Decoding the right regulation for satcom services

DoT is yet to decide how satellite spectrum will be made available to telcos in India; the right decision can make or break this nascent sector

During the past year, satellite communications services or satcom have gained much prominence in India. With a massive market opportunity that is pegged to be worth over USD 263 million by 2028, satcom services are understandably being touted as the next big frontier for telecom operators to focus on. However, while Jio and Airtel have both announced that their services are ready to commence, the most crucial piece of the jigsaw is missing at the moment – the spectrum itself.

“Spectrum auction of satellite services is banned in the United States to prevent any anti-competitive market practices.”- TV Ramachandran, President, Broadband India Forum

Conflict around giving stakeholders of the industry access to satellite spectrum was driven by letters written by Reliance Jio and Vodafone Idea, to the Telecom Regulatory Authority of India (TRAI). In these letters, the telcos argued that administrative allocation of shared satellite spectrum could potentially kill commercial incentives and advantages for these firms. As a result, a faction of the industry, largely led informally by Reliance Jio, demanded an auction of spectrum.

WHAT IS THE INDUSTRY PRECEDENT?

Industry stakeholders say that when it comes to the satcom industry, all global precedent points to the administrative allocation of satellite spectrum. Lt Gen (retd) Anil Kumar Bhatt, Director General of the space industry body, Indian Space Association (ISpA), said in an interview with Voice&Data that there are “no” global auction models when it comes to satellite spectrum. TV Ramachandran, President of Broadband India Forum (BIF), also concurred, thereby suggesting that industry presentations to TRAI regarding spectrum auction or allocation have mostly gone in favour of allocation.

Certainly, Voice&Data’s research reveals that all nations with active satcom services have so far opted for administrative allocation, placing Jio’s pitch for auctioning of satellite spectrum at a disadvantage. At least two senior industry officials with knowledge of the matter, who requested anonymity, as well as ISpA’s Bhatt, said that during TRAI’s industry consultation periods, all space sector firms presented in favour of administrative allocation from the Centre.

Ramachandran clarified that there is no constitutional legislative requirement mandating spectrum auctions. He also highlighted that the Supreme Court’s judgement related to spectrum allocation is often misunderstood. “In its advisory jurisdiction in the Presidential Reference in the 2G spectrum case, the apex court said that auction, as a method of disposal of natural resources, cannot be declared to be a constitutional mandate under Article 14 of the Constitution of India.

He further referenced the Supreme Court’s ruling, pointing out that, while auction might maximise the revenue, it may not always be the optimal approach to serve the public good, considering connectivity and the network as public goods.

“Auctioning spectrum to a private entity could lead to enabling a highly anti-competitive market environment.”- Lt Gen (retd) Anil Kumar Bhatt, Director General, Indian Space Association

WHY IS AUCTION AN ANOMALY?

Explaining why most industry stakeholders are against spectrum auction, Bhatt said that since satellite spectrum fundamentally differs from terrestrial spectrum, the former is best utilised when shared by all operators. “Auctioning spectrum to a private entity could lead to enabling a highly anti-competitive market environment,” he said.

Industry stakeholders and veterans believe that if satellite spectrum is privately auctioned to specific firms, the latter will have the ability to control access to satellite spectrum, which in turn could hamper the overall health of a sector in terms of its commercial viability. This, in turn, would mean that instead of applying for spectrum allocation to the Centre, startups or even global firms would be at the mercy of private firms owning satellite spectrum to offer them access, and also define market standard pricing models for access to satellite spectrum.

Ramachandran further highlighted that spectrum auction of satellite services is banned in the United States, to prevent such anti-competitive market practices.

IS THERE A WAY FORWARD?

At the moment, the verdict on how satellite spectrum access will be enabled hangs in the balance. Senior industry officials who requested anonymity said that the retirement of former TRAI chief, PD Vaghela, has delayed the matter significantly since the new TRAI administration will take its own time in gaining full industry confidence and understanding of the matter, before offering its recommendations to the Ministry for the final decision.

However, space sector startups have pointed out that auctioning satellite spectrum will be detrimental towards global investor confidence in the business health of the satcom market in India. A fundamental difference lies in that when spectrum is administratively allocated, firms pay a certain fee to the Centre to lease satellite spectrum. However, the latter is shared among all companies that apply and is thereby not restricted in terms of access by any private entity.

Senior officials with knowledge of the matter indicate that TRAI is close to issuing its recommendations, thus suggesting a potential resolution to this issue by the end of this fiscal.

With the entire industry’s health hanging in balance, and global majors knocking on the door, it remains to be seen what course of action the industry takes, and where satcom eventually ends by the end of 2024.

By Vernika Awal

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