Starlink Deal Done, What Plot Twist Will Elon Musk’s Tesla And SpaceX Bring To India?

Cooked in Washington and served in India. That’s perhaps the best way to describe the astounding three-way deal between satellite telecom provider Starlink, owned by Elon Musk, and Indian telecom rivals Reliance’s Jio and Bharti’s Airtel.

News is that both Jio and Airtel will act as distribution, installation and service partners for Starlink’s internet broadband service. Effectively, they will also hand over their consumers to Musk.

Given that both were competitors to Starlink, wanted to keep the company out and are fighting each other in India as well, this is either a deal made in heaven or in the White House.

Fait Accompli

The question, of course, is whether the two Indian telecom majors had any choice in the matter or this was effectively a fait accompli. It smells suspiciously like the latter.

It’s like Company X wants to launch a new car for which it has the technology and capability but not the permissions. And now, it is told to open sales and service centres for a rival from overseas, who in most situations, company X would have tried to keep out. Or at least fought tooth and nail for market share.

Satellite internet is a good to have complimentary service, there is nothing to say it is a must have or that calls for a deal of this nature to be pushed through. Unless it is of course a Musk have, as evidently is the case.

Remember, Reliance and Airtel have both promised endless and seamless 5G mobile connectivity across India, which in most cases would be superior to most satellite broadband connectivity as we know it and at the price we know of. Unless the location is so remote that a satellite would work best or if services fail.

There is no denying the importance of satellite-based communications as a backup, given India’s entire television content revolution of the last few decades was built on satellites and dishes still perched on our rooftops. Till fibre internet and high-speed data on mobile phones came along.

But wherever you live in India, you would admit there are very few places in the country that lack data connectivity now. Unless you are really trying to live an off the grid existence.

There is also the cost, the hardware could cost upwards of Rs 20,000 and a monthly bill of Rs 5,000 or more unless the prices are specifically tuned for the Indian market. "While it has been surprising, it's a prudent strategy for Starlink to enter the India market and a win-win for all the parties involved earlier competing for the pie and now cooperating and sharing," Neil Shah, co-founder of research firm Counterpoint and a frequent guest on The Core Report, told Reuters.

The Core has reached out to Reliance’s Jio and Bharti’s Airtel over email and will update this piece when they respond.

The agreements come on the heels of Prime Minister Narendra Modi’s US visit where, reports suggest, space, mobility, technology and innovation were discussed.

Starlink has been trying since 2022 for licenses to operate commercially in India, with no clear timeline yet on a decision. It has been delayed for reasons including national security concerns.

What Next From Musk?

Nothing linked to satellites in India is easy. Carrying a satellite phone at this point can get you arrested and jailed unless you have specific permissions. So satellite internet is viewed through the same lens of national security.

So SpaceX must get spectrum allocated and work on local data storage apart from other security clearances. Between Airtel and Jio, obviously, there is enough firepower to get things going. Though in retrospect, they had not succeeded either, along with other partnerships they had tied up.

A report in Mint said that at the India Mobile Congress (IMC) 2024, Sunil Mittal of Airtel supported the stance of rival Mukesh Ambani's Jio that said satellite companies need to pay license fees and buy airwaves for their telecom services, as legacy telecom companies have to.

Mittal had said that he did not have anything against Starlink but wanted all companies to have a level playing field.

“They need to buy the spectrum as the telecom companies do, and need to pay the license as the telecom companies do, and also secure the networks of the telecom companies,” Mittal said at the conference.

Earlier, Jio also shared similar views, saying satellite firms should be treated at par with telecom companies.

Incidentally, both Jio and Sunil Mittal have ties with Starlink’s rivals. Mittal is an investor in OneWeb Ltd and wants to roll out services in India. Reliance Jio formed a joint venture with Luxembourg-based SES in 2022 and unveiled JioSpaceFiber in October 2023. Jio had planned to deliver high-speed satellite Internet “at highly affordable prices” through this joint venture.

Of course, it seems everyone is friends now.

“We applaud Jio’s commitment to advancing India’s connectivity,” said Gwynne Shotwell, president and chief operating officer of SpaceX. “We are looking forward to working with Jio and receiving authorisation from the Government of India to provide more people, organisations and businesses with access to Starlink’s high-speed internet services.”

With the satellite internet business tied up with a nice ribbon, it would be interesting to see how Musk’s two other ventures, Tesla cars and SpaceX rockets, enter India and what surprises we have in store.