Satellite broadband promises to be the next big thing in India. It is super-fast and does not need wires or towers to connect to the world wide web. Satellite broadband promises to be the next big thing and a slew of big names are ready to roll it out as early as next year, reports ET’s Kalyan Parbat.
Imagine sitting in a remote mountain village north of the Rohtang Pass in Himachal Pradesh and chatting with colleagues in Delhi or Bengaluru over an uninterrupted video call. Or, watching a Clint Eastwood western on a laptop in the Andamans – without using a cellular network or wired broadband.
This may soon turn into a reality once satellite broadband connections are rolled out across India, likely as early as next year.
Some of the biggest global names – including OneWeb, SpaceX and Hughes – are betting big on the opportunity to deliver satellite-based fast internet services – anywhere, anytime.
OneWeb, co-owned by Bharti Global and the UK government, is launching high-speed satellite internet services in the country by mid-2022.
Tech billionaire Elon Musk’s SpaceX Technologies is looking to do the same next year with a maze of satellites.
Hughes Communications India, the local arm of US satellite maker Hughes Network Systems, is also ready to invest in a US$500 million satellite and pump in US$300 million more on ground-level gear to deliver such connectivity.
There is growing buzz around satellite broadband and the far-reaching implications of the internet-from-space race.
“The future is probably shifting now. If you extrapolate this 10 years from now, will there be ground networks at all? Who knows?” Bharti Enterprises chairman Sunil Mittal told ET in a recent interaction. “Every month you will see a launch; we need to send 650 satellites; they will go up by April 2022. Then, we’ll be up and running. This will be nothing but telecom in space.”
OneWeb is in constant touch with the Indian Space Research Organisation (Isro) and regulators to ensure all approvals for market access and landing rights are in place before it goes live in India, Mittal’s UK-based son Shravin, the managing director of Bharti Global and the one responsible for driving the group’s satellite business, told ET separately.
SpaceX is already offering a beta version of its Starlink satellite internet service on pre-orders.
This comes with a refundable deposit of US$99 (more than Rs 7,000) in India.
The Starlink beta service has even been opened up for pre-orders to potential customers in remote trans-Himalayan zones such as the Keylong-Leh road in the high-altitude Lahaul valley.
Once operational, the beta version alone will pack data speeds of 50-150 Mbps, which will increase sharply once more satellites are put into orbit, according to Starlink’s website.
So, why are these marquee names keen to enter the satellite broadband business in a country with a 63 per cent reach of 4G services and one of the lowest mobile data rates in the world?
While existing telecom networks have largely delivered broadband connectivity to consumers in urban and suburban areas, industry experts say the Covid-19 pandemic painfully revealed how millions in India’s rural and remote corners still do not have access to fast internet or reliable mobile connections.
“SpaceX’s Starlink high-capacity, high-speed, low-latency satellite network would advance the goal of delivering broadband connectivity to all Indians, particularly those without access now or in the near-term to broadband services, traditionally available only to customers in urban and suburban areas,” said VP (satellite government affairs) of SpaceX, Patricia Cooper responding to the Telecom Regulatory Authority of India’s paper on broadband speeds.
Nearly 75 per cent of India’s rural population do not have access to broadband since many locations go without cellular or fibre connectivity, according to the estimates of the Broadband India Forum (BIF), which represents OneWeb, Hughes, Amazon, Google, Facebook, Microsoft and Qualcomm.
Hence, powerful next-generation satellite systems are being touted as a viable alternative to connect the unconnected.
One reason why the likes of OneWeb and SpaceX are “attracted to the new stirrings in India’s satellite broadband space is that satellite networks can be rolled out and scaled up a lot faster and more cost-effectively than terrestrial mobile/broadband networks, especially to connect a sizable chunk of the population living in remote and inhospitable regions,” says a telecom analyst and director of Com First (India), Mahesh Uppal.
Satellite internet players also do not have to worry about securing right-of-way clearances which typically slow down terrestrial broadband network rollouts.
Last year, finance minister Nirmala Sitharaman said the government would create a level-playing field for private satellite builders, satellite launchers and space-based service providers under its new space communication policy, which would ring in a predictable regulatory regime.
Once the ‘Open Space’ policy is fully operational, satellite broadband services can be a US$500 million-plus near-term market opportunity, the Satcom Industry Association (SIA-India) says.
At present, satellite broadband services in India are a primarily B2B play with a market size of roughly US$100 million.
