The next frontier for telcos in India

Satellite internet services, expected to commence operations in 2024, is a big opportunity for both telcos in India and the global firms.

On 27 October, Akash Ambani, the Chairman of Reliance Jio Infocomm, the tech and telecom division under Reliance Industries, announced the launch of JioSpaceFiber. Taking the stage on the same day at the 2023 India Mobile Congress, Sunil Bharti Mittal, Chairman of Airtel’s parent firm Bharti Enterprises, announced that OneWeb and Airtel’s satellite internet services were ready to commence operating in India in November itself.

While neither has started services in the country yet, the announcements stand testament to the approach that the two major telecom operators have taken by signalling satellite-based network services as the next big frontier for the robust telecom industry in India.

But it is not just Jio and Airtel that are vying for a slice of this nascent, yet-to-launch subset of the networking and telecommunications sector in the country – Elon Musk-backed satellite internet services firm, Starlink, has also procured a licence from the Department of Telecommunications in India to offer its services here. Jeff Bezos and Amazon-backed Project Kuiper, which is a step behind the rest in terms of launching its satellites, has also made a beeline to launch similar services in the country.

All of this makes the satellite internet industry a hotly contested one to follow, even before services have commenced. While the regulatory hurdle of spectrum allocation is the key bottleneck that all companies are waiting to get resolved, bets made by major domestic and global corporations show that the satellite communications, or satcom industry of India, is likely to be the next big frontier for telcos to take on.

WHAT MAKES SATCOM SO HOT?

Simply put, most networks used by consumers as well as enterprises today are based on terrestrial infrastructure. In simpler words, all wireless network communications take place through cell towers and networks that are based on Earth itself. satcom, as the name suggests, takes the aerial route, with satellites orbiting the earth and deployed by the companies in question planning to beam down network bandwidth to be used for a wide range of tasks.

These tasks will range from consumer-end connectivity through satellite networks, as well as to connecting enterprises in remote locations, such as aboard vessels in maritime activities, remote offshore oil rigs, or across difficult mountain terrains, where setting up network towers and sites and laying down fibre is incredibly difficult.

Satellite communications will always provide a complementary service and not a competitive service to terrestrial technologies with dependable redundancy.

To be sure, satcom is not an entirely new sector. However, the liberalisation of India’s space operations, combined with the rollout of the New Space Policy 2023 earlier this year, has provided a much-needed impetus for private firms to access satellite bandwidth, a feature that was so far tightly under government regulations.

Satcom services, to simplify matters, are significant because they open up a whole new avenue for telecom operators to tap into. By using satellite bandwidth, these operators can reach new markets that are as yet not connected, or see very limited services to date. A wide range of use cases, such as lower latency and higher bandwidth connectivity, will open up thanks to progress in satellite technologies. This, in turn, has made satcom into a lucrative avenue that telcos and global firms alike are waiting to tap.

THE MARKET OPPORTUNITY

Responding to Voice&Data’s query, TV Ramachandran, President of the industry body Broadband India Forum (BIF), said that satcom services offer “a huge pent-up demand and large consumer market potential” even in the near term. Data from information services platform ICRA, cited by BIF, said that as of 2021, while the US had 2.1 million active consumer-end satellite connections and 2.6 million enterprise satellite connections, India had no consumer services and only 3,00,000 enterprise connections.

This meant that India’s satcom market, as of 2021, was just around 6% the size of the US satcom market overall, despite India’s exponentially larger population potentially offering a bigger market waiting to be tapped into.

“Satellite communication has a great role to play in serving the unserved and the underserved regions of the country. These are those areas which are difficult to serve and not techno-economically viable through terrestrial technologies Satellite communications will always provide a complementary service and not a competitive service to terrestrial technologies with dependable redundancy, even in urban areas for disaster recovery and provision of emergency services,” Ramachandran said.

Lt Gen (retd) Anil Kumar Bhatt, Director General of the space industry body Indian Space Association (ISpA), concurred. “A recent ISpA-Nasscom-Deloitte report pegged the market potential for satcom in providing broadband connectivity to remote areas to be approximately USD 263 million in the next five years. This underscores not only the technological advancement but also the substantial economic opportunities associated with addressing connectivity challenges in India’s rural landscape,” Bhatt said.

Ramachandran also added that a large section of India’s 1.4 billion population is yet to connect to broadband networks. This offers a sizeable market opportunity for all stakeholders looking to capture a share of the overall pie.

“The total broadband subscriptions as per the latest TRAI subscriber data is around 880 million users. It must be understood that many consumers, especially in urban areas, have more than one broadband subscription. Hence, the actual number of unique broadband subscribers is estimated to be around 600 million. In a country with a population of 1.4 billion, this indicates a sizeable addressable market,” he said.

Sectors that will present major opportunities, Ramachandran said, include agriculture, remote healthcare and e-commerce, among others.

MITIGATING COSTS WITH VOLUME

While all of this is good, it is also important to note that the setting up cost of satcom infrastructure will be significantly high. Data shared with Voice&Data by BIF indicates that while the cost of setting up satellite ground stations in urban circles, due to the scale of users and high density per square kilometre, could be comparable with terrestrial networks, this goes to become as high as 18 times as that of traditional fibre-based networks in rural and remote areas.

Eventually, experts believe that capturing the largest possible user volume is what will drive the market forward, hence explaining the rush to launch services by Jio, Airtel, Starlink, and Kuiper alike. The initial cost of satellite internet services, however, will be undeniably high.

Nevertheless, there are silver linings for the service providers to consider. According to Bhatt, lower satellite launch costs would be a key factor in making satcom services less exorbitant or prohibitive in terms of operational expenditures for telcos.

“This holds the potential to facilitate the widespread establishment and maintenance of satellite constellations, subsequently driving down the overall expense of satellite internet services for consumers. Simultaneously, the escalating demand for high-speed connectivity, fuelled by the increasing prevalence of bandwidth-intensive activities like video streaming and gaming, underscores the critical role that satellite internet can play. Even in regions with limited terrestrial infrastructure, satellite internet stands poised to meet the demand for swift and reliable internet access,” he said.

ROOM FOR ALL PLAYERS

Both Ramachandran and Bhatt believe that the likes of Starlink and Kuiper will not jeopardise the plans that homegrown telcos Jio and Airtel have. “The overall pie is big enough for several foreign and local players to operate. The New Space Policy 2023 permits equal opportunities for both foreign and indigenous players and the operation of open market forces. This is likely to enable free and fair competition among all the players, thereby reducing the artificial supply crunch in the sector and enabling sufficient capacity,” Ramachandran added.

Bhatt added that Jio and Airtel’s superior understanding of local market dynamics could help them further, thus not signalling doom once the sector becomes operational, and foreign players enter the fray, too.

As a result of all these factors, the satcom services industry looks set to commence operations, thereby presenting a marquee new opportunity to tap new users and see a surge in growth that became stagnant in the conventional telecom space.

By Vernika Awal

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