Elon Musk is battling Mukesh Ambani on India’s satellite internet

The race between two of the richest men in the world, Elon Musk and Mukesh Ambani, is heating up as they prepare to battle it out in India’s satellite broadband market.

After the Indian government announced last week that satellite spectrum for broadband would be allocated administratively instead of through an auction, this battle has only intensified.

Musk had previously criticized the auction model backed by Ambani.

Satellite broadband provides Internet access anywhere within satellite range.

This makes it a reliable option for remote or rural areas where traditional services such as DSL (a connection that uses telephone lines to transmit data) or cable are not available. It also helps bridge the hard-to-reach digital divide.

India’s telecom regulator has not yet announced spectrum prices, and commercial satellite internet services have yet to commence.

However, according to credit rating agency ICRA, the number of satellite internet subscribers in India is expected to reach two million by 2025.

The market is competitive, with about half a dozen key players, led by Mr Ambani’s Reliance Jio.

After investing billions in radio auctions to dominate the telecom sector, Jio has now partnered with Luxembourg-based SES Astra, a leading satellite operator.

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

Receivers on the ground receive satellite signals and process them into internet data.

Musk’s Starlink has 6,419 satellites in orbit and four million subscribers in 100 countries. He has been focused on launching services in India since 2021but regulatory hurdles have caused delays.

If his company enters India this time, it will boost Prime Minister Narendra Modi’s efforts to attract foreign investment, many say.

It will also help his government’s efforts to burnish its image as pro-business, countering claims that its policies favor top Indian businessmen like Mr Ambani.

Although auctions for this purpose have proven lucrative in the past, The Indian government is defending its decision to administratively allocate satellite spectrum this time, claiming it is in line with international standards.

Satellite spectrum is not typically allocated through an auction because the costs involved could impact the financial rationale or investment in the business, said Gareth Owen, a technology analyst at Counterpoint Research. In contrast, administrative allocation would ensure that the spectrum is distributed fairly among “qualified” players, giving Starlink a chance to enter the race.

But Mr Ambani’s Reliance says an auction is necessary to ensure fair competition, given India’s lack of clear legal provisions on how satellite broadband services can be offered directly to people.

In letters written to the telecoms regulator earlier in October and seen by the BBC, Reliance repeatedly urged creating a “level playing field between satellite-based and terrestrial access services”.

The company also said that “recent developments in satellite technologies… have significantly blurred the boundaries between satellite and terrestrial networks”, and that “satellite-based services are no longer limited to areas not served by terrestrial networks”. One letter stated that spectrum allocation is done through auctions under Indian telecom laws, with administrative allocation allowed only in cases of “public interest, government functions or technical or economic reasons precluding auctions”.

On The International Telecommunication Union (ITU), a UN digital technology agency, sets global regulations, and India is a member and signatory.

When Reuters news agency reported that Mukesh Ambani was lobbying the government Reconsidering his position, Mr Musk responded to a message on [Mr Ambani] and ask whether it would not be too much of a stretch to allow Starlink to compete to provide internet services to the people of India.”

Mr Ambani’s opposition to the administrative pricing method could stem from a strategic advantage, Mr Owen suggests. The tycoon could be “prepared to outbid Musk,” using an auction to potentially exclude Starlink from the Indian market, he says.

But it is not just Mr Ambani who supported the auction route.

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

Mr Mittal – India’s second-largest mobile operator – together with Mr Ambani controls 80% of the country’s telecom market.

Such resistance is a “defensive move aimed at raising costs for international players seen as a long-term threat,” said Mahesh Uppal, a telecommunications expert.

“Although there is no direct competition, satellite technologies are developing rapidly. Telecom companies [in India] while major terrestrial companies fear that satellites could soon become more competitive, challenging their dominance.”

Clearly, the promise of the vast Indian market is at stake. Nearly 40% of India’s 1.4 billion people still don’t have internet access, with rural areas accounting for the bulk of cases, according to consultancy EY-Parthenon.

For context, China is home to nearly 1.09 billion internet users, which is almost 340 million more than India’s. 751 millionaccording to DataReportal, which tracks global online trends.

India’s internet adoption rate still lags behind the global average of 66.2%, but recent surveys show that the country is closing the gap.

If priced right, satellite broadband could help bridge some of this gap, and even help close the gap internet of things (IoT), a network that connects everyday objects to the Internet, allowing them to talk to each other.

Prices will be key in India, where mobile data is among the cheapest globally 12 cents per gigabyteModi said.

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

Starlink has already reduced prices in Kenya and South Africa.

Although it may not be easy. In a 2023 reportEY-Parthenon noted that Starlink’s higher costs – nearly ten times those of major Indian broadband providers – could make it difficult to compete without government subsidies.

Far more LEO satellites – of the kind that Starlink operates – are needed to provide global coverage than MEO satellites, increasing launch and maintenance costs.

And some of the fears of Indian operators may be unfounded.

“Businesses will never move completely to satellite unless there is no terrestrial option. Terrestrial networks will always be cheaper than satellite, except in sparsely populated regions,” says Mr Owen.

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

The battle between two of the world’s richest men over the Internet of Space has begun in earnest.