Sky-high battle between satellite service providers and telcos for spectrum

Satellite companies are demanding spectrum free or at a nominal administered price as is done in other parts of the world. The move is being vehemently opposed by telcos through the COAI

An annual market that is expected to touch $20 billion in the next few years is at stake. No surprise, then, that a fierce war has broken out over this lucrative high-speed broadband pie between global satellite service providers and domestic telecom majors (telcos).  

Elon Musk’s Starlink is already asking Indian customers to pre-book its broadband offering for $99 (which includes the kit needed to power the service in homes).

Like Musk, Amazon’s Kuiper is putting up thousands of low earth orbit (LEO) satellites around 2,000 km above Earth across the world. These LEOs will also cover India, offering high-speed broadband that could match speeds of 5G. 

Taking them on are Reliance Jio and Vodafone-Idea, which want to leverage 5G to offer high-speed fixed wireless broadband to customers and enhance revenues. Jio is already offering fibre-to-the-home. Then there is the Bharti group, which straddles both telecom as well as satellites and now is a majority owner of OneWeb, which has the British government and SoftBank as partners.

As with mobile telephony, players in the game are battling for control over spectrum. But this time the fight has a twist. Satellite companies are demanding spectrum free or at a nominal administered price as is done in other parts of the world. The move is being vehemently opposed by telcos through the Cellular Operators Association of India (COAI), which is demanding a “level playing field” given the huge sums they have to fork out for the same 5G spectrum in auctions.

The fight is for the control of spectrum in the 28 Gigahertz (GHz) band, also known as the millimetre band. This high-frequency band has huge bandwidth. The International Telecommunication Union (ITU), the global telecom body, had earmarked that spectrum be divided in this band between satellite operators and telcos. So the band between 24.25 and 27.5 Ghz is reserved for 5G services and the one between 27.5 GHZ and 29.5 GHz for satellite operators.

But Indian telcos contend that they need to share the spectrum earmarked for satellites, too. Says a senior executive of a leading telecom gear-maker: “In the US, UK and South Korea, the 27.5 GHz-28.5 GHz band has been used for running 5G services. As a result, there is a huge choice of equipment available that reduces the deployment cost. By reserving this for telcos, at least one player can be accommodated in this band (one player requires about 1 GHz). This could also help generate competition among the three operators for this band.”

But satellite operators say such a move would jeopardise their viability since a lower bandwidth means lower speeds, which would make them uncompetitive.

Prodded by the government, a compromise solution is in the works. Anil Prakash, director general of Satcom Industry Association (SIA), explains: “We have suggested a formula — that telcos can have spectrum between 24.25 and 28 GHz, and satellite keep spectrum from 28 GHz to 29.5 GHz, provided the satellite gateways in 27.5-28 GHz are protected.” This simply means telcos need to ensure that satellite ground terminals do not face any disturbance from the telcos’ towers.  

COAI officials are pushing for more — they want satellite players to concede more spectrum, till 28.5 GHz. Officials also point out that the decision on sharing spectrum is acceptable even to Bharti, which has maintained a neutral stance.

There is another band in which both satellite and telcos could be battling for spectrum — the V band (57-71 GHz). Telcos have demanded the band for backhaul (the intermediate links in each telcos’ network) and want it to be auctioned. The Broadband India Forum, which represents Google and Facebook, wants the lower end of the V band to be delicensed and used for indoor WiFi services. Starlink has requested the telecom regulator that this band be shared with satellite companies. The company plans to launch over 7,500 V band satellites.

Satellite companies argue that their capital costs are much higher than telcos’ and paying for spectrum will make the new alternative technology unvi­able from the start. Says Anil Prakash: “A LEO constellation costs between $5 billion and over $10 billion,” principally because the technology is global and not country-specific. 

Nearly 50 per cent of the cost is in building the satellites, which have a shelf life of five to seven years. This means in a 20-year period, service providers need four times the size of the constellation. Break-evens could take more than seven years as the subscriber market is still very small, says research by RCR Wireless.

Telcos counter that costs of putting up a 5G network would be over $10 billion minus spectrum cost. So satellite players’ argument has no real basis. They also question whether there is enough market for broadband based on different technologies.

Satellite players hit back saying that telcos want to kill alternative technology and hoard spectrum. And if spectrum prices are high, it is they who are responsible for pushing them up in auctions.

Clearly the government has to take a call on balancing the opposing demands. “One way is to bring down the base spectrum price in the 5G auction. Otherwise, why should we pay while satellite players won’t for the same service? Also, they should take a Unified Access Service Licence for offering the same service, just like we have,” says a senior executive of a telecom company. 

Nobody’s backing down yet because of the potential market. In India, for instance, rural internet penetration is still just a tad over 30 per cent and wired internet covers only 10 per cent of the total households. And the government’s plan to connect 250,000 villages with broadband by fibre is a long way off. Despite numerous changes in the deadline, less than half of them have WiFi installed. With satellite, this could be covered within 12-18 months, says a Ficci-Deloitte report, adding that the initial satellite broadband market would be around $1 billion, growing at 15 per cent.

This apart, satellite broadband can be used increasingly also for backhaul between mobile towers in remote and rural areas to improve telcos’ mobile connectivity.

But there are other uses that will see more competitive clashes, such as an alternative broadband for customers of the kind Starlink is testing in the US or for powering private networks of corporate factories at remote or rural locations. Bharti’s Sunil Mittal said satellite broadband will always complement terrestrial networks because it will be priced higher. But there are others who see it as a viable competitor in the broadband sweepstakes.