Satellite broadband players may face tough battle to attract subs: Analysts - ET Telecom

Satellite broadband players may face a tough battle to attract subs: Analysts

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Representative photo
Representative photo

Kolkata: Bharti Group-backed OneWeb and Elon Musk’s SpaceX Technologies, which are keen to enter India’s satellite internet space, are likely to face tough times in grabbing broadband users as the country already has 63% 4G penetration, offers the lowest mobile data rates in the world and sees high data consumption levels at 12 GB per month per user, say analysts.

Satellite broadband services, they said, are likely to remain much more expensive than both mobile and wired broadband since India is among the 30-odd countries worldwide that continue to limit access to satellite services.

CLSA said a combination of “the world’s lowest telco average revenue per user (ARPU) at $2 (Rs 150 approx) and the lowest mobile data rates at $0.1 per GB in India vs $1.4-$8 in the UK/US will make it a challenge for operators of global satellite constellations (read: OneWeb and SpaceX) to target incremental broadband subscribers in the country”.

Additional challenges, it said, include “possible delays and regulatory risks” for Satcom players as satellite services would have licensing requirements and final regulations are awaited.

Kunal Vora, the senior telecom analyst at BNP Paribas, said satellite broadband is likely to remain “a niche offering” and won’t be a threat for telecom service providers in the medium term.

“Mobile broadband in India is the cheapest worldwide, and it’s widely available even in rural markets, and areas that don’t have 4G coverage could have affordability and distribution reach issues, which severely limits the scope of satellite broadband,” Vora told ET.

He added that expensive satellite internet is also unlikely to offer any serious competition to fiber-based wired broadband players like Airtel, Reliance Jio or state-run BSNL as only consumers with high data usage needs opt for fixed broadband connections and pay as little as $5-6 for data usage upwards of 200 GB a month.

Bharti Airtel’s chief executive Gopal Vittal said at an earnings call last month that satellite technologies “would always be a complement to existing wireless and wired technologies as the spectrum available and backhaul required to deliver through satellite would never ever compare to terrestrial networks”.

To be sure, analysts say the biggest demand for satellite broadband services in India can be in delivering high-speed connectivity to people in remote areas still not within reach of cellular towers or fiber connections. This, since satellite networks, can be deployed more rapidly than terrestrial networks.

CLSA said other opportunities could be deploying satellite broadband to provide the backbone for networks of IoT devices, smart factories, utilities, and other systems that require complex machine-to-machine communications.

OneWeb, the satellite communications operator co-owned by Bharti Global and the UK government, plans to launch fast broadband services in India by June 2022. SpaceX, according to its website, too aims to launch its Starlink satellite internet service in India in calendar 2022 and has listed several Indian locations where services will be available on a first-come-first-serve basis. There’s also an option for Indian users to pre-book Starlink services at a refundable sum of $99 towards gear they need to install for getting a satellite internet connection.

India’s telecom regulator has recently floated a discussion paper, seeking industry views on ways to drive down satellite broadband rates and make them comparable with today’s low mobile data tariffs. It has also sought views on whether satellite service licensees should be allowed to obtain bandwidth from foreign satellites to connect the new wave of IoT (or internet of things) devices.

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