Editorial: Competition by coercion

NEW DELHI: When Prime Minister Narendra Modi had an appeasement meeting with President Donald Trump in Washington last month, it was clear that the latter would drive a hard bargain, not just on lowering tariff barriers to American goods but also to open up India’s satellite communication and electric mobility markets to companies run by the latter’s chief benefactor, Elon Musk. Barely hours later, when the Prime Minister met the billionaire, his brood of children and their nannies while India’s National Security Adviser and External Affairs Minister looked on, it was obvious that the doors would soon be thrown open to Musk.

So, a month later, it is no surprise that Musk’s SpaceX has stitched up deals with Jio Platforms and Bharti Airtel to offer its Starlink satellite internet services in India. The only unanticipated outcome is that the country’s biggest telecom giants both have offered a piggyback ride to the American satcom company, setting aside their shared hostility to the foreign invader as well as their mutual competition for dominance in India.

As per their separate deals signed only hours apart, Jio and Airtel will act as distributors for Starlink's equipment and services in India while continuing to operate their respective broadband internet businesses. SpaceX will have to get regulatory approvals from India’s Space and Telecom departments to offer its satellite-based internet connectivity. There still are important considerations outstanding such as national security and data sovereignty, but from the Modi government’s diffident posture since Trump began his second presidency, there is a strong likelihood that the path has been paved for Musk.

However, there is justifiable apprehension that the Indian government is not dealing from a position of strength at this juncture. Musk has been aggressively leveraging his proximity to Trump to further his business interests and is determined to break into India’s internet market of 60 billion users. The US President for his part has been using his threat of reciprocal tariffs to intimidate India into opening up its agriculture and auto markets to American products. In the face of this, there have been no signs so far of the Modi government stiffening its back to stand up to the coercive tactics.

Instead, what we have seen are important strategic shifts by both the Indian government and Jio and Airtel to facilitate Musk. Previously, the Modi government pivoted from its policy of auctioning spectrum to administratively allocating it, which nudges out competition and suits Musk. All of a sudden, Jio and Airtel too, who had been adamant that Starlink should be made to buy spectrum via an auction, have now decided to become Musk’s partners, junking their own exploratory investments in satellite telephony. Jio and Airtel say Starlink’s service will be a ‘complement’ to their existing optical fibre business although such an arrangement is likely to have uncertain implications for their own as well as for the survival of lesser players like Vodafone Idea.

Competition is welcome but Starlink’s arrival piggybacking on Jio and Airtel – while continuing to have the option of making an independent foray – looks nothing like it. While MTNL continues to be beset with PSU frailties, the writing is now dire for Vodafone Idea and for the Rs 16,000 crore the Indian government invested in that flailing company. Over the past decade or so, the telecom arena has become the graveyard of major players, and now India’s Big Two teaming up with Musk, this game looks more like Monopoly than competition.