Why Jio and Airtel are scared of Elon Musk’s Starlink

medium nocaption114342560“Daddy, I have captured my peak,” Captain Vikram Batra told his father GL Batra over a satellite phone on the morning of June 20, 1999. He had seized the 17,000-foot ‘Peak 5140’ during the Kargil war hours earlier. Journalists who covered that war also relayed despatches to their offices via Iridium satellite phones that had been launched worldwide late in 1998.If satellite phones have been around for so long, why is “spectrum for satellite services” in the news now, more than 25 years later? And why are billionaires Mukesh Ambani, Sunil Mittal and Elon Musk making a fuss over how it is allocated — via auction or assignment by the government?Once upon a time, satellite internet was slow as a bullock cart, but...To answer the first part briefly, satellite phone services in 1999 bore only a passing resemblance to what might be available in India soon. Sure, satellite phones then could also make calls, send texts and had some internet capabilities (how does 2,400 bits per second sound?) but they were not user-friendly. Los Angeles Times journalist Lawrence J Magid “borrowed” a Motorola 9500 Iridium phone, weighing about half a kilogram, for a trip to the Amazon rainforest in Peru in March 1999. The phone itself cost $3,000 (about $5,700 or Rs 4.8 lakh today), the monthly fee was $79, and each call cost “from $1.95 to $8 a minute depending on where you are and where you are calling”. The problem, Lawrence said, was that you had to call from a clear space, ideally with nothing between you and the horizon. Cities weren’t a good match because highrises fouled signals, the jungle wasn’t a good place because the tree canopy interfered.“When using the phone from a clearing in the rainforest, I was unable to make a call about a third of the time. And when the call did go through, it was sometimes dropped within a minute or two,” Lawrence said.His best bet was to take a boat to the middle of the river, point the phone antenna directly towards the sky “and, sure enough, the phone worked every time I tried it”. …today you could watch Netflix sitting atop Nanda Devi peakIn 2025, or whenever modern satellite internet services arrive in India, your experience will be very different. On Musk’s Starlink, which has the best satellite internet speeds according to CNET, you can expect downloads at up to 220 Mbps, which is about 92,000 times faster than the maximum speed Lawrence could have got on his Iridium handset 25 years ago. It’s also close to the speed of most home broadband connections. So, armed with a modern satellite receiver and a smartphone, you could, theoretically, watch Netflix on Nanda Devi or the middle of nowhere.Do remember that satellite internet could be costlier than home broadband and 5G. Although US prices are not comparable, Starlink’s cheapest plan there costs $120 a month (about Rs 10,000), plus a one-time payment of $349 (about Rs 30,000) for equipment. And your maximum speed on this plan is capped at 100Mbps. medium114338540 What’s the difference between auction and allocation of spectrum?So, satellite phone and internet services are practical now. They are also widely available. In June, Musk claimed Starlink was present in 100 countries, including 10 in Africa. And he’s not the only operator in the market. We’ll take a look at this growing business, but first let’s understand what the recent row in India is about.On October 15, telecom minister Jyotiraditya Scindia announced that India would not auction its satellite internet spectrum. Instead, it would distribute the spectrum to different telcos like Airtel and Jio through an “administrative process”. Two questions arise here. What’s spectrum, and what’s an administrative process? Spectrum: Satellite and mobile phone signals are electromagnetic waves just like visible light and X-rays. But all these waves have different properties because they move at different frequencies, measured in thousands, millions or billions of ‘hertz’ (kilo-, mega- or gigahertz). The ‘spectrum’ is the entire gamut of electromagnetic waves covering all frequencies, but telcos like Jio and Airtel are only interested in waves that lie in the 300 kilohertz to 30 gigahertz range. Administrative process: In an auction, the highest bidder walks away with the prize. India auctioned its 3G, 4G and 5G spectra, but the 2G spectrum was allocated on a first-come-first-served basis, which was a type of “administrative process”. Generally, whenever a government assigns a scarce resource without an auction, it’s called an administrative allocation, and that’s what will happen with the satellite internet spectrum, as minister Scindia said. What do Ambani’s Jio and Mittal’s Airtel want, and why?Reliance Jio and Airtel are India’s top two telcos, and both want spectrum for satellite communications to be allocated via auctions. While Jio has always favoured the auction route, harping on the need for transparency, Airtel had favoured allocation for satellite communications until recently. Industry news portal TelecomLead reported that Airtel sent a letter to the telecom