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The sunrise satellite communication sector in India is witnessing a significant showdown between industry giants, with Elon Musk’s Starlink, Reliance, Bharti Group-backed OneWeb-Eutelsat, and Amazon’s Project Kuiper vying for dominance. Recently a debate over whether the Indian government should allocate satellite spectrum through auctions or administrative allocation emerged after Musk criticised the auction route being sought by Reliance Industries chairman Mukesh Ambani as “unprecedented”. Following this, the Indian government clarified that it would allot spectrum for satellite broadband administratively and not via auction.
In September, India’s telecom regulator TRAI issued a consultation paper suggesting administrative allocation of satellite broadband spectrum, in which the government assigns airwaves to selected applicants without the auction process that happens for mobile wireless spectrum. Starlink, Kuiper, and Bharti Group have supported the proposal, but India’s largest telecom operator, Reliance Jio, is not on the same page. India’s Telecommunications Act 2023 exempts satellite broadband airwaves from being auctioned. The service is part of the First Schedule, which specifies services where spectrum is given out administratively.
Jio wrote to telecom minister Jyotiraditya Scindia last week and said the Telecom Regulatory Authority of India was overlooking the critical issue of a level playing field by hinting that it was in favour of administrative allocation. Later on, at a media briefing, the minister clarified that the government is not likely to change its stance. Satellite spectrum is not allocated by auction because the costs involved could significantly impact the business case economics.
Mukesh Ambani may want an auction because he is prepared to outbid Elon Musk, thereby eliminating Starlink from the Indian market. Going down the administrative route will ensure that the spectrum is divided equitably between “qualified” companies, allowing Starlink to enter the Indian market, explains Gareth Owen, associate director at Counterpoint Research.
Sunil David, a former AT&T regional director and now co-chair of the digital communications working group at the IET Future Tech Panel, says it’s always good to invite competition. “If Starlink comes to India, it will keep the Indian operators on their toes. So it’ll be nice to have a foreign player participating in this.”
India’s decision to allocate satellite spectrum administratively is in line with international practices. The International Telecommunication Union (ITU) advocates for spectrum allocation that promotes efficiency and economic fairness. Other countries, such as the United States, have also adopted administrative allocation for satellite spectrum.
The TRAI regulation is crucial to prevent challenges in satellite communication. Auction may not be the ideal way because issues like bandwidth manipulation and unfair distribution of resources may arise, explains Arun Moral, managing director at Primus Partners. “Countries like Brazil, Mexico, the US, and Saudi Arabia have tried auctioning satellite spectrum, but except for Saudi Arabia, all have reverted to administrative allocation.”
The economies of scale are critical for satellite systems. Although tremendous progress has been made in reducing costs (satellites and launch costs) over the past 20 years, satellite systems are still expensive compared to terrestrial networks, and have limited capacity. This makes it very difficult to develop a profitable business case for consumer broadband access. “The economics might work in geographically large, advanced economies such as the US, Canada, or Australia, but the problem is that the size of the market in those countries is not sufficiently large to support a big LEO (low earth orbit) system. This is why Starlink is trying to add as many other markets as possible, including India,” adds Owen.
Satellite communications (Satcom) in India is gaining attention due to the convergence of government initiatives, private sector investment, growing demand, and India’s space ecosystem advancements. Satcom is a way of sending and receiving information (like data, voice, or video) through satellites orbiting the Earth. Currently, Satcom services support 5 billion ATM transactions annually in India through 125,000 Very Small Aperture Terminal (VSAT)-enabled ATMs. Other key areas where they provide support include cellular backhaul, enterprise networking, and rural connectivity, as well as in-flight, rail, and maritime communications. A report by KPMG has estimated that India’s Satcom sector, which currently stands at $2.3 billion a year, will reach $20 billion by 2028. At present, the country ranks fourth in terms of investments in the sector globally.
India’s telecommunications sector is primarily driven by terrestrial mobile communications, which account for over 95 percent of the market share. This dominance is due to the relatively fast rollout and low costs of terrestrial mobile services, resulting in over a billion connections nationwide. But there are limitations to it, as they struggle to reach rural and remote areas, leaving certain populations without access due to economic unviability. Satellite communications can bridge this gap, offering wider coverage without the need for ground-based towers.
Despite its advantages, satellite communications are expensive, with handsets costing several times more than terrestrial mobile devices. This disparity is missed in the concerns among terrestrial players, who fear competition from satellite communications. The improving economics of satellite communications and the entry of deep-pocketed global players like Starlink and Amazon exacerbate these concerns, explains Mahesh Uppal, director of consulting firm ComFirst India, which specialises in policy and regulatory issues relating to telecom and the internet.
“Satellite communications will become increasingly important, particularly with the Internet of Things (IoT). The terrestrial players aim to create barriers to entry by increasing spectrum costs, either through auctions or administrative allocation,” adds Uppal.
The telecom sector in India is at a crossroads, with the government’s decision on satcom spectrum allocation set to shape the industry’s future. While administrative allocation may facilitate rapid growth, concerns about fairness and competition remain.