Musk vs Ambani-Mittal is a battle to watch out for

Elon Musk's Starlink gains approval for satellite broadband in India, challenging Reliance and Bharti, raising tensions in the telecom sector.

What a week it’s been in telecom! Elon Musk will finally get the toehold he wanted in India. His company Starlink that promises to offer broadband internet via satellite to the remotest places appears to have got the nod. He’s been wanting to do that since 2021, but kept running into regulatory roadblocks of all kinds. What is well known in policy making and telecom circles is that the Mukesh Ambani-led Reliance does not like the idea of Musk in India. So, it set up Jio Space Technology. And the Sunil Mittal-backed Bharti acquired a majority stake in OneWeb. Both promised to do what Starlink does. As things are, Reliance and Bharti control 80% of India’s telecom market.

Musk vs Ambani-Mittal is a battle to watch out for

Several eyebrows went up when Telecom Minister Jyotiraditya Scindia clarified earlier this week that the government of India would allocate satellite spectrum, and not go the auction route. This is exactly what Ambani and Mittal did not want.

Prasanto K Roy, a New Delhi-based technology analyst, said, “I am surprised about a central government policy decision that appears to go against the Ambani viewpoint and advocacy, a rare event, and apparently in favour of an American company. This is especially surprising since even Sunil Bharti Mittal (who largely owns OneWeb) is has changed his earlier position asking for allocation and is now backing Reliance’s position.”

India’s journey to the cusp of satellite broadband has been a long one. Think of technologies such as 5g, 6g and satellite broadband as super-fast highways. It is the Telecom Regulatory Authority of India’s (TRAI) job to ensure everyone on this highway is treated equally. Else, there could be speed bumps.

This fundamental principle of net neutrality means your internet provider can’t play favorites, blocking or slowing down certain websites or apps while giving others preferential treatment. Metaphorically speaking, it’s like ensuring every car on the highway gets an equal chance to reach its destination, regardless of its make or model.

Now, imagine a new trick: network slicing. This means dividing that highway into separate lanes, each optimized for different types of vehicles. One lane for speedy sports cars (gaming), another for heavy-duty trucks (video streaming), and so on. Sounds efficient, right? But here’s where things get tricky. Telecom companies, eager to cash in on the investments they made to build the networks might be tempted to give preferential treatment to companies that pay extra. Imagine a scenario where your favourite streaming service suddenly buffers endlessly because a rival paid your ISP for a “fast lane.” Not so fair anymore, is it?

This isn’t just hypothetical. TRAI has been grappling with this issue ever since it released its consultation paper on “Net Neutrality in the 5G Era” in August 2023. No one knows when their recommendations will come in. But the stakes are high.

Why should you care? Because a neutral internet fosters innovation and allows startups and small businesses to compete on a level playing field. It protects consumer choice and ensures you’re not forced into using certain services just because your ISP has a deal with them.

But striking the right balance isn’t easy. Telecom companies argue they need flexibility to manage their networks and offer specialized services. They’ve invested heavily in 5G, and they want a return on that investment. And TRAI’s behaviour in the past has been capricious.

The government allocating scarce, shared resource of satellite spectrum is the global norm and the ITU recommendation. India is a signatory to this. “An auction would raise the entry barrier for foreign players, deterring them, which is of course the local telcos’ objective,” said Roy. As this column has pointed out earlier, India had ten players once upon a time but now BSNL is on life support and it is unclear when Birlas will give greater focus to their telecom business. The government won’t let both die though.

With Musk’s Starlink getting into the game, the battle will get bloody. Grab the popcorn for Musk versus Ambani and Mittal.