department in March, “voicing opposition to the auction of satellite spectrum”. It said since satellite communications were meant to complement mobile networks, and help connect remote areas, an exception could be made for them. But at the recent India Mobile Congress (IMC) in Delhi, Airtel chief Sunil Mittal seemed to change his stand, saying foreign satellite communications companies should purchase spectrum through auctions, just like domestic firms. medium114338323Why are Indian telcos so keen that satellite spectrum be auctioned even though it will push up acquisition costs for everyone? As The Times of India reported on October 16, “The homegrown players fear the auction-free route will provide an easy entry to Starlink, and possibly Musk’s fellow American Jeff Bezos’s satcom venture Project Kuiper, in the lucrative Indian market, and drive in a fresh wave of competition.”India’s spectrum auctions have been notoriously expensive. The 2010 auction had earned Rs 106,000 crore, and the one in 2015 bagged Rs 110,000 crore. Such high rates would deter foreign firms from entering the Indian market where the stakes are high, with the country’s satellite communications market expected to grow at 36% annually. Why Musk wants the govt to allocate satellite spectrumMusk has been equally insistent that India should allocate satellite spectrum, not auction it. A day before the IMC started on October 15, he responded to reports about Jio’s opposition to administrative allocation. “That would be unprecedented as this spectrum was long designated by the ITU as shared spectrum for satellites,” he wrote on X.The ITU or International Telecommunication Union is a United Nations agency that deals with information and communication technologies. On October 15, in response to a tweet about Jio’s stand, Musk joked on X: “I will call (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.”Hours later, when it became clear that the government was firm on taking the allocation route, he wrote: “Much appreciated! We will do our best to serve the people of India with Starlink.”This time, govt’s hands are bound by global normsAt the IMC, minister Scindia stood up to the pressure from Jio and Airtel, saying that global norms as well as Indian law recommend the administrative allocation route for satellite spectrum. “Telecommunications Act 2023 clearly states the satcom spectrum will be allocated administratively,” Scindia said, and clarified that the government was not giving away precious spectrum for free.“That doesn’t mean (such) spectrum doesn’t come without (sic) a cost. What that cost is, and what the formula of that costing is going to be, will be decided by Trai (Telecom Regulatory Authority of India),” he said.Scindia also made it clear that this is an international norm: “Satellite spectrum across the world is administratively allocated. So, India is not doing anything different from the rest of the world… satellite spectrum is a shared spectrum. Now if the spectrum is shared then how can you price it individually?”Why beating Musk in satellite race is almost impossible todayOn October 17, a Reuters report said: “Reliance, which has dominated India’s telecom sector for years, is now concerned that after spending $19 billion in airwave auctions it risks losing broadband customers to Musk, and potentially even data and voice clients later as technology advances.”That might sound far-fetched at first because Jio has almost half-a-billion subscribers, and it added 42 million of them in the 2023-24 financial year. Its lead seems unassailable today. But when it comes to satellite communications, both Jio and Airtel aren’t a patch on Musk’s Starlink. When Captain Batra made that satellite phone call to his father 25 years ago, the Iridium network had just 66 satellites orbiting 780km above the Earth. By September this year, Starlink already had 6,371 working satellites in orbit. How many does Jio have? According to Reuters: “Reliance has partnered with Luxembourg-based SES Astra, which non-profit CelesTrak says has 38 satellites that Reliance plans to use.”And Airtel? It’s better placed than Jio as the biggest shareholder in Eutelsat OneWeb that has more than 630 satellites orbiting 1,200km above Earth. But neither Jio nor Airtel has the capability to launch satellites like Musk’s SpaceX. In fact, Musk, rather Starlink, does not need to launch more satellites right now, and can afford to offer satellite broadband at prices as low as $10 per month, as it has done in Kenya. 114340488On January 2 this year, Starlink launched six satellites that can directly connect to an unmodified mobile phone, without an intermediary receiver. These have been used for sending text messages, as in the aftermath of Hurricane Helene. Next year, Starlink intends to start direct-to-cell “voice, data and Internet of Things” services. And it’s already working on its second-generation network that will offer gigabit speeds.When you consider that the future of the internet may not lie in under-sea cables and rooftop transmitters but constellations of satellites in low-Earth orbit, the magnitude of Elon Musk’s lead sinks in.