Satellite broadband is a key connectivity solution – for banks with numerous branches in remote areas where mobile coverage and wired internet are unreliable or even small and medium enterprises operating in far-flung regions.
The biggest potential money spinner – in a B2B scenario – is to use satellites to boost mobile broadband coverage in rural areas where there is not enough mobile towers or terrestrial backhaul links via fibre networks, industry executives point out.
“We believe satellite broadband can provide the vital ‘backhaul’ or connectivity between mobile towers and a telco’s core mobile network in rural areas to ensure uninterrupted mobile coverage in such regions,” vice president and CTO at Hughes Communications India, K Krishna told ET.
The revenue opportunity is significant.
Each remote tower would need at least 20 Mbps to deliver cellular backhaul via satellite.
Since every Mbps of satellite connectivity can garner an average revenue per user (ARPU) of Rs 16,000-Rs 20,000 a month, the potential monthly ARPU for a satcom operator providing such connectivity in a remote area can be as much as Rs 3.2-Rs 4 lakh per month.
However, satellite broadband will not see mass consumer traction like mobile services unless satellite internet rates crash.
At present, these services are priced at around US$15-$20 per GB in India, about 22-30 times higher than the US$0.68 charged per GB for mobile data.
There are several reasons why this is so.
Satcom operators in India have no access to high-throughput satellites offering 100-500 Gbps of bandwidth. This is because most conventional satellites (with low transponder capacity) are run by Isro and offer only a maximum 12 Gbps. These are largely reserved for government programmes, hampering commercial satcom services.
Satcom players also cannot lease bandwidth capacity directly from foreign satellite operators.
They have to go via the Department of Space (DoS), which pushes up final leasing costs by around 15-20 per cent, including a withholding tax component.
“Hughes provides satellite broadband services to consumers in many markets, but for this service to be viable and successful (in India), the input cost of capacity has to be substantially lower than what it is today,” Krishna says.
Current leasing costs “are in the range of Rs 75,000 per Mbps per month, which is 10 times the global average of Rs 7,500,” he says.
The rates will fall sharply only if a satellite service provider is able to control every cost element, like in the mature satellite markets.
In the United States, satellite companies like SpaceX, Hughes or Viasat own, operate and launch satellites. They also directly deliver satellite internet services to consumers. This is akin to telcos who buy spectrum, roll out networks and offer mobile services.
In India though, the case is different.
A potential satellite broadband operator will first need to lease bandwidth at a higher cost through DoS. They will then have to separately seek a VSAT permit from the Department of Telecommunications (DoT) or enter into a third-party pact with an existing VSAT permit-holder before offering satellite internet services. Multiple intermediaries end up hiking the cost of services.
Further, bandwidth leasing agreements are only for a year or less despite a satellite’s 15-year lifespan. This artificially increases costs due to the uncertainties around foreign satellite capacity utilisation, making satellite broadband rates unaffordable.
Industry experts say such leasing contracts should be for a minimum of three years. India’s dependence on foreign satellite operators will not disappear overnight, they say, since Isro satellites meet only around 50 per cent of the country’s needs.
India is working on building high throughput satellites — offering more than 100 Gbps bandwidth capacity — but there are no timelines yet.
“There is an insatiable demand for broadband connectivity, but there simply isn’t enough domestic satellite capacity to serve this growing demand in India,” says director-general, SIA-India, Anil Prakash.
Isro did not reply to ET’s detailed queries, while questions to OneWeb and SpaceX also went unanswered.
Pricing of satellite broadband services can plunge to as little as US$1 per GB — on par with global rates — if satcom operators can directly lease bandwidth from foreign operators and access very high-throughput satellites.
Going forward, satellite broadband can become the backbone for networks of Internet of Things (IoT) devices, smart factories, utilities and other systems that require complex machine-to-machine communications, according to brokerage CLSA.
The satellite industry is also hopeful that the government may allow 100 per cent foreign direct investment through the automatic route.
The industry though is wary of DoS’s current combined role as licensor, market regulator and satellite operator. This, they say, is leading to a conflict of interest with private satellite makers and satcom service providers.
In its recent submissions to the government on the draft satcom policy, the VSAT Services Association of India has suggested that DoS’s role should be segregated. BIF is also of the view that DoS must only evaluate proposals for authorisation of satellite capacity. It should not be a party in commercial contracts between satellite operators and service providers, it says