I recently got a Whatsapp forward from a friend of mine. Too busy with my routine work, I ignored the post as we usually receive many such forwards on a daily basis.
The very next day, I received a call from Deepak, the friend who sent me the post asking me if I had checked out his Whatsapp message.
When I replied negatively, he said: ” Just check it out once. It is important news which might impact the share price of Reliance Industries in the coming days”.
Not able to control my curiosity, I stopped all my work and checked out his post which spoke about how the launch of Elon Musk’s revolutionary satellite-based internet service Starlink in India would pose a significant threat for Reliance Jio as early as 2021.
It is said that ‘Half knowledge is a dangerous thing’. So to understand this post in detail, I decided to dig deeper and take a detailed look.
When Mukesh Ambani launched the Reliance Jio service in 2016, it was a gamechanger. With a disruptive tariff offering high-speed 4g internet services along with free voice calls Reliance Jio’s move put other telecom players like Bharti Airtel, Reliance Communications, Vodafone, and Idea on the backfoot.
While Bharti Airtel managed to hold its ground and emerge as Reliance Jio’s biggest competitor, Reliance Communications shut down its business under the burden of massive debt. Vodafone and Idea which got merged to form a bigger entity Vodafone Idea, now renamed as VI is still struggling to stay afloat due to its massive debt and outstanding dues for spectrum.
In a short span of fewer than 5 years after launch, Reliance Jio has become a top player in India’s telecommunications industry.
Can the arrival of a new disruptor, Starlink launched by Elon Musk, a man known to do the unthinkable topple Reliance Jio?
Keep reading to know…
What is Starlink internet service, and how does it work?
Imagine you are climbing on a mountain, far away from civilization, and want to transmit your pics live to your loved ones or do video call. Starlink internet service allows you to do that. Get connected to high-speed internet anywhere in the world without the requirement of wired infrastructure or cellphone towers.
A constellation of thousands of small satellites orbiting around 350 miles above the Earth beaming high-speed internet signal offers internet access from virtually anywhere on Earth. A recent performance test revealed that the service was capable of download speeds of between 102 to 103Mbps, & upload speeds of 40.5Mbps, with a latency of 18 to 19 milliseconds.
“Once these satellites reach their position, we will be able to roll out a fairly wide public beta in the northern USA and hopefully southern Canada,” Elon Musk said in a recent tweet.
Starlink internet service has been running a private beta since July in some parts of the USA.
“Other countries to follow as soon as we receive regulatory approval” stated Musk in another tweet.
Other players in the segment
Reliance Jio’s biggest competitor in India, Bharti Airtel owns a significant stake in OneWeb. OneWeb is currently owned by a consortium of the UK government and Bharti Global, which helped the satellite company stave off bankruptcy. Bharti Global is the overseas arm of Bharti Enterprises — the holding company of Airtel.
In December 2020, OneWeb launched 36 satellites with the objective of launching high-speed internet services across key global markets towards the end of 2021. The company also intends to launch the satellite-based high-speed internet service in India by mid-2022.
Why Elon Musk’s Starlink won’t be a significant threat to Reliance Jio?
India’s telecommunications market is very price sensitive. Before the arrival of Reliance Jio in 2016, data packs were priced around Rs.250 for 1 GB. Post the launch of Jio data prices came down to an average of Rs.12 to 14 per GB as other players in the industry were forced to cut the prices to match Reliance Jio’s tariff.
Reliance Jio’s competitors like Airtel were also offering 4G in a limited circle in 2016, but the low price was a significant reason why the majority of customers opted for Jio. Media reports indicate Starlink plans to provide its Internet services for around $80 per month and a worldwide rollout of the service is expected by the end of the year 2021.
Also currently no clarity about whether Starlink will offer voice calling services based on Voice over Internet Protocol (VoIP) (a technology that allows you to make voice calls using a broadband Internet connection).
Before Starlink, Motorola backed Iridium and Teledesic backed by Microsoft Chairman Bill Gates, Craig McCaw, founder of McCaw Cellular Communications, and Saudi Prince Alwaleed bin Talal had attempted to build and launch satellite constellation based internet service but failed due to enormous debt.
Starlink is a boon for connecting remote areas with poor or zero infrastructure. However, it works from a fixed location using an antenna, router, and a power source. Of course, it can be carried anywhere but cannot be as handy as a cellphone.
So the question of being a significant threat to Reliance Jio in the future does not arise as it is just like comparing an apple with an orange.
Going back to the Whatsapp forward, the inspiration behind this article, it is best to take such forwards with a pinch of salt.
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This article was last updated on 26th Feb 2021.