Will India soon open the door for Elon Musk’s Starlink?

Bengaluru - The Indian government is reportedly looking to relax some conditions for Mr Elon Musk’s satellite high-speed internet company, suggesting that Starlink might soon obtain regulatory approval to operate in India after a marathon pursuit.

Data security concerns and pushback from domestic telecom companies have delayed Starlink’s approval since 2021, when it opened an Indian subsidiary and accepted pre-registrations but was warned by India not to do so without a licence.

Decisions have been complicated by Mr Musk’s close relationship with incoming US president Donald Trump, with Prime Minister Narendra Modi’s government wary of upsetting the politically influential billionaire. India is also keen for Mr Musk to fulfil his promise of building a factory in the country for his Tesla electric cars.

The American company’s impending arrival in the world’s second-largest telecommunications market could transform the provision of fast, affordable, and reliable internet to underserved regions in India, particularly in remote areas. Some 37 per cent of the 1.4 billion people in India are still without internet access, according to EY-Parthenon, a consulting company.

Unlike terrestrial internet providers, which rely on cables or fibre-optic infrastructure, satellite connectivity is ideal for reaching rural, remote, or hilly areas where laying cables is impractical or too expensive. 

Starlink is already operating in more than 100 countries and has capabilities that are superior to its rivals, but it has not been straightforward to get a foot in India’s door.

Security concerns

In October, India’s Telecom Minister Jyotiraditya Scindia said Starlink must address the government’s security concerns before licence approval is given to the satellite-based internet service launched by Mr Musk’s aerospace company, SpaceX.

India’s National Security Directive on the Telecommunications Sector (NSDTS) mandates that telecom service providers procure and deploy trusted product or components from trusted sources only.

Starlink has requested exemptions from certain provisions, citing technical limitations, to operate in India. Experts said that India would relax only some restrictions.

“It’s not unusual for telecom operators to get exemptions or interim exemptions from NSDTS (so that they can use the equipment), especially for something that is non-critical, as long as they promise to comply with it later,” said telecom and public policy consultant, Mr Prasanto K. Roy.

But he added that the Indian government’s greater concern would be about satellite calls that it cannot intercept in case of a security threat.

“Starlink would have to provide government agencies call data records on demand, and pass all calls through a gateway located in India that would also allow interception if legally demanded,” said Mr Roy.

Starlink’s exact licensing terms are not known publicly. The Ministry of Communications and SpaceX did not respond to ST’s queries. 

Mr Musk’s appointment to a US government department in Mr Trump’s future administration worries some experts in India, as the businessman is now a political individual.

As an American company, Starlink would already be governed by the Reforming Intelligence and Securing America (RISA) Act, which allows the US government to gain access to data in the satellite spectrum, noted Mr Nikhil Pahwa, founder of the website MediaNama, which analyses technology and telecom policy.

“Someone who might potentially be able to use the companies he owns for political gain is someone we need to think twice about,” he said. 

Mr Pahwa added that “internet connectivity must be neutral”.

Domestic players

Satellite communication is a small, niche sector in India. It currently stands at US$2.3 billion (S$3 billion) a year, but a KPMG India report expects it to reach US$20 billion by 2028. 

While the Elon Musk-led Starlink and Amazon’s Project Kuiper await Indian government operating approvals, the two Indian telecom companies that control 80 per cent of the terrestrial internet market have already received authorisations to launch their own satellite-based internet services.

In November 2023, Bharti Group-backed OneWeb India received authorisation to launch French operator Eutelsat’s commercial satellite broadband services. In June 2024, Jio Satellite Communications, a joint venture between Luxembourg-based SES Astra and Mr Mukesh Ambani’s Reliance Jio, also received approval to offer satellite connectivity.

But analysts believe that technically, Starlink has a significant advantage over other satellite communication providers, not just in India but globally.

Non-profit orbital data tracker CelesTrak said that SES operates 38 medium-earth orbit satellites at a high altitude, beaming signals to receivers that provide internet connectivity. Eutelsat OneWeb’s network features more than 630 satellites at 1,200km above earth in low orbit.

