Elon Musk vs Reliance Jio vs Airtel satcom debate: Why no one fears Musk’s Starlink in India

Elon Musk's satellite internet venture, Starlink, may be causing ripples overseas, but in India, it is yet to generate much fear among its competition. The reasons are multifaceted, ranging from regulatory hurdles to pricing dynamics and the unique characteristics of India's rural market.

Pricing is a major obstacle for the US-based company. Overseas, Starlink's service is priced at a premium, and when converted to Indian rupees, the cost makes it much less attractive compared to local alternatives. The cheapest monthly plan offered by Starlink starts at around $50 (Rs 4,200). On the other hand, Airtel Xstream Fiber plans start at Rs 499  (excluding taxes) per month and Reliance JioFiber starts at Rs 399 (excluding taxes) per month. India boasts some of the cheapest internet in the world, especially with the rollout of 5G services by Reliance Jio and Bharti Airtel. For rural consumers, who are Starlink's primary target audience, the prospect of paying much higher rates for satellite internet bandwidth is unlikely to be appealing when cheaper options are readily available.

Even if Starlink manages to navigate the high costs, it will still need to maneuver through all the regulatory hurdles. The company has faced headwinds in adapting to India's licensing framework. Unlike in other countries, where spectrum allocation for satellite communication often follows administrative guidelines, India's telecom regulations require a Unified Access Service Licence (UASL) for any communication service. The UASL is a comprehensive licence that permits service providers to offer various telecommunications services, including voice, data, and satellite communications, under a single licence. It is part of India's regulatory framework designed to ensure that operators meet specific rollout obligations, adhere to quality standards, and contribute to government revenues through licence fees. This requirement acts as a significant barrier to entry for Starlink, making it difficult to quickly roll out services without jumping through several regulatory hoops.

Moreover, India's rural areas, while in need of better connectivity, present a challenge in terms of market density. Unlike more sparsely populated regions overseas where Starlink thrives, rural India is often densely packed, making the case for expensive satellite-based internet services less compelling. The cost-to-benefit ratio simply does not stack up well against the availability of affordable 5G services, which are expanding rapidly.

The dynamics between India's telecom players have also shifted, with Bharti Airtel and Reliance Jio finding themselves somewhat aligned in their stance on spectrum allocation, despite their past rivalry. Reliance Jio, led by Mukesh Ambani, has been pushing for a full-fledged auction of the satellite spectrum, arguing that it ensures a level playing field for all players, including those who intend to serve urban, high-paying customers. On the other hand, Bharti Airtel, led by Sunil Mittal, supports some form of payment but favours an administrative approach rather than an outright auction. Jyotiraditya Scindia, India’s Telecom Minister, has also leaned towards the latter view, aligning with Bharti’s preference for administrative allocation while incorporating a fair pricing mechanism set by the telecom regulator.

Airtel, through its partnership with OneWeb, is already in the satcom service space, providing satellite-based internet services and establishing ground stations in Gujarat and Tamil Nadu. This existing foothold makes Airtel less threatened by Starlink, especially given the complexities Musk’s company will face in gaining market traction in India.

Elon Musk has welcomed the Indian government's decision to allocate satellite spectrum administratively rather than through an auction. Musk praised the move, stating that it aligns with international practices, and reiterated that an auction would be unprecedented, given that the International Telecommunication Union (ITU) designates such spectrum for shared satellite use. Despite Musk's optimism, his promise to bring Starlink to India faces several practical challenges that make it less of a threat to existing players like Airtel and Jio.

The result is a market where, for now, no one seems particularly scared of Elon Musk's Starlink. Between regulatory barriers, pricing issues, and the competitive edge held by local telecom giants, Starlink's journey in India is likely to be an uphill battle. With Bharti and Jio presenting a somewhat united front, and with the backing of the telecom minister, the satellite internet space in India may remain a challenging landscape for newcomers, even one as high-profile as Musk’s Starlink.