The race between two of the globe’s richest men, Elon Musk and Mukesh Ambani, is intensifying as they prepare to face off in India’s satellite broadband trade.

After India’s government announced last week that satellite spectrum for broadband would be allocated administratively rather than through auction, this battle has only heated up.

Mr Musk had previously criticised the auction model supported by Mr Ambani.

Satellite broadband provides internet access anywhere within the satellite’s coverage.

This makes it a reliable alternative for remote or rural areas where traditional services like DSL – a connection that uses telephone lines to transmit data – or cable are unavailable. It also helps to bridge the challenging-to-reach digital divide.

India’s telecom regulator has yet to announce spectrum pricing, and commercial satellite internet services are still to commence.

However, satellite internet subscribers in India are projected to reach two million by 2025, according to financing rating agency ICRA.

The trade is competitive, with around half a dozen key players, led by Mr Ambani’s Reliance Jio.

Having invested billions in airwave auctions to dominate the telecom sector, Jio has now partnered with Luxembourg-based SES Astra, a leading satellite operator.

Unlike Mr Musk’s Starlink, which uses low-Earth orbit (LEO) satellites positioned between 160 and 1,000 km from Earth’s surface for faster service, SES operates medium-Earth orbit (MEO) satellites at a much higher altitude, offering a more expense-effective structure. Receivers on the ground receive satellite signals and procedure it to internet data.

Mr Musk’s Starlink has 6,419 satellites in orbit and four million subscribers across 100 countries. He has been aiming to launch services in India since 2021, but regulatory hurdles have caused delays.

If his business enters India this period, it will boost Prime Minister Narendra Modi’s efforts to attract foreign startup distribution, many declare.

It will also assist his government’s efforts to burnish its image as pro-business, countering claims that its policies favour top Indian businessmen like Mr Ambani.

While auctions have proved lucrative for it in the history, India’s government defends its selection to allocate satellite spectrum administratively this period, claiming it aligns with international norms.

Satellite spectrum is not typically allocated by auction as the costs involved could impact the monetary rationale or startup distribution in the business, says Gareth Owen, a technology analyst at Counterpoint Research. In contrast, administrative distribution would ensure spectrum is fairly distributed among “qualified” players, giving Starlink a chance to enter the race.

But Mr Ambani’s Reliance says an auction is essential to ensure fair competition, given the lack of obvious legal provisions in India on how satellite broadband services can be offered directly to people.

In letters written to the telecoms regulator earlier in October, seen by the BBC, Reliance repeatedly urged the creation of a “level playing field between satellite-based and terrestrial access services”.

The firm also said that “recent advancements in satellite technologies… have significantly blurred the lines between satellite and terrestrial networks”, and that “satellite-based services are no longer confined to areas unserved by terrestrial networks”. One note stated that spectrum assignment is done through auctions under India’s telecom laws, with administrative distribution allowed only in cases of “community gain, government functions, or technical or economic reasons preventing auctions.”

On X, Mr Musk pointed out that the spectrum “was long designated by the ITU as shared spectrum for satellites”. The International Telecommunication Union (ITU), a UN agency for digital technology, sets global regulations, and India is a member and signatory.

When Reuters information agency reported that Mukesh Ambani was lobbying the government to reconsider its position, Mr Musk responded to a post on X, saying: “I will call [Mr Ambani] and inquire if it would not be too much trouble to allow Starlink to compete to provide internet services to the people of India.”

Mr Ambani’s resistance to the administrative pricing way might stem from a strategic advantage, suggests Mr Owen. The tycoon could be “prepared to outbid Musk”, using an auction to potentially exclude Starlink from the Indian trade, he says.

But it is not Mr Ambani alone who supported the auction route.

Sunil Mittal, chairman of Bharti Airtel, has said that companies aiming to serve urban, high-complete customers should “receive telecom licences and buy spectrum like everyone else”.

Mr Mittal – India’s second-largest wireless operator – along with Mr Ambani, controls 80% of the country’s telecom trade.

Such resistance is a “defensive shift aimed at raising costs for international players seen as long-term threats,” says Mahesh Uppal, a telecommunications specialist.

“While not immediate competition, satellite technologies are advancing quickly. Telecom companies [in India] with large terrestrial businesses terror that satellites could soon become more competitive, challenging their dominance.”

At stake, clearly, is the commitment of the vast Indian trade. Nearly 40% of India’s 1.4 billion people still don’t have internet access, with rural areas making up most of the cases, according to EY-Parthenon, a consulting business.

For context, China is home to almost 1.09 billion internet users, which is almost 340 million more than India’s 751 million, according to DataReportal, which tracks global online trends.

India’s internet adoption rate still lags behind the global average of 66.2% but recent studies display that the country is closing the gap.

If priced properly, satellite broadband can assist bridge some of this gap, and even assist in the internet-of things (IoT), a network that connects everyday objects to the internet, allowing them to talk to each other.

Pricing will be crucial in India, where mobile data is among the cheapest globally – just 12 cents per gigabyte, according to Modi.

“A worth war [with Indian operators] is inevitable. Musk has deep pockets. There’s no rationale why he cannot propose a year of free services in [some] places to earnings a foothold in the domestic trade,” says Prasanto K Roy, a technology analyst. Starlink has already cut prices in Kenya and South Africa.

It may not be straightforward though. In a 2023 update, EY-Parthenon noted that Starlink’s higher costs – almost 10 times those of major Indian broadband providers – could make it challenging to compete without government subsidies.

Many more LEO satellites – the benevolent Starlink operates – are needed to provide global coverage than MEO satellites, increasing launch and maintenance costs.

And some of the fears of Indian operators could be unfounded.

“Businesses will never switch completely to satellite unless there is no terrestrial alternative. Terrestrial networks will always be less expensive than satellite, except in thinly populated regions,” says Mr Owen.

Mr Musk could have a first-mover advantage, but “satellite markets are notoriously leisurely to develop”.

The battle between two of the globe’s richest men over internet of space has truly begun.