In comparison, as of September 2024, Starlink had 6,426 low-earth orbit satellites at some 550km from the planet’s surface, offering faster service. SpaceX plans to eventually have as many as 42,000 satellites as part of its ‘megaconstellation’.

Not only is Mr Musk in a better position today to dominate satellite connectivity, but analysts also expect him to adopt aggressive pricing policies like he did in Kenya, where Starlink charged customers US$10 per month as opposed to US$120 in the US.

Mr Musk’s immense wealth would allow him to take some initial losses from discounts on Starlink installation kits or monthly bills, some experts said. This could undercut domestic competitors in a price sensitive Indian market.

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

Billionaire battles

Starlink’s competitors in India are doing all they can to prevent or delay its entry to the market.

Mr Ambani, whose Reliance Jio leads the Indian market, is calling for an auction to allocate satellite spectrum or airwaves, like India does for terrestrial internet, while Mr Musk is happy with administrative allocation, or direct licensing by the government, as is now the case. 

Unlike terrestrial spectrum used for mobile communications, satellite spectrum has no national territorial limits and is a globally shared resource. The efficient allocation of satellite spectrum is overseen globally by the International Telecommunication Union (ITU), a UN agency.  

“As a signatory to the ITU Treaty, India is bound by its international standard of administratively allocating spectrum,” said Mr Roy. 

Most countries follow direct allocations, but the US did conduct auctions for allocating spectrum along orbital slots in 2004. When this turned out not to be feasible, it reverted to administrative allocations. The country now charges annual regulatory and licence fees.

The Indian government changed the telecommunication law in 2023 to require an administrative allocation of satellite spectrum. In October, Telecom Minister Scindia indicated that the government would administratively allocate satellite spectrum to Starlink in keeping with global practice.

Jio expressed concerns in a Nov 15 letter to the Telecom Regulatory Authority of India that a direct allocation would not create a level-playing field. Starlink reportedly said in its submission, however, that the Indian operators were “transparently self-serving”.

Experts agree on the need for internet access to remote areas and greater competition in the Indian telecom sector dominated by a duopoly, but are divided on how licences should be given.

Mr Roy said that an administrative allocation for satellite spectrum “made more sense” because “auctions are expensive, and ultimately the cost will be transferred to the consumer”.

But, given the country’s history of corruption and arbitrariness in the allocation of 2G spectrum, some believe that auctions are the best model for India. In fact, the Supreme Court in 2012 cancelled the allocation of terrestrial spectrum licences in favour of auctions, to limit the discretionary powers of the government.

The court rejected a government petition in May 2024 to clarify if the verdict also applied to satellite spectrum.

“It’s a lesson India learnt, and we should not go back on that. Administrative allocation lacks transparency, and leaves room for discretion and corruption. Auctions are the most transparent, corruption-free and apolitical way to make a decision,” said Mr Pahwa. 

Vodafone Idea, Airtel and the Cellular Operators Association of India advocate a differentiated pricing strategy, where spectrum should be auctioned when serving urban areas to level the playing field with terrestrial networks which compete there, while administrative pricing could apply only for remote areas with fewer commercial players to improve access while keep prices there low.

He added that auctions in the past created healthy competition as it allowed many new players to enter the market, like Norwegian operator Telenor, Russian telco Systema, and the UAE’s Etisalat. 

Mr Musk’s unfulfilled promise of a Tesla factory in India also hangs in the balance. There were hurried developments since 2021 as Tesla tried to reduce import duties on its electric cars, and even set up an office in Pune, but after Mr Musk cancelled a much-touted visit to India in 2024, talks have stalled.

“We know that India is under pressure to give Starlink the right to provide internet access in exchange for a Tesla factory it has long wanted. But allocation of a public resource like spectrum should not be a trade, or a political or geopolitical decision,” Mr Pahwa warned.