“Hello Space, Earth Here!”

India’s space missions have opened tantalising vistas of satellite telephony and the Internet. Reaping their great potential will need addressing a slew of riddles

Ready-to-eat food, Nike trainers, baby formula, crash helmets, joysticks, water purifiers, golf balls, home insulators, dust-busters, memory foam and even camera phones! We owe these everyday marvels to space. Yes, whenever something, or someone, goes towards the dark blue sky, a by-product is tossed in the laps of everyday grey humanity on Earth.

Now that our satellites and rovers are waltzing in full glory up there, would India have a by-product in the form of satellite telephony and the Internet? After all, we ‘really’ need it now more than ever.

HOW NEW? HOW RARE?

So what is it? Satellite connectivity helps to connect devices to low-orbit or higher satellites by establishing a radio link between them, instead of using terrestrial cell sites. No points for guessing. The big advantage here is location independence and quick reach to remote areas, far better than traditional on-ground infrastructure like DSL or fibre. So far, its usage has been limited to texting and SOS messages but it seems a lot is changing with satellite calls and broadband coming in the radar.

Examples from the recent industry action corroborate this promise. HughesNet Fusion has come up with a new home Internet offering that puts together satellite and wireless technologies to fix the latency problem (which was an issue with GEO-based Internet due to the vast distances that traffic must travel there – 23,000 miles from Earth to a satellite and back). It is a hybrid solution that satellite capacity with wireless capacity to wipe away initial latency. With two GEO satellites, Jupiter 1 and Jupiter 2, Hughes is betting seriously on this and it is no coincidence that it is already working hard in the software-defined wide area networking (SD-WAN) using its GEO satellite connectivity.

The number of satellite IoT subscribers can rise at a compound annual growth rate (CAGR) of 39.6% to reach 23.9 million units in 2027.

We have also seen Google, Apple (partnering with satellite communications company Globalstar for emergency messages), Qualcomm (joining satellite service provider Iridium) and T-Mobile (tapping SpaceX’s Starlink) offering satellite connectivity on their smartphones. At the time of writing, Huawei had just come out with a new smartphone flagship Mate lineup, one of which offers satellite calling (it also uses PA chips inside to amplify the signal and manage power consumption, as per media reports).

John Strand, CEO of Strand Consult, quips, “I’m so old that I remember when Motorola launched Iridium In November 1998, a wild story that shows what cost can do to a business case. With the introduction of the KA satellite and the introduction of standard components in the satellite industry, the cost of producing a satellite has also decreased.”

“Success hinges on continuous efforts in these areas to swiftly and robustly deliver satellite-based telephony and Internet services.”- Vikas Sharma, Founder and Director, HCIN Networks

While global players like Starlink, OneWeb, Telesat and Hughes Communications are already active in this fast-evolving space, Indian players are also jumping in the pool; as seen with Jio Space Technology, Bharti Airtel, Tata’s Nelco, ISRO, Hughes Communications India and Bharat Broadband Network Limited (BBNL).

Moreover, collaborations are underway too, such as SES with Jio Space Technology, Hughes Communications’ Indian arm with ISRO, OneWeb with Bharti Airtel and ISRO, and Telesat with Tata’s Nelco. It is not hard to guess why.

The satellite Internet market in India could be huge very soon. More so, as 40% of our population does not have Internet access, and rural areas make up most of these cases. Also, the demand for instant communication, increased smartphone penetration and the ability to reach rural and remote areas will boost the adoption of satellite broadband services across India. With approximately 63% of the global population having Internet access, there is a ginormous untapped terrain to bridge the digital divide for the remaining population, as pointed out in the June 2023 EY-Parthenon report. Estimates mentioned in the report peg the overall satellite Internet market to be more than USD 17 billion by 2030, and the global space-based broadband Internet market to surpass USD 50 billion by 2031.

“Only about 10% of the Earth’s surface has access to terrestrial connectivity services which leaves a massive opportunity for satellite IoT communications.”- Johan Fagerberg, Principal Analyst, Berg Insight

As for India, things are heating up, both in terms of business interest and policy momentum.

Sourav Gupta, Telecom Analyst, Omdia, observes that in India, satellite Internet is at a nascent stage, with Jio and Airtel receiving Department of Telecommunications (DoT) approval to deliver broadband services via satellites. “But the potential use cases will be providing Internet connectivity in remote and rural areas where traditional broadband infrastructure is limited or unavailable. Also, providing reliable and secure communication during natural disasters and other emergencies, when terrestrial networks may be disrupted, would be strong uses.”

