Musk’s Entry in Telecom Market: Shake-up or Shake Down?

The announcements of Elon Musk's SpaceX-Starlink's tie-up with Reliance Jio (Jio is a trademark of Reliance Industries) and Bharti Airtel, the two dominant players, raise a number of questions. The two key questions are: i) Will it mean a greater monopolisation in telecom services? ii) Will satellite spectrum be given to Starlink without auction? It also raises questions about whether such satellite spectrum, a country's critical resource, should be given out for commercial operations in this way.

A preferential spectrum allocation to Starlink seems to be on the cards after its tie-up with Reliance Jio and Bharti Airtel. This will further cement the duopoly of Jio and Bharti in India's telecom market. The others, including Vodafone Idea and the state-owned BSNL, as shown in the table above, would be relatively distant competitors. Should such a market consolidation be allowed through the preferential allocation of satellite spectrum by the government? Will that not increase the monopoly power of the two major telecom players vis-a-vis the users?

The two leading telecom companies will also be dependent on a US company for critical communication services. Does this not go against India's strategic autonomy?

This also raises a larger issue: should a government that aims to play an independent role, allow its strategic telecom resources to come under the control of a foreign player?

If such a partnership between India's major telecom players and Starlink is allowed, let us make no mistake about who will control India's telecom services. Whichever entity controls the satellite feed—in this case, Musk's Starlink—effectively controls the telecom services. This is irrespective of Starlink’s shares in the companies providing the services; or its agreement with our telecom service provider.

What is Spectrum?

So, let us return to the spectrum, which readers of this column will remember was also central to the 2G license issue. What is a spectrum, and how does it relate to telecom or even television services?

Those familiar with spectrum from school physics will know that the electromagnetic spectrum covers radio waves and visible light, as well as the high-frequency X-rays and gamma rays used in medical imaging. For the purpose of 2G to 5G, we looking at the radio wave spectrum, starting from 900 MHz (MegaHertz, Hertz is cycles per second) for 2G, moving up to 26 GHz (GigaHertz). After former telecom minister A Raja's controversial 2G spectrum allocation, all the spectrum bands are now only given through auction. The Supreme Court, in its 2G judgement, laid down that the spectrum is a scarce natural resource and can only be allocated through a transparent and open auction. The existing 3G, 4G and 5G licenses have all been allocated after such auctions.

As late as May last year, the Supreme Court turned down an attempt by the government to allocate spectrum through administrative means. Simply put, if the spectrum is used to provide commercial services, it has to be auctioned. This raises serious questions about Airtel and Jio's attempt to tie-up with Starlink, whether it is an attempt to bypass the position that spectrum be allocated only through auction.

Interestingly, both Jio and Airtel had earlier opposed SpaceX's Starlink entry into satellite-based communication services. Jio had argued for an open auction of spectrum, while Airtel had agreed that an administrative allocation could be done, but only for five years and not 20, as SpaceX had asked. Both Jio and Airtel have tie-ups with satellite-based services, Jio with Luxemburg-based SES and Airtel with Eutelsat OneWeb. IN-SPACe, under the Department of Space, gave clearance in both these cases.

What is unclear is what spectrum usage charges have been set and how these have been set. And if competitive services for high-speed internet, as SpaceX offers, are set up, will there be different tariffs for the same services? Returning to the 2G Supreme Court judgement, how does the government allocate spectrum without a competitive bid? And if spectrum usage services have been fixed, how have they been determined?

Some Other Issues

Satellite communications have other issues as well. Existing space-based internet or SatCom are provided by geostationary satellites. These rotate at the same speed as the Earth, providing continuous satcom services to a large area. If there is a relative movement between the satellite in space and the ground, then a series of satellites have to be deployed with a proper handshake between the satellites so that the consumers do not notice any break of service. This is how low-earth orbit (LEO) satellites provide continuous telecom services, including broadband services, over large areas. SpaceX's Starlink has a little more than 7,000 satellites in orbit, with more to follow.

There is no regulation or international agreement on who can occupy how much of orbital space or how much a country or an entity can grab; there are long-term consequences of such a ‘might-is-right’ approach to orbits.

Even if space does not have restrictions, airwaves do. That means using space to beam up or down; in the case of the internet, two-way communication uses airwaves under the specific country's sovereign control. That means how much will the space-based communication players pay for the license? And yes, this spectrum has not yet been auctioned. While earlier Jio pushed for the auctioning of spectrum, we have to see what they actually do now. Will they also, like Airtel, push for administrative allocation of spectrum for satellite-based broadband services?

So why this sudden volte face by Jio and Airtel, from opposing Starlink to hitching their wagon to it? Did the government play a role in this “marriage”?

These are not the only questions. All of us are aware that the US, under President Donald Trump, has embarked on a path of capturing the territory of other countries, unilaterally imposing high import duties, and forcing countries to hand over critical natural resources to the US. This is a combination of a trade war and not just a neo-colonial relationship with other countries, but a reversal to colonial times.

This pressure led to Panama forcing the Hong Kong-based company to sell its shares of the Panama Canal to Black Rock, a US company. Trump has asked that Greenland be given to the US, not as an additional state but as a colonial possession. The US also demands that Ukraine hand over its mineral resources to "pay" for the US military and financial aid that it received in its war against Russia. Is India allowing Musk's Starlink entry into India's telecom a part of India's attempt to placate Trump? Will such a policy work? Or will it lead to even more demands?

This is not the US as the New Rome, the inevitable power and the sole global hegemon, as Francis Fukuyama proclaimed in the 1990s. This is a US that wants to reverse its weakening economy by simply extracting tribute, either by threats or by exercising its military and economic power. We should not have any illusion that a weakening hegemon will become more amenable to reason—quite the contrary. The illusion of power fades more slowly than their economic decline. This is the danger that Trump poses to the world. This is what we know from history.