.

In remote or rural areas where conventional services like DSL, which uses phone lines to convey data, or cable are absent, are possible. It even helps to bridge the hard-to-reach online break.

Professional satellite internet services are still in development, and India’s telecom regulator has not yet made an announcement regarding spectrum pricing.

However, according to the credit rating agency ICRA, India’s satellite internet users are projected to reach two million by 2025.

The market is competitive, with around half a dozen major athletes, led by Mr Ambani’s Reliance Jio.

Having invested trillions in broadcast auctions to occupy the telecoms industry, Jio has then partnered with Luxembourg-based SES Astra, a top dish operator.

Unlike Mr Musk’s Starlink, which uses low-Earth orbit ( LEO ) satellites positioned between 160 and 1, 000 km from Earth’s surface for faster service, SES operates medium-Earth orbit ( MEO ) satellites at a much higher altitude, offering a more cost-effective system.

Satellite signals are processed into digital data by ground receivers that process them.

Mr Musk’s Starlink has 6,419 satellites in orbit and four million subscribers across 100 countries. He has been aiming to launch services in India since 2021, but regulatory hurdles have caused delays.

If his firm enters India this time, it may increase Prime Minister Narendra Modi’s efforts to recruit foreign investment, some say.

It will also assist his administration’s efforts to burnish its image as pro-business, countering says that its guidelines favour leading American traders like Mr Ambani.

While auctions have proved lucrative for it in the past, India’s government defends its decision to allocate satellite spectrum administratively this time, claiming it aligns with international norms.

According to Gareth Owen, a systems analyst at Counterpoint Research, satellite spectrum is not commonly distributed by auction because the costs involved could have an impact on the company’s economic justification or investment. In contrast, operational planning may assure range is very distributed among “qualified” people, giving Starlink a chance to enter the race.

Given the absence of explicit legitimate guidelines in India regarding how to provide satellite broadband services to consumers, Mr. Ambani’s Reliance contends that an auction is necessary to ensure fair competition.

Reliance constantly urged the development of a “level playing field between satellite-based and earth access providers” in letters written to the telecoms regulator earlier in October, which the BBC saw.

Additionally, the company claimed that” satellite-based services are no longer limited to places unserved by terrestrial network” and that “recent advances in satellite technology… have considerably blurred the lines between satellite and terrestrial systems.” According to one letter, under India’s telecoms laws, range assignment is done through auctions, with managerial planning only permitted in cases where “public attention, government functions, or technical or financial reasons prevent auctions.”

On X, Mr. Musk remarked that the ITU had long designated the spectrum as” shared 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 its position, Mr Musk responded to a post on X, saying: “I will call [Mr Ambani] and ask if it would not be too much trouble to allow Starlink to compete to provide internet services to the people of India.”

Mr Ambani’s resistance to the administrative pricing method might stem from a strategic advantage, suggests Mr Owen. The tycoon claims that he could be “prepared to outbid Musk” by using an auction to potentially force Starlink out of the Indian market.

However, Mr. Ambani was not the only one to support the auction route.

Sunil Mittal, chairman of Bharti Airtel, has said that companies aiming to serve urban, high-end customers should “take telecom licences and buy spectrum like everyone else”.

Mr Mittal- India’s second-largest wireless operator- along with Mr Ambani, controls 80 % of the country’s telecom market.

According to Mahesh Uppal, a telecommunications expert, this resistance is a “defensive move aimed at raising costs for international players seen as long-term threats.”

” While not immediate competition, satellite technologies are advancing quickly. Telecom companies ]in India ] with large terrestrial businesses fear that satellites could 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 n’t have internet access, with rural areas making up most of the 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 million, according to DataReportal, which tracks global online trends.

India’s internet adoption rate is still in decline compared to the global average of 66.2 %, but recent studies indicate that the nation is closing the gap.

If priced properly, satellite broadband can help bridge some of this gap, and even help in 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 – just 12 cents per gigabyte, according to Modi.

” A price war]with Indian operators] is inevitable. Musk has deep pockets. There’s no reason why he cannot offer a year of free services in]some ] places to gain a foothold in the domestic market”, says Prasanto K Roy, a technology analyst.

In Kenya and South Africa, Starlink has already reduced prices.

It may not be easy though. In a 2023 report, EY-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.

As a result of rising launch and maintenance costs, many more LEO satellites, the kind Starlink operates, are required to provide global coverage.

And some of the concerns of Indian businesspeople may not be valid.

Businesses will never completely transition to satellite unless there is no alternative to a terrestrial system. Terrestrial networks will always be less expensive than satellite, except in thinly populated regions”, says Mr Owen.

Mr Musk could have a first-mover advantage, but” satellite markets are notoriously slow to develop”.

The conflict between two of the richest men in the world has officially begun.