At present, Bharti-backed OneWeb and Reliance Jio along with Luxembourg’s SES have obtained a Global Mobile Personal Communication by Satellite (GMPCS) licence for LEO, and MEO and GEO satellite service, respectively. Inmarsat and BSNL have an inflight and maritime communications licence, Gupta points out. The EY report observes how the Indian government is also entering the satellite Internet space with Bharat Broadband Network Limited (BBNL), in charge of implementing the BharatNet project. BBNL aims to connect some 7,000 gram panchayats across the country through satellite Internet.

Gupta also notes how some of the global major satellite Internet service providers are planning to enter the Indian market through partnerships with the existing service providers as the government of India recently approved the Indian Space Policy 2023 which seeks to regulate and enhance the private sector participation in the space sector. The policy is expected to clarify the foreign ownership restrictions for operators of satellite constellations in low-earth orbit (LEO) and medium-earth orbit (MEO). “It may also help in providing greater clarity on the regulatory framework, addressing some of the previous hurdles around commercial satellite broadband services in India,” he says.

But the big question is whether customers are willing to pay extra to be able to use a satellite connection on their mobile phone, cautions Strand. Now, that’s a tough landing to make. Here’s why.

HOW EXPENSIVE?

“The question is also how much a mobile operator is willing to pay for their customers to get access to an additional network. I don’t believe that the willingness to pay is high; you compete with better and better mobile coverage and Wi-Fi in a lot of places.” Strand puts it clearly and boldly on the table.

“The potential use cases will be providing Internet connectivity in remote and rural areas where traditional broadband infrastructure is limited or unavailable.”- Sourav Gupta, Telecom Analyst, Omdia

Satellite communication and the Internet hold immense promise in India due to their wide coverage, bridging the connectivity gaps in remote areas, and fostering digital inclusion, reasons Vikas Sharma, Founder and Director, HCIN Networks Private Limited. However, affordability and a clear regulatory framework are critical factors that will determine their success, he adds, echoing the concern that Strand puts forth.

If we look at the Barclays report on the annual Euroconsult Satellite C conference, the satellite services segment has experienced muted growth in the past years as pricing declines have offset the volume growth.

Strand does not believe that satellite players can disrupt the mobile market. “I believe that they will sell their capacity to a wide range of niche segments where carriers are just one player of many.” In his assessment, there is a great risk that some of the satellite players will have the same fate as Iridium. There will be consolidation in that industry, and there are investors who must recognise that the hardware they have sent into space cannot generate the revenue that they dreamed of.

Moreover, there is the question of how the spectrum game will work out here. The Indian Council for Research on International Economic Relations (ICRIER) also launched a working paper recently, supported by the Broadband India Forum (BIF), wherein the authors emphasised that satellite spectrum is a shared resource, and existing empirical and practical models of assignment through auctions are scant. They advocated instead for an administrative assignment of space-based communication spectrum on a shared basis, in line with international best practices.

HOW SOON?

With all these drivers and bumps dotting this trajectory, satellite connectivity is moving at a new pace now.

As viewed by Yerramreddy Nivesh Reddy, Founder and CEO, and Peddineni Raghavendra, Co-Founder and CTO, Mydhili Aerospace, the satellite and aerial connectivity space is poised for significant evolution. “With players like Starlink, Hughes, OneWeb, Google-Garmin, and Facebook entering the market, we can expect increased global connectivity options.”

“The question is also how much a mobile operator is willing to pay for their customers to get access to an additional network.”- John Strand, CEO, Strand Consult

According to the Barclays report, LEO constellations continue to make progress; with Starlink successfully expanding to new verticals with an evolving ‘go to market’ strategy, embracing partnerships and third-party distribution. Kuiper could also tread well here with the launch of two prototype satellites in October 2023 and plans to deploy the constellation in 2024. Telesat has also got the financing for its LEO constellation and could begin operations in 2027. What’s fully deployed is the OneWeb constellation. So, supply is well on track to continue to increase dramatically in the industry (Barclays experts expect x15 between 2020 and 2025).

Gupta notes that, at the moment, consumer smartphones in India do not support satellite connectivity, and the feature is limited to ‘satphones’, which are used in maritime applications, trekking operations and more. “According to a spokesperson of Google, the company is designing phones for satellites and the feature could be available in the next Android version.”

Reddy warns how GEO-based Internet offers widespread coverage but can have latency issues. “LEO Internet, with its lower orbit, reduces latency but may require more infrastructure. Hybrid solutions, combining satellite and Fixed Wireless Access (FWA) offer versatility. The choice depends on specific use cases and requirements, with technology continuously improving.”

