India’s Satellite Internet Battleground: Uncovering the Web of Competitive Advantages
India’s space run has already been getting triumphs as the government previously loosened regulations for private and foreign investment in satellite manufacturing and operations. Additionally, beaming internet from the middle of the woods from a satellite orbiting kilometres outside Earth’s atmosphere has been the pipe dream for aspirers of high-speed heaven in India. This aspiration manifested in the form of Teledesic, a company founded in 1990 to build a commercial broadband satellite internet constellation. However, it failed to sustain at the time due to high operating costs and latency. Then today, what has brought companies like Starlink and OneWeb to mammoth heights and also ticked Mukesh Ambani to make a stride in the Indian market potentially?
With 42 million wired broadband internet users and 904 million telecom users on networks, India is the world’s second-biggest telecom market after China. Yet, the digital divide stands so prevalent in the following statistics:
This inconsistent distribution of networks also coincides with inconsistent speeds for unfair prices. According to The Internet Value Index by Surfshark, India is 26% below the global average of fairness in internet prices. The existence of 2 dominant players in the market, as well as the exorbitant license fee charged by the government are both key factors that drive up the prices for consumers. The government has been putting in strained efforts to revive BSNL’s presence, such as establishing a larger network of towers. The Cellular Operators Association of India (COAI) has formally requested the government to reduce the 8% license fee due to a reduction in auction spectrum costs. These moves can drive down high operating costs and allow companies to focus on innovation and growth.
The Indian market still has a lot of extra space for potential satellite internet users. Reliance has dominated India’s telecom sector for years with a 40.17% market share, while Bharti Airtel and Vodafone Idea have a 35.10% and 18.39% market share, respectively. Yet, low penetration in rural areas exists and is often tied to the remoteness of these locations and the lack of traditional infrastructure, which is either unavailable or prohibitively expensive. Moreover, presently BSNL still operates in tier-2 and tier-3 cities, majorly by expensing 3G services at half the price of Jio’s plans and maintaining satisfactory internet connectivity. Its customer base also comes from being a viable dual SIM option preferred by various customers. As of 2017, 30% of India’s then-mobile users had dual SIM connections. Therefore, these strategic areas provide a brilliant opportunity that must be exploited by these companies to offer satellite internet at a fair cost in remote locations, which will help them lead this new spatial digital revolution.
It has rightly re-emerged as a viable alternative to the time and energy-intensive practice of laying thousands of miles of fiber optic cable. The science behind it lies in utilising innovative, non-synchronous orbit constellations of small, mass-produced satellites that lower production costs and improve latency to better compete with broadband. While Indian telecom companies are still catching up, new Silicon Valley–related companies such as OneWeb and Starlink are heading the race to launch satellites, and Starlink tops the list with 6,400 satellites as of October 2024.
Elon Musk, Starlink’s founder, has also shown eager interest in being a pioneer of satellite internet in India along with Reliance Jio. Starlink’s strong fleet of low-Earth orbit (LEO) satellites are positioned between 160 and 1,000 km from Earth’s surface for faster service, providing it leverage over Jio. Whereas, Jio has partnered with Luxembourg-based SES Astra, which has been reported to have 38 satellites that Reliance plans to use. SES operates medium-Earth orbit (MEO) satellites at a much higher altitude, offering a more cost-effective system with some increase in latency. These technological capabilities of the companies also dictate the pricing strategies these companies aim to deploy in the future to extract maximum market share.
Historically, both Starlink and Jio have been known to be masters of “launch-pad pricing”, technically known as penetration pricing. In 2015, Jio entered the market, making a surge over all the other competitors by offering free internet packages and today has evolved into following decoy pricing strategies. Similarly, Musk led Starlink to Kenya, unsettling local players and offering the Starlink kit at $10 per month, versus $120 in the United States, with rental plans available for higher hardware costs. As a result, Kenya’s Safaricom in July complained to local regulators, calling for players like Starlink to be required to partner with mobile networks and not operate independently. For comparison, in India, a Reliance Jio Fiber-based, high-speed broadband plan costs $10 per month, with a router free on long-term plans. Starlink also has plans to offer an unlimited internet data plan in India initially and target corporate clients.
With hindsight, if Starlink enters the Indian market, it would contain all the capabilities required to form a monopolistic competition if the government does not intervene. Starlink can price aggressively because it doesn’t need to add more satellites, pushing Jio’s plans to the brink. Right now, both companies have already obtained the global mobile personal communication by satellite (“GMPCS”) license to provide satellite communication services in licensed service areas. Jio has already incurred a spend of $19 billion in airwave auctions and will risk losing broadband customers to Musk and potentially even data and voice clients later as technology advances. Thus, the government’s encouragement of foreign investment also requires monitoring key concerns, such as national security and healthy market competition.
Satellite internet in India is still nascent, but it promises to reshape the digital landscape. It is within this context that a significant expansion of the satellite Internet industry is taking place, bringing grand visions of social and economic growth through connectivity. As more players enter the market, innovations and collaborations are likely to emerge, enhancing service quality and affordability. High installation and service costs might bear an initial burden on Indian consumers; however, adoption can be streamlined, as we have seen implementation models in war-torn countries like Ukraine. Thus, developing India’s indigenous network of satellite internet constellations is pivotal to the nation’s recognition on the global front.
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