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The big game in India’s satellite telecom space is unfolding

The Indian satcom market is heating up as Reliance joins Starlink and OneWeb and Amazon and Tata-Telesat also show interest.

The race for India’s satellite broadband business has begun. For a long time, competition between the telcos was about getting more and more unified access service licenses (UASL).

The UASL licensing allows telecom companies to offer wire-based and wireless broadband services to users in a particular city or a circle area. Until now, the companies were focused on acquiring more and more licenses with a large base of phone users. But this phenomenon is likely to change with these firms going for satellite broadband, considering that now they will only need a GMPCS (Global Mobile Personal Communication by Satellite) license, for pan-India operations.

Interestingly, on the one hand, it holds the power of bringing a total revolution in connectivity for India’s remotest areas, where terrestrial mobile or fiber cannot reach, but at the same time, it can create a major disruption for India’s existing telecom sector. India boasts of having the world’s second-largest number of internet users, around 600 million at the lowest tariffs. But, the country also has the other half of its population that does not have access to the internet. And this digital divide has worsened post the onset of Covid-19 pandemic. Considering these aspects, a satellite-based internet will be the catalyst for connecting the unconnected areas within India and the region to the full range of digital services, offering access to remote health, government services, and distance learning opportunities.

Satellite versus telecom. For satellites, the biggest strength is availability. Since the signal of a satellite internet comes from space, it can be picked up anywhere in the country, as long as the sky is clear. But then the cost for satellite internet is quite high. And the data caps and high latency are not much fun either.

As opposed to this, cable internet offers a great mix of availability, speeds, and prices. It offers download speeds at par with fiber internet, and it is much more affordable than satellite internet. It can also be bundled with TV. On the flip side, the biggest downside of cable is that packages, providers, and even prices are different across the country. The location of the subscriber determines the amount paid.

The Indian market. Last year in November, Elon Musk-backed Starlink had registered its business in India to capture the country’s rural market. Starlink had offered 100 devices for free to schools in Delhi and nearby rural districts in its first phase. After that, it had planned to target 12 rural districts across India. The company aimed to have 200,000 Starlink devices in India by December 2022, and 80 percent of them in rural districts.

Subsequently, the telecom operators represented to the department of space to forbid the backdoor entry of satellite communications operators in the country, temporarily blocking Starlink’s entry into India. The space also saw Reliance Jio partner with Luxembourg-based telecom company SES, in which it acquired 51 percent of the equity share to become an anchor customer of the joint venture, and apply for a GMPCS license.

With this move not only did Reliance announce its plans to enter the satellite internet space, but also locked horns with its sole challenger in India – Bharti Airtel-backed OneWeb – in terms of market share.

The department of telecommunications has granted a letter of intent to OneWeb for starting services. OneWeb has indicated that it would remain a B2B service provider and has no plans to offer services to retail customers. OneWeb and Hughes Network Systems have signed a strategic six-year pact to provide satellite broadband services in the country. The services will be provided by Hughes Communications India (HCIPL), a joint venture between Hughes and Bharti Airtel.

OneWeb, which is building a constellation of low earth orbit satellites, had to abandon its planned launch on March 4 in the wake of Russia-Ukraine war. The launch was to happen from Baikonur, located in Russia-controlled area of Kazakhstan. But since the UK government has around 19.8 percent stake in OneWeb, Russian space agency Roscosmos had demanded withdrawal of UK from the project. Also, a guarantee was sought from the firm that the satellites had no military purpose. OneWeb thereafter entered into an agreement with SpaceX to resume satellite launches. So far, OneWeb has launched 428 satellites and plans to launch services across the world by the end of this year. Overall, the company has to launch 648 LEO satellites.

Subsequently, it announced a new distribution partnership agreement with satellite operator Eutelsat, which will allow the two firms to develop combined GEO and LEO connectivity solutions. Eutelsat became OneWeb’s second-largest shareholder last December. Australian telco Telstra also announced its plans to build three dedicated teleports across Australia to provide satellite gateway services (ground-based comms, essentially) for OneWeb in the Southern Hemisphere, as part of a ten-year deal between the two firms.

Besides OneWeb, and Elon Musk’s Starlink, heavyweight players like Amazon’s Project Kuiper, and Tata-Telesat are also in the running. Tata Group company, Nelco is planning to offer satellite broadband services in India through the Canadian firm Telesat’s Lightspeed brand by 2024.

This may threaten the sustainability of Vodafone Idea and BSNL-MTNL. Vi accounts for the highest share of rural subscribers in the country.

“Once the government delicenses and permits the B2C market to operate, the use of handheld satcom terminals will come into play. With adequate competition and given the size of the Indian market, we could see the introduction of affordable devices, which are capable of using terrestrial technologies and satcom in an interchangeable manner to maximize their connectivity. A policy shift will be required,” opines TV Ramachandran, President, Broadband India Forum. This is the exact same thing that happened with mobile services and devices in the country and we expect the same outcome for satcom as well, he said.

While India accounts for just 2.6 percent of the global space economy in 2020, EY projects it is likely to reach USD 12.8 billion by 2025. Clearly India’s satellite communications market is heating up, with various companies entering the space, the government needs to come up with policies to support the sector. Telecom regulator TRAI in March this year released a consultation paper on licensing framework for satellite-based connectivity for low-bit-rate applications. Once recommendations are made, DoT will put its final stamp.

