Can Starlink really take off in India?

Starlink is all set for its debut in India.              

The Elon Musk-owned internet provider, which relies on satellites to provide internet services, is expected to launch its services in the country in the coming weeks. Ahead of the launch, its website showed what appeared to be the price the company planned to offer for its services in India, before it was deleted.

The company soon issued a clarification stating that the price of Rs 8,600 per month shown on the website was incorrect. Starlink users must also pay a one-time hardware cost of Rs 34,000, the website had claimed before it was removed. The pricing model immediately raised eyebrows in a market where a GB of wireless data costs less than a cup of tea.

“The Starlink India website is not live, service pricing for customers in India has not yet been announced, and we are not taking orders from customers in India,” Starlink’s vice president, Lauren Dreyer, said in a statement. “There was a config glitch that briefly made dummy test data visible, but those numbers do not reflect what the cost of Starlink service will be in India. The glitch was quickly fixed. We're eager to connect the people of India with Starlink's high-speed internet, and our teams are focused on obtaining final government approvals to turn service (and the website) on.”

Regardless, even if the price shown seemed exorbitant, it’s unlikely Starlink will be able to match the prices offered by internet providers in the country, making it only a complementary service to existing providers. Data costs have plummeted by 98% in India over the past 11 years, from Rs 287 per gigabyte in 2014 to Rs 9 currently, helping connect 944 million broadband users—up from 60 million in 2014—across the world’s second-largest telecom market. India has about 1.01 billion internet users, with wireless users at 973 million.

Much of that had to do with the Reliance Group's ambitious foray into the telecom sector with Jio, where it slashed prices significantly to penetrate the market.

Perhaps that’s also why Starlink has tied up with Jio and Airtel to support its India foray, allowing it to leverage the established networks of the homegrown service providers. There is a good reason for that. In the US, the cheapest residential Starlink internet service costs upwards of $40 (Rs 3,600). While that’s bundled with the hardware, speculation is rife that Starlink could be priced between Rs 2,500 and Rs 3,600 in the Indian market.

Starlink’s website lists monthly plans in neighbouring Bangladesh at $40–50 (Rs 3,400– Rs 4,300), with equipment costs of $300–400 (Rs 25,800– Rs 34,400). In Sri Lanka, plans cost $100–125 (Rs 8,600– Rs 10,750) per month, with equipment priced at $900–1,000 (Rs 77,400–Rs 86,000). Download speeds range between 190 and 360 Mbps. India ranks 30th globally for mobile download speeds, averaging 131 Mbps, while fixed broadband ranks 99th at 66 Mbps, according to the Speedtest Global Index.

“Our expectations are that it will be priced around Rs 4,000,” Varun Gupta, senior analyst at Counterpoint Research, tells Fortune India. “If Starlink can find a way to bundle the equipment cost into a package, perhaps that will make it an attractive proposition.  The initial users will be those wanting to buy it for the novelty factor. But affordability is a factor in a market like India, and when that’s the case, it’s a hard sell for Starlink unless it can find a way to make the proposition cheaper.”

In the US, where population density is lower than in India, laying large fiber networks is an uneconomical proposition, making Starlink’s proposition viable. Pricing is also in line with the country's existing rates, unlike in India, a price-conscious market. 

Starlink has already secured the mandatory Global Mobile Personal Communications by Satellite (GMPCS) licence, allowing it to provide satellite communications services to retail customers. The company has also obtained a VSAT licence and authorisation for flight and maritime connectivity. Once the company receives the necessary government security clearance, Starlink will compete with Jio-SES and Bharti-backed Eutelsat OneWeb. The company has already tied up with the government of Maharashtra to bring satellite-based internet connectivity to remote and rural areas.

Starlink uses a Low Earth Orbit (LEO) constellation to provide low-latency broadband connectivity, ensuring an uninterrupted connection. The service gained significant traction during the Russia-Ukraine war by offering services to Ukraine, thereby strengthening its operational capabilities.

But in India, where entry-level fiber and fixed wireless access (FWA) plans cost between Rs 500 and Rs 1,000 per month, the challenge remains penetration, especially given Starlink's value proposition, which is at least three to five times the existing rates. There are also over 999 million broadband users in the country, according to the Telecom Regulatory Authority of India. Of this, Reliance Jio accounts for half the market, with Bharti Airtel trailing.

 “If you price at Rs 7000 or Rs 8000, then the uptake is going to be very difficult,” adds Gupta of Counterpoint. “Secondly, a lot of people have moved to phones with 4G and 5G as their primary device to access the internet. Then you have the bundling of services with OTT and television, along with the internet, that has helped increase penetration for incumbents.”

Starlink could stand out by offering internet services to areas where broadband infrastructure remains limited, including the northeastern parts of the country. “But affordability remains an issue there too,” adds Mishra.

“If they had come into the market five or six years ago, things would have been different when network footprints weren’t well established,” says Faisal Kawoosa, the chief analyst at consultancy firm Techarc. “Affordability is an issue in India today. 5G, today covers 95 per cent of the population, and with alternatives such as fiber and FWA (fixed wireless access), it becomes a difficult sell in a market like India.”

Perhaps, like Tesla, Elon, and Starlink, may not have an easy outing in the world’s most populous country. And in that, it also speaks volumes about the Indian market.