Big Win For Musk’s Starlink As Telecom Bill Mandates Licensing Regime For Satcom

In what appears to be a major win for foreign players, including the likes of Elon Musk’s Starlink and Amazon’s Kuiper, the new Telecommunication Bill, 2023 has opted for allocation of satellite communication (satcom) licences via administrative route.

Toeing the global line and snubbing recommendations made by Mukesh Ambani-led Reliance Jio, the new draft exempts satcom players from bidding for the licence. 

“Assignment of spectrum through administrative process: Certain satellite-based services such as:… Digital Satellite News Gathering, Very Small Aperture Terminal, Global Mobile Personal Communication by Satellites, National Long Distance, International Long Distance, Mobile Satellite Service in L and S bands,” read the Bill. 

The new Bill aims to replace the more than century-old Indian Telegraph Act, 1885 as well as the Indian Wireless Telegraphy Act, 1933, and the Telegraph Wires (Unlawful Possession). The bill was tabled by the Union Information Technology Minister Ashwini Vaishnaw in Parliament on Monday (December 18). 

The development comes as a major boost for foreign players such as Elon Musk-led Starlink, Amazon’s Project Kuiper, and the British government and Bharti Airtel-backed OneWeb that had previously pitched for a licensing regime. On the other hand, the new proposal is a setback for Jio, which had backed an auction-based approach.

The contention of these overseas players has partly been led by cost overruns that could be triggered if the government opts for an auction-based approach. To put things in perspective, the last 5G spectrum auctions brought in INR 1.5 Lakh Cr in government coffers and saw participation from just four players. 

On top of that, companies would have to make hefty investments in setting up the allied infrastructure that could have cost these companies dearly. 

This comes a few months after the players fought pitched verbal battles with each other after the Telecom Regulatory Authority of India (TRAI) floated a consultation paper on spectrum assignment for space-based communication. 

Curiously enough, 47 of the 64 submissions made to TRAI called for a non-auction route for the spectrum allocation. However, Jio was one of the few dissenting voices saying that ‘free and fair auctions’ were the ‘most’ transparent method for maximising public good and serving the greatest number of people via spectrum auction. 

The administrative route now sets the stage for companies to acquire licences by complying with prospective local rules. Currently, only two companies have satcom licences namely Bharti Group-backed OneWeb and Jio Satellite Communications, which operates in a joint venture with Luxembourg-based SES. 

The move has also opened the door for more global players to enter the competitive and niche sector. It is expected to intensify a price war with the tariffs largely expected to hover in the range of INR 8,000 to INR 10,000 per month, as per industry experts. 

While the service is largely suited for residents in remote parts of the country, it remains to be seen how these companies tailor these offerings to consumers in the hinterlands where purchasing power is less. On top of that, there is saturation in urban areas, which already boast of 5G services and broadband services in the range of 100-200 Mbps, at sub-INR 500 rates. 

But, at the heart of this fight between billionaires is the lucrative Indian satcom market, which is expected to grow to a market size of $5.71 Bn by 2028.