Geo-based Internet, like traditional satellite systems, offers wide coverage but suffers from latency issues due to its high orbit, observes Sharma. “In contrast, LEO-based Internet, with lower orbits, promises lower latency but requires more satellites for global coverage. Therefore, a hybrid approach, combining LEO and FWA, could prove to be a viable solution, offering low latency in populated areas and global reach through satellites.”

HOW UNDISPUTED?

Let’s not forget that there are more untapped orbits that can be unexpected and unprecedented, by-products of the current big satellite impetus. IoT Communications and D2D (Direct to Device), for example.

Johan Fagerberg, Principal Analyst, specialist IoT analyst firm Berg Insight, cites a new research report which states that the global satellite IoT communications market is growing at a steady pace. The global satellite IoT subscriber base grew to surpass 4.5 million in 2022. The number of satellite IoT subscribers can rise at a compound annual growth rate (CAGR) of 39.6% to reach 23.9 million units in 2027. Only about 10% of the Earth’s surface has access to terrestrial connectivity services which leaves a massive opportunity for satellite IoT communications. As of now, Iridium, Orbcomm, Inmarsat and Globalstar are the largest satellite IoT network operators.

Direct to Device (D2D) is another big, and emerging, disruption. It is now seen as potentially the largest revenue opportunity for the industry – even if not in the immediate future. As per some industry players, this segment could reach USD 1 billion within five years, and others believe it could take as long as 10 years. Euroconsult estimates that the addressable market could touch USD 100 billion. The point to note here is that, as of now, the satellite services industry represents USD 12 billion in annual revenues. Satellite connectivity is turning into a ‘must have’ with satellite attributes (reliability, redundancy, security) and prospects for verticals such as Aero and Consumer broadband are quite robust. But the largest revenue opportunity lies in other segments, such as the Direct to Device segment – as pointed out in the Barclays report too.

HughesNet Fusion has come up with a new home Internet offering that puts together satellite and wireless technologies to fix the latency problem.

GETTING READY FOR THE COUNTDOWN

All these cascading markets of satellites have good take-off prospects for sure. But not until some issues are fixed before the countdown.

An ICRIER paper noted: “While exclusive auctions have their merits, the interplay of flexibility, innovation, and equitable public access inherent to shared assignments can substantially contribute to a more inclusive and harmonious spectrum landscape.” The paper advocated for a departure from these conventional methods and suggested the adoption of prioritisation and coordination mechanisms for spectrum sharing within the framework of ITU Radio Regulations, but adapted to the domestic context.

At the end of the day, the big question, as Strand underlines, is what the satellite and mobile business case looks like and how ARPU should be shared between the different players. This is the ‘1 billion dollar’ question. As a broadband connection satellite-based broadband can become a commercial product for special customer segments; such as corporate customers, high-income customers, and schools. It will not be a mass-market product for low-income Indian people, Strand believes.

As India shines globally in space technology, the timeline and strength of translating this progress into satellite telephony and Internet services depend on technological readiness, infrastructure development, regulations, and market demand, dissects Sharma. “ISRO’s communication satellites like GSAT-19, GSAT-11, and GSAT-30 offer promise, but we must focus on bandwidth capacity, policy formulation, affordability, and accessibility. Success hinges on continuous efforts in these areas to swiftly and robustly deliver satellite-based telephony and Internet services, ensuring India’s connectivity evolution matches its space prowess.”

The overall satellite Internet market is estimated to be more than USD 17 billion by 2030 while the space-based broadband Internet market is likely to surpass USD 50 billion by 2031.

The Barclays report combs through some market trends and concludes that there is a rising demand from B2B customers to connect to the cloud as satellite is now seen as a key component of telecom networks, bringing reliable and secure redundancy. Telecom companies that wholesale satellite capacity and resell to B2B and B2C customers have witnessed a change in demand, with satellite capacity now seen as a key backup for B2B clients that want redundancy and security. There are also new hot pockets like demand for integrated multi-orbit capacity (i.e., LEO, MEO, GEO), as orbital positions have different attributes that are valuable (latency, capacity, low cost of equipment). Telecom operators also see satellites as a good alternative to further expanding their terrestrial infrastructure (towers, FTTH) as this is far better economics in remote parts of the world. But for now, satellite capacity is more of a complement to the operators that they can bundle in their offers, not a substitute.

As hot as they look, these satellite offshoots are not exactly ‘ready to eat’. Not right away.

By Pratima Harigunani

pratimah@cybermedia.co.in