Game in the sky: Will Musk's Starlink disrupt India's broadband universe?

Will the entry of Elon Musk’s Starlink disrupt India’s broadband universe dominated by telcos? That question has kept analysts busy after Starlink, a fully-owned subsidiary of SpaceX —majority owned by Musk — got the go-ahead from the Department of Telecommunications (DoT) last week to start its satellite broadband service in the country.

 

For starters, Musk seems to be taking cautious steps, having waited three years for the Starlink application to get through. After a prolonged war of words between telcos led by Reliance Jio and Bharti Airtel on one side and foreign players led by Musk on the other, the two sides have teamed up now.    

 

Recently, both Jio and Airtel signed up with SpaceX for distribution of Starlink in India. Quite a switch from the days of  clash —domestic players favoured auction of spectrum and the foreign companies sought administered allocation of airwaves. Airtel had shifted its stance from backing administered allocation of spectrum to supporting auction.

 

Many suggest that geopolitical relations between India and the United States played a role in facilitating the tieups between Starlink and the Indian telcos. Musk is a key advisor to US president Donald Trump.  

 

That will reduce Starlink’s cost of  setting up a distribution system from the scratch. In fact, in many countries, telcos have entered such tieups after initial resistance. Through such ventures with Starlink, Telstra in Australia offers services in remote areas, KDDI in Japan, and Roger Communications in Canada.

 

But unlike telcos in other countries, both Airtel’s promoter Sunil Mittal through One Web (across the globe, including India) and Mukesh Ambani’s Reliance Jio are involved in a direct play in the satellite services market. Clashing head on with Starlink.

 

With the two straddling both  terrestrial and satellite in India, most experts say they would still have a big upper hand to leverage their existing large mobile customer base for broadband services, while Starlink will start afresh.  

 

Also unlike in many other markets, where telcos have substantial underserved or non-connected areas, the reality in India 

 

is different. According to data available with GSMA (non-profit association representing the interests of mobile companies around the world), 99 per cent of India is already connected with mobile and as much as 96 per cent of the 650,000 villages in the country are linked with 4G or 5G technology. So they already have mobile broadband.

 

Competitors, who have closely followed Musk’s entry strategies for satellite broadband in many countries, say that Starlink is expected to tread slowly initially. Currently, with 5 million customers across the globe, it is still building the service in stages as more satellites and capacity are being put in the skies.

 

Starlink has dropped kit prices and tariffs in some markets. For instance, in Bhutan, where it recently launched the service, the tariffs range from ₹3,000 to 4,200 a month and initial mini starter kit is pegged at ₹17,000 going up to ₹33,000. But that is still at a large premium over terrestrial broadband services.

 

Analysts explain the maths for India. There are over 40 million households who have either fixed fibre broadband and fixed wireless broadband — mostly with Jio and Airtel across the country. This number is projected to hit 75 million to 100 million by 2030. To put it simply, only 13 per cent of the total 300 million households in the country are connected by broadband.

 

“We expect Starlink to churn subscribers from the top end of the existing market. If it can get 10 per cent of these households in a few years, it would be able to double its global subscriber base from India itself,” says a senior executive of a telco.

 

He adds that Starlink, like in most other countries, will price its offering at a premium or similar to FTTH (fiber to the home) and FWA (fixed wireless access) offered by telcos. The two services range between ₹2,500 (for 500 mbps) and ₹4,000 a month (1 gbps).  In the early days, Starlink will have to launch more satellites and is unlikely to clog the service by playing the pricing or the volume game.

 

Another challenge for Starlink could be the entry cost — the steep kit price which consumers need to pay to start  the service. Perhaps, it may have to subsidise compared to most telcos offering the set top boxes free, bundled with data, for a few months. 

 

Once volumes increase and Starlink gets armed with more capacity, the game could change dramatically, explain analysts. That’s why the argument put out by the Telecom Regulatory Authority of India (Trai) that satellite services only complement terrestrial services is being debated by telcos.

 

Telcos argue that while they have to fork out huge instalments for auctioned spectrum, satellite players have been given flexibility — they pay more if they earn more.

 

Trai settled the issue of spectrum for satellite internet last week by recommending the administered allocation route for giving out airwaves. Satcom players will have to fork out 4 per cent of their adjusted gross revenue (AGR) and a top-up fee of ₹500 per subscriber in case of urban areas. Auction is out of the way.

 

Estimates are that for every ₹100 earned from a subscriber, telcos have to fork out ₹48 (including goods and services tax, spectrum usage charge, licence fee, and spectrum installment) for terrestrial services to the government. However, satellite service operators will have to fork out around ₹31 to ₹32 as they won’t need to pay installments for auctioned spectrum, an analyst says.

 

Starlink, which has put in 6,000 satellites in the air, hopes to hit 42,000 LEO (low earth orbit) satellites in two years. With the launch of new satellites (the cost of which is falling), the operator is expected to have a huge bandwidth capacity over the Indian region. According to experts, this could be equivalent to the total  bandwidth capacity available to the largest telcos in the terrestrial space. Once that happens, Starlink will be able to play the pricing game, replicating the Jio playbook during the 4G launch.

 

Yet, despite competition, there are many areas where Starlink and the telcos can work together. One is the growing potential of direct smartphone- to-satellite connectivity. Starlink is already experimenting with many  players including T-Mobile in the US, Optus and Telstra in Australia amongst others. And many mobile device players such as Apple and Google are already offering emergency text services in some countries via satellites in cases where cellular network is rare.

 

In India too, Starlink can tie up with Indian telcos, which can leverage their existing spectrum and subscriber base to offer the additional service. “We expect them to use our spectrum and offer direct satellite connectivity on Starlink satellites to our customers. That will be a win win revenue share model,” points out a senior executive in an internet company.

 

That can happen once the policy fineprint is out. For now, telcos such as Airtel and Jio — with their presence in terrestrial and satcom — seem well poised to take on satcom companies backed by Elon Musk and Jeff Bezos.

 

The satellite broadband spectrum saga

 

2021-2022: Starlink invites Indian consumers to pre-book its services, gets 5,000 applicants

 

2022: Government pulls them up for violating regulation and offering service without licence. Starlink refunds $99 it took for pre-booking. Its India head Sanjay Bhargava resigns  

 

> Applies for GMPCS licence, faces regulatory hurdles  

 

2024: Starlink pushes for administrative allocation of spectrum. Jio, and later Airtel, favour the auction

 

November 2024: Communications Minister Jyotiraditya Scindia announces that spectrum will be given through administrative mechanism, a big victory for Musk

 

May 2025: Starlink gets licence from DoT to operate satcom services 

 

> Trai recommends pricing the spectrum through administrative mechanism, offering the airwaves for five years, a demand made by Indian telcos. Musk had pushed for 20 years