As India readies to usher in 5G services, it represents an opportunity for a shift in the relationship between terrestrial and space-based communications systems more broadly.

In order to deliver on the full promise of 5G networks (near ubiquitous, instantaneous coverage for a massive number of connected devices), satellites will need to play a far more central role within telecommunications networks going forward, with both terrestrial and space-based components working in tandem for a wider diversity of functions. Given the evolution of the satellite industry, both in terms of business models and technology, that greater role is now, for the first time, possible.

Notably, the specific and diverse roles satellites will play in the future is still an open question, and the answer depends as much on industry and business decisions as it does on technological and economic feasibility. However, in 5G networks, satellites could serve three potential functions – providing additional backhaul, creating redundancies, and providing remote and rural areas with greater connectivity. In each of these cases, there is a diversity of business models that could potentially emerge from direct-to-device connections between the end-user and the core network.

Shifting gears, on the global front, recently when Ukraine suffered multiple internet and connectivity outages since the Russian invasion began, seeking to restore vital connectivity to its citizens in the face of the Russian military threat, Vice Prime Minister Mykhailo Fedorov tweeted at SpaceX CEO Elon Musk asking for help. After receiving what is arguably the first regulatory approval by Tweet, Musk and SpaceX responded by shipping the Starlink user terminals to Ukraine on March 1, 2022. The non-geostationary satellite orbit satellite broadband service now serves as a vital tool for connectivity where traditional terrestrial infrastructure fell short.

Over the past two decades, there have been numerous examples of the fallibility of terrestrial telecommunication infrastructure when natural or man-made disasters strike, leaving thousands without reliable communications, including emergency responders. In order to restore network connectivity, federal and local governments, as well as emergency response teams, often turn to satellite network operators to provide rapid, reliable, easy-to-deploy connectivity solutions to keep communities connected. Despite the reliance on satellite connectivity in the wake of devastating emergency situations, governments – including the United States – have failed to place significant emphasis on or investment into satellite technology during communications resiliency planning.

Satellite networks can be incorporated into resiliency frameworks to provide true path and technology diversity. Once a satellite network is launched into orbit, all that is needed to deliver reliable connectivity service is a terminal on the ground, which can often be set up in a matter of minutes. In the event of power disruptions, satellites can be powered by solar panels and battery packs, making the technology uniquely suited for natural disasters and armed conflicts, during which power outages are frequent. As such, satellite technology has an essential role to play in ensuring connectivity in the face of natural disasters, fiber cuts, and other emergency situations. Satellite connectivity provides the much-needed redundancy, more resilient networks, and in turn, better emergency communications and response.

The European Union has laid out proposals for a €6-billion space-based secure communication system that would ensure the long-term availability of worldwide uninterrupted access to secure and cost-effective satellite communication services for the protection of critical infrastructures, surveillance, external actions, and crisis management, and allow for the provision of commercial services by the private sector that can enable access to advanced, reliable, and fast connections to citizens and businesses across Europe, including in communication-dead zones, ensuring cohesion across member states. The EU estimates the total cost of the planned network will be €6 billion, with the EU to pitch in €2.4 billion between 2022 and 2027, with the rest coming from member states, the European Space Agency, and private sector investors.

But planning, building, and launching such a network takes years – initial services are not envisaged until late 2024 and full services not until 2027 – and, meanwhile, OneWeb and Elon Musk’s Starlink will have been offering LEO-based satellite broadband services for years.

Early March, China’s first LEO broadband satellite constellation GalaxySpace deployed six 5G-capable satellites, joining a seventh test satellite that was launched back in January 2020.

Each one boasts 40 Gbps of capacity and can provide 30 minutes of coverage before handing off to the next satellite. GalaxySpace plans to launch 1000 satellites. Meanwhile, separately from GalaxySpace, the Chinese government has set a target of creating a 13,000-strong fleet of LEO broadband satellites that will offer nationwide coverage.

With many other LEO constellations also in the works, it is little wonder that recent forecasts from Northern Sky Research (NSR) predict that satellite communications will become the biggest single sector of the global space economy in terms of revenue by 2030. The research firm reckons the overall space market will generate cumulative revenue of USD 1.25 trillion by 2030.

The serviceable addressable market (SAM) for global satellite broadband over geostationary (GEO), medium earth orbit (MEO), and low earth orbit (LEO) satellites will stand at 330 million premises, equivalent to 1.3 billion household members in 2026. SAM has grown by 5.3 percent compared to 2021.

With mobile cellular subscriptions forecasted to grow to 8.8 billion by 2026, satellite communication firms can support and contribute to this growth by providing coverage for rural communities and help top up capacity in suburban areas, which do not have access to high-capacity fiber-optic or 5G infrastructure.

“There is an enduring need for GEO satellites’ ubiquitous cover synergizing with MEO and LEO high throughput and low latency. As satellite network technologies continue to evolve and are integrated with terrestrial technologies, telecom operators will be better equipped and more agile in providing broadband connectivity to its growing and diverse customer base,” says Jake Saunders, report research manager and vice-president at ABI Research.

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