Musk and Ambani in a business tug of war
Elon Musk and Mukesh Ambani, two of the world’s richest men, are currently in a tug of war over India’s satellite broadband market.
Last week, the Indian government announced that satellite spectrum for broadband would be allocated administratively rather than through auction. This announcement has intensified the battle between the two billionaires. Given that Musk had once criticised the auction model which Mr Ambani supported.
Satellite broadband offers internet access anywhere within the satellite’s coverage. This makes it a dependable alternative for remote areas where traditional services are unavailable. It’s also an answer to the hard-to-reach digital gap problem.
Indian satellite internet subscribers are set to reach 2 million by 2025 according to ICRA’s credit rating, even though the pricing is yet to be announced.
Despite the competitive market, about six key players are led by Mr Ambani’s Reliance Jio. To control the telecom industry, Jio has invested billions in airwave auctions, and has now partnered with SES Astra, a Luxembourg-based leading satellite operator.
While Musk’s Starlink uses low-Earth orbit (LEO) satellites positioned between 160 and 1,000 km from Earth’s surface for faster service, SES uses medium-Earth orbit (MEO) satellites at a higher altitude, providing a more cost-effective system.
Musk’s Starlink has 6,419 satellites in orbit and 4 million subscribers across 100 countries. Although he has been working to launch services in India since 2021, regulatory challenges have held him back.
Popular opinion stipulate that the establishment of Musk’s starlink in India aid Prime Minister Narendra Modi’s efforts to draw foreign investment. It will also enhance his efforts to position his government as pro-business.
Gareth Owen, a technology analyst at Counterpoint Research, explains that, “Satellite spectrum is not typically allocated by auction as the costs involved could impact the financial rationale or investment in the business. In contrast, administrative allocation would ensure spectrum is fairly distributed among “qualified” players, giving Starlink a chance to enter the race.”
Mr Ambani’s Reliance, however, still maintains that an auction ensures fair competition, considering that there are no clear legal provisions in India on the provision of broadband services to people.
The company has advocated for an auction through series of letters. One of these letters stated that, “recent advancements in satellite technologies… have significantly blurred the lines between satellite and terrestrial networks. Satellite based services are no longer confined to areas unserved by terrestrial networks”.
On X, Musk clarified that the spectrum “was long designated by the ITU as shared spectrum for satellites”. A UN agency for digital technology, The International Telecommunication Union (ITU), sets global regulations, and India is a member and signatory.
Following Reuters news agency report on Ambani’s lobbying, Musk responded to a post on X with, “I will call (Mr Ambani) and ask if it would not be too much trouble to allow Starlink to compete to provide internet services to the people of India.”
Mr Owen points out that, “Ambani’s resistance to the administrative pricing method might stem from a strategic advantage.” Insinuating that Ambani’s plan is to oust Starlink from the Indian market through an auction.
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