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Starlink’s India Entry and Spectrum Concerns
Context:
Before considering India as a market for his electric vehicle venture, Elon Musk explored the country for his satellite communications initiative, Starlink. However, concerns over national security and spectrum allocation have delayed its entry, with approvals still pending from the government.
How Does Starlink Differ from Other Operators?
- Satellite Based: Unlike traditional internet service providers such as Jio and Airtel, which rely on ground-based infrastructure like fiber-optic cables and network towers, Starlink provides connectivity via a network of satellites.
- Placed in LEO: These satellites are placed in low Earth orbit (LEO) and are connected through ground stations and small satellite dishes, enhancing last-mile connectivity in remote and inaccessible regions where conventional network infrastructure is impractical.
- Low Latency: Compared to traditional satellite communication (satcom) providers, Starlink has an advantage in latency (the time taken for data transmission), as its satellites operate in a lower orbit.
- However, conventional broadband services still offer higher speeds and lower latency, making them more suitable for urban and densely populated areas, while satcom services remain ideal for remote and rural locations.
Applications of Satcom Services
The enhanced connectivity offered by satellite-based services can drive significant transformations across various sectors:
- Crisis Response: One of the most notable examples of Starlink’s impact was seen in the Russia-Ukraine conflict in 2022.
- Just two days after the conflict began, Ukrainian President Volodymyr Zelenskyy requested SpaceX to activate Starlink, which has since remained a crucial tool for Ukraine’s public, government, and military.
- Commercial, Social and Recreational: Beyond crisis response, satcom services have commercial, social, and recreational applications.
- Improved connectivity can facilitate online education, telemedicine, and digital access for remote communities.
- Travel: Additionally, the luxury travel industry can benefit from satellite connectivity in exotic holiday destinations where traditional networks may be unreliable.
Potential of India’s Satcom Market
- According to a 2024 KPMG study, India’s satcom sector is valued at $2.3 billion and is projected to grow to $20 billion by 2028.
- Currently, India ranks fourth globally in satcom investments, with nearly $2 billion invested in 110 domestic firms as of March 2024.
- The potential for expansion is immense, as India’s rural teledensity stood at just 59.1% as of March 31, 2024, per government data.
- With the Digital India initiative aiming to boost connectivity, satcom can play a crucial role in bridging the digital divide.
- Rather than competing with traditional telecom providers, satellite internet can serve as a complementary solution for underserved regions.
- One key challenge, however, is cost. Satcom services are estimated to be 7-18 times more expensive than home broadband plans, which currently start at $5-7 per month.
- However, subsidies from the Universal Service Obligation Fund (USOF or Digital Bharat Nidhi) could help make these services more affordable.
Regulatory Hurdles and Delays
- Starlink’s application is currently under review by the Ministry of Home Affairs and security agencies.
- To commence operations in India, it must obtain a Global Mobile Personal Communication by Satellite (GMPCS) license from the Department of Telecommunications (DoT), along with necessary spectrum allocations.
- The delays are primarily due to security concerns regarding data storage and interception capabilities for intelligence agencies.
- DoT guidelines require foreign satcom operators to store all user data within India and ensure compliance with domestic security laws.
- Another contentious issue is spectrum allocation.
- While the government plans to administratively allocate spectrum for satellite services, some industry players have advocated for an auction-based system, similar to how spectrum is assigned to telecom operators.
Competition in India’s Satcom Market
- Early Stage: India’s satcom industry is still in its early stages, with only two domestic players—Jio Satellite Communications and Bharti-backed OneWeb—having received all necessary approvals for rollout.
- Caution of Incumbents: Incumbent telecom providers remain cautious, fearing that Starlink and other satellite operators could cannibalise their subscriber base by offering services in urban areas.
- However, analysts at JM Financial argue that satellite internet poses only a limited threat to major players like Jio and Bharti, as home broadband currently contributes only 6-10% of their FY30 EBITDA and valuation.
- Financial Advantage: Global competitors such as Amazon’s Kuiper and Starlink have a significant financial advantage, allowing them to scale operations despite the high costs of satellite deployment.
- Starlink, in particular, is revolutionising the industry by launching multiple small satellites into LEO, as opposed to the conventional method of sending a few large satellites into higher orbits.
