Elon Musk and Mukesh Ambani Set to Compete for India’s Satellite Broadband Market

The rivalry between two of the world’s wealthiest individuals, Elon Musk and Mukesh Ambani, is escalating as they prepare to compete in India’s satellite broadband sector. This competition intensified after the Indian government’s recent announcement that satellite spectrum for broadband would be allocated through an administrative process instead of an auction, a decision that has sparked debate.

Previously, Elon Musk had expressed his disapproval of the auction model, which was supported by Mukesh Ambani. Satellite broadband is designed to provide internet access across vast areas covered by the satellite, making it an ideal solution for rural or remote locations where traditional internet options like DSL, which uses telephone lines, or cable services are not available. This technology is seen as an essential tool for closing the digital divide in hard-to-reach regions.

While India’s telecom regulator has yet to reveal the pricing details for satellite spectrum, commercial satellite internet services are expected to roll out soon. Projections from credit rating agency ICRA indicate that satellite internet subscribers in India could reach two million by 2025. The sector is growing increasingly competitive, with several key players entering the race, including Mukesh Ambani’s Reliance Jio.

Jio, already a dominant force in India’s telecom industry due to massive investments in airwave auctions, has partnered with SES Astra, a satellite operator based in Luxembourg. SES Astra uses medium-Earth orbit (MEO) satellites, which operate at a higher altitude and are known for being more cost-effective, unlike Musk’s Starlink, which relies on low-Earth orbit (LEO) satellites positioned between 160 and 1,000 kilometers from Earth. LEO satellites generally offer faster services but are more expensive to deploy and maintain.

Starlink already has 6,419 satellites in orbit and serves four million subscribers across 100 countries. Musk has been aiming to launch Starlink services in India since 2021, but regulatory hurdles have delayed these plans. If Starlink enters the Indian market, it could provide a significant boost to Prime Minister Narendra Modi’s initiative to attract foreign investment. This move might also enhance the government’s reputation as business-friendly, countering perceptions that its policies primarily benefit Indian business magnates like Ambani.

India’s decision to allocate satellite spectrum administratively, rather than through an auction, aligns with international norms, according to the government. Auctions have previously generated substantial revenue for India, but in this case, the government defends the administrative allocation as being in line with global practices. According to Gareth Owen, a technology analyst at Counterpoint Research, spectrum auctions are rare for satellite broadband because the high costs involved could negatively affect the business’s financial viability. He added that an administrative allocation allows the spectrum to be distributed fairly among qualified players, giving Starlink a chance to compete.

However, Reliance has advocated for an auction, arguing that it is necessary to ensure fair competition, especially in the absence of clear legal provisions in India on how satellite broadband services can be provided directly to consumers. In a series of letters sent to India’s telecom regulator, Reliance emphasized the importance of creating a level playing field between satellite and terrestrial broadband services. The company noted that advances in satellite technology have “blurred the lines between satellite and terrestrial networks,” meaning satellite-based services are no longer restricted to underserved areas.

One of the letters from Reliance stated, “Spectrum assignment should be done through auctions as per Indian telecom laws, except in specific cases where public interest or economic reasons justify administrative allocation.” In response to reports that Ambani was lobbying the government to reconsider its position on spectrum allocation, Musk reacted on X (formerly Twitter), 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.”

Gareth Owen suggests that Ambani’s opposition to the administrative allocation could be part of a broader strategy to outbid Musk in an auction, potentially blocking Starlink’s entry into the Indian market. This would not only protect Ambani’s interests but also cement Reliance’s dominance in India’s telecom sector.

Ambani is not the only one backing the auction process. Sunil Mittal, chairman of Bharti Airtel, India’s second-largest telecom operator, has also voiced support for the auction model. Mittal believes that companies seeking to serve high-end urban customers should “take telecom licenses and buy spectrum like everyone else.” Airtel and Reliance together control 80% of India’s telecom market.

Mahesh Uppal, a telecommunications expert, views this resistance as a “defensive move aimed at raising costs for international players seen as long-term threats.” He believes that while satellite technology may not pose an immediate threat, it is advancing rapidly, and traditional telecom companies fear that satellite-based services could soon challenge their dominance in the market.

The potential market in India is immense, as nearly 40% of the country’s 1.4 billion people still lack internet access, with most of these unconnected individuals living in rural areas. In comparison, China has around 1.09 billion internet users, which is significantly higher than India’s 751 million users. While India’s internet adoption rate remains below the global average of 66.2%, recent studies suggest that the country is steadily closing the gap.

Satellite broadband has the potential to help bridge this digital divide, particularly in rural regions and in the internet of things (IoT) ecosystem, where everyday objects are connected to the internet. However, pricing will be a crucial factor in determining the success of satellite internet services in India. Mobile data in India is among the cheapest in the world, costing just 12 cents per gigabyte, according to Prime Minister Modi.

Prasanto K Roy, a technology analyst, predicts that a price war between Starlink and Indian operators is inevitable. “Musk has deep pockets,” Roy said. “There’s no reason why he cannot offer a year of free services in some places to gain a foothold in the domestic market.” In fact, Starlink has already reduced prices in countries like Kenya and South Africa.

Nevertheless, entering the Indian market may not be straightforward for Musk. A 2023 report by EY-Parthenon highlights that Starlink’s costs are nearly ten times higher than those of Indian broadband providers, which could make it difficult for the company to compete unless it receives government subsidies.

Despite these challenges, some of the concerns raised by Indian telecom operators may be overstated. Gareth Owen points out that businesses are unlikely to switch entirely to satellite broadband unless there is no alternative, as terrestrial networks will always be less expensive than satellite systems, except in sparsely populated areas.

While Musk’s Starlink may have a first-mover advantage, satellite markets are known for being slow to develop. Still, the rivalry between Musk and Ambani in this space is only just beginning.