Is Starlink's India Ambition Doomed?

The introduction of satellite internet services by Reliance Jio and the Bharti Group-backed OneWeb, the second-largest player in the Satellite Internet industry, at the 2023 India Mobile Congress (IMC) on Friday heralds a promising development for India. It holds the potential to deliver high-speed internet connectivity to the farthest reaches and underserved areas of the country. However, Elon Musk's Starlink is unlikely to view these developments with enthusiasm.

A Satellite Internet Battle Unfolds

Stepping up to the podium during IMC 2023, Bharti Enterprises Chairman Sunil Bharti Mittal announced that Eutelsat-OneWeb would soon commence satellite internet services in India. The launch of their services is slated to take place after the establishment of a satellite ground station in Mehsana, Gujarat. Reliance Jio also made a significant announcement during the event, introducing "JioSpaceFiber," a satellite broadband service tailored to deliver high-capacity bandwidth and rapid internet connectivity throughout the nation, all while maintaining competitive pricing.

These launches occur against the backdrop of Starlink's apparent challenges in India. Despite its aspirations to provide low-latency satellite internet services through Low Earth orbit (LEO) satellite deployments and connect even the most remote areas of the country, the company has encountered regulatory roadblocks. Starlink, which initially entered India with the promise of bridging connectivity gaps, is yet to obtain a commercial license and is awaiting regulatory approval. In fact, the company’s foray into India too began on the wrong note as it had to refund around 5,000 pre-booked Indian orders due to government mandates in 2022.

EY estimates that the near-term annual revenue opportunity for the satellite internet market in India exceeds USD 1 billion

The market for space-based broadband internet services in India is poised for substantial growth. Estimates of the industry's market size vary considerably, with one projection foreseeing the market exceeding USD 17 billion by 2030. Another, even more ambitious estimate suggests that the global space-based broadband internet market could surpass a staggering USD 50 billion by 2031. Courtesy: EYThe need for improved internet access in India cannot be overstated. Out of India's approximately 1.4 billion people, as of April 2023, nearly 40 per cent still lack internet access, primarily in rural areas where infrastructure challenges persist. It is in these underserved regions that satellite internet has the potential to make a transformative impact.

As per Icra's 2021 report, the number of satellite internet customers in India is expected to increase almost sixfold, reaching approximately two million by 2025. This growth potential presents a significant opportunity for satellite internet providers.

"Satellite broadband is an alternative with the capacity to provide the required stability and sufficiency for hard-to-reach areas and business domains like logistics which are throwing new scenarios at the communication industry. The lack of dependency on complex ground structures is a boon and at the same time developments in domain of space can provide interesting options."

- Santosh Tiwari Partner, Strategy and Transactions EY LLP

Pricing Challenges for Starlink

A major hurdle that Starlink faces in the Indian market is the issue of pricing. Starlink's services come at a significantly higher cost, nearly ten times more expensive than those of India's leading broadband providers. Unless the Indian government intervenes with subsidies to level the playing field, this substantial cost differential could seriously impede Starlink's ability to compete effectively in the country. This pricing disadvantage naturally places the company on backfoot when compared to local players like Reliance Jio and Bharti Group-backed OneWeb.

To put this into perspective, Starlink's pricing structure includes an initial upfront fee of Rs 37,400 (approximately USD 499), with a monthly fee of Rs 7,425 (approximately USD 99). This pricing does not include taxes and levies, which Starlink estimates at around 30 per cent, resulting in a total annual cost of Rs 1,58,000, according to an EY report.

Comparing Starlink and Jio's Approach

In addition to cost considerations, the technology and deployment strategies of satellite internet providers will play a pivotal role. Starlink utilises Low Earth orbit (LEO) deployments, with satellites orbiting at distances ranging from approximately 160 km to 2,000 km from Earth. This configuration allows for low latency and high-speed connectivity. Interestingly, OneWeb also utilises LEO deployments.

On the other hand, Jio's approach combines Medium Earth orbit (MEO) deployments, with distances ranging from around 2,000 km to 35,786 km, and Geostationary Earth orbit (GEO) deployments at approximately 35,786 km from Earth. The company is bringing this service to life through a collaboration with SES. While this strategy offers certain advantages, LEO's low latency is a key selling point for Startlink which has the biggest constellation of satellites in orbit currently (about 4,200 satellites, more than half of the total active satellites). In some of the key economies, Starlink’s internet speed has been observed to beat broadband.Courtesy: EY

Opportunity and Challenge

Starlink accomplished a significant milestone in September when its subscriber base surged, doubling to a remarkable two million users within nine months. However, the ongoing trajectory of its success hinges critically on the company's ability to enter new markets, encompassing a vast collective population exceeding three billion individuals.

EY estimates that the near-term annual revenue opportunity for the satellite internet market in India exceeds USD 1 billion. This underlines the immense growth potential in the sector and the high stakes for all players involved.

Yet, India looms as a formidable challenge for Elon Musk's Starlink, setting the stage for an arduous competition in this market against robust contenders like Jio and OneWeb. Further, the landscape may soon become even more crowded, with Tata Group's Nelco having submitted its application for the global mobile communication by satellite (GMPCS) license in December 2022.

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