The user base of satellite communication in India is expected to increase to about 1.5-2 million by 2025, clocking revenue of nearly Rs 5,000-6,000 crore annually, if the operating environment eases, Icra said on Monday.
While satellite communication would be beneficial to areas deprived of the traditional network, it will be "quite expensive", making its adoption slow.
The "restricted" operating environment, "vague" licensing policies and "uncertainty" around spectrum allocation for satellite communications puts India in the backseat, Icra said in a statement.
"In India, if the operating environment eases, satellite communication user base is expected to rise to around 1.5-2 million by 2025, generating a revenue of around Rs 5,000-6,000 crore annually," it said.
Satellite communication has been gaining prominence globally, and is being viewed as "the next big thing".
Several players are entering this space and are in the process of launching a constellation of Low Earth Orbit (LEO) satellites.
On the pros and cons, Icra said that satellite communication mainly scores over the traditional network in inaccessible terrains and remote areas. It has wide geographical coverage and good broadcasting capabilities.
"On the flip side, satellite communication is expensive and requires a lot of approvals, apart from being prone to weather disturbances. Despite all these, satellite communication is touted to be the next advancement in the broadband space," Icra said.
Sabyasachi Majumdar, Group Head and Senior Vice President at Icra, noted that satellite communication will remain crucial for broadband inclusion of a lot of remote and sparsely populated areas which have not been connected through terrestrial network.
"Several foreign players are eyeing this market, and have launched/ are in process of launching a constellation of satellites to cover the entire earth, including One Web, Starlink, Amazon, etc," Majumdar added.
Satellite communication can complement the current network infrastructure by way of providing a redundant network, acting as a backhaul network, bridging the digital divide by providing broadband access in hilly and remote areas.
It has been also found suitable for a variety of applications including Internet of Things.
While globally the adoption of satellite communication has started, with the US having more than 4.5 million subscribers and European Union having more than 2.1 million subscribers, the penetration in India is only restricted to 0.3 million enterprise subscribers, according to Icra.
"This is because of restrictions on last mile connectivity through satellite to retail subscribers, in addition to restrictive policies to operate in this space," Icra said.
Majumdar said there have been a lot of policy-related uncertainties, "including vague licensing regime and lack of clarity on spectrum frequency and allocation, which can act as deterrents to the proliferation of this technology".
While the global adoption rates are also slow owing to multiple reasons, including high prices and low speeds, both these aspects should improve with time, he pointed out.