India's deadlock on pricing internet from satellites


It’s been a few months since we covered Starlink’s approval to operate in India, but it isn’t operational yet. So, what’s the holdup?

Well, getting Wi-Fi beamed down from space isn't merely about building satellites and orbital mechanics. The real drama is happening on planet Earth, in the state offices of Delhi. Bureaucrats there are wrestling with a question that only sounds simple, but really isn’t:

How should we price the right to beam internet from space?

The Telecom Regulatory Authority of India (TRAI) has made a set of recommendations on satellite spectrum pricing, based on consultations with private players. However, the Department of Telecom (DoT) has suggested that TRAI rework the set.

This is no mundane regulatory back-and-forth. What it really reflects is the incentives and goals of the TRAI, the DoT, and different private sector firms  and how those goals conflict with each other. This story won’t solely be about individual players Starlink, but the whole maze of pricing India's satellite spectrum.

Now, let’s get down to Earth.

To transmit good internet to cities, mid-frequency waves — decent coverage with enough data  make the most sense. Your home Wi-Fi (2.4-5 GHz) usually operates in this band. However, when two signals in the same frequency band are targeted in the same area, they interfere with each other. Imagine two radio stations on the same frequency in the same city  you’d get nothing but static. Turns out, the internet works in much the same way.

That's why telecom companies auction for exclusive rights to use a frequency band (or spectrum) in a given area. It's like getting the sole right to use a specific highway lane in a specific city. Naturally, this drives up auction prices. And telecom firms like Jio and Airtel have spent tens of billions of dollars each on these auctions.

But satellite internet works differently.

Instead of broadcasting broadly across a city, satellites use incredibly narrow, focused beams think laser pointers rather than floodlights. A satellite orbiting over one area in Bangalore can send internet to it, while another satellite can use the same frequency to serve another area in the same city. No static, no interference, just high-speed internet.

In other words, space increases abundance where land couldn’t. Now, everyone can use the same highway lane. And if that’s true, then do we even need auctions to distribute highways, or even internet capacity?

This is why almost every major satellite-operating country in the world—from the US to China uses administrative allocation instead of auctions for satellite spectrum, all coordinated by the International Telecommunications Union (ITU). The national government sets the price (and rules), and companies adhere to it. Officially, India has also codified the same approach in the Telecom Act of 2023.