A potential broadband price war in India

Having just lost a battle with Elon Musk over how India’s satellite spectrum is awarded, Asia’s richest man Mukesh Ambani could face a bigger challenge if Musk’s Starlink launches services in India and the two go head-to-head on price.

India’s government said on Tuesday it will allocate spectrum for satellite broadband administratively and not via auction, hours after Musk criticized the auction route being sought by rival billionaire Ambani as “unprecedented.”

Musk’s Starlink, a unit of SpaceX which has 6,400 active satellites orbiting earth to provide low-latency broadband to 4 million customers, has publicly expressed interest in launching in India, but its plans faced repeated regulatory roadblocks.

Ambani, who runs India’s biggest telecom company, Reliance Jio, had tried since last year to seek a “balanced competitive landscape” and wanted to keep Musk at bay, as experts say a spectrum auction would have required much more investment and deterred foreign players.

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, a person with direct knowledge said on Thursday.

The Indian government says its decision to allocate spectrum administratively to whoever applies for it is in line with global trends.

It has not set a timeframe for when the process will start but Musk’s Starlink has already applied for necessary permits. Starlink’s entry into the Indian market would create a new battleground between the two billionaires: pricing.

Musk has thousands of operational satellites, while Reliance has partnered with Luxembourg-based SES Astra, which non-profit CelesTrak says has 38 satellites that Reliance plans to use.

“Starlink can price aggressively because it doesn’t need to add more satellites,” said Tim Farrar, a satellite industry analyst at U.S.-based TMF Associates.

Ambani once gave data for free on his mobile plans, but Musk is no stranger to such tactics which can unsettle local players.

In Kenya, Musk priced Starlink at $10 per month, versus $120 in United States, with rental plans available for higher hardware cost. Kenya’s Safaricom in July complained to local regulators, calling for players like Starlink to be required to partner with mobile networks, and not operate independently.

In India, a Reliance Jio fibre-based, high-speed broadband plan costs $10 per month, with router free on long-term plans. It has a 30% market share in the wired broadband market.

Starlink has plans to offer an unlimited internet data plan in India initially and target corporate clients, said a second industry source familiar with the matter.

Reliance and Starlink did not respond to Reuters queries.

With 42 million wired broadband internet users and 904 million telecom users on networks like 4G and 5G, India is the world’s second-biggest telecom market after China.

Internet penetration in India stood at 52.4% as of early 2024, according to DataReportal and there are still 25,000 villages without internet. And even in urban cities, many areas don’t have fibre-based fast internet offerings.

Musk said last year Starlink “can be incredibly helpful” in remote Indian villages or places that lack high-speed services, and his former India head in 2022 said Starlink at the time targeted 200,000 customers within eight months of launch.

Starlink has also announced plans to launch globally a constellation of hundreds of satellites to enable “direct to cell” voice and data services in coming years.

Gareth Owen, associate director at research firm Counterpoint, however, said some of the fears about Musk might be overstated, as “terrestrial networks will always be less expensive (and) businesses will never switch completely to satellite.”

For now, even before the real battle starts on the ground, the Musk-Ambani rivalry is increasingly on display.

A Reuters report this week that Ambani was again lobbying New Delhi to auction satellite spectrum for a “level playing field” caught Musk’s attention, after a social media user asked if Ambani was scared of Musk disrupting the Indian billionaire’s telecom empire.

“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,” Musk joked in a post on X in response.