Telcos slam Trai satellite spectrum charges as 'unjustifiably low'

Says proposals will create non-level playing field, impact sustainability of terrestrial services

Telecom operators have hit out at the Telecom Regulatory Authority of India’s (Trai’s) recent recommendation that satellite spectrum be charged at 4 per cent of adjusted gross revenue (AGR), terming it as ad hoc. They added that it is “based on incorrect assumptions” that have been presented without a clear rationale.

 

According to them, Trai’s guidance will undermine competition, and create a non-level playing field. It will benefit satellite operators and threaten the sustainability of traditional terrestrial services, they said.

 

In a letter to Department of telecommunications (DoT) Secretary Neeraj Mittal last week, the Cellular Operators Association of India (COAI) — which counts Bharti AIrtel, Reliance Jio and Vodafone Idea (Vi) among its members — argued that the recommendations fail to ensure a level-playing field between satellite operators and traditional terrestrial service providers. This, they said, undermines competition and creates regulatory distortions. 

Interestingly, both Airtel and Jio are active entrants in the satcom race. Bharti Airtel-backed Eutelsat Oneweb and Jio's satcom arm Jio Satellite Communications Ltd have secured all permissions back in November, 2023, and June, 2024, respectively. 

 

Meanwhile, Elon Musk-led Starlink which got a nod for a global mobile personal communication by satellite (GMPCS) services licence from DoT last month is awaiting clearance from space regulator IN-SPACe.

 

Amazon's Project Kuiper is also actively aiming to enter the Indian market.

  COAI alleged that rather than a techno-economic evaluation, Trai has based its pricing formula on the adhoc spectrum charges set on administrative basis for non-competitive VSAT services using geostationary satellites. This is outlined in DoT's office memorandum dated November 11, 2023. 

 

Non-geostationary threat

 

COAI has trained its guns mostly on satcom services through next generation non-geostationary satellite orbit (NGSO) satellites, which can now directly substitute and compete with terrestrial fixed, and mobile broadband services.

 

NGSO refers to those satellites which occupy either a low-earth orbit (LEO) or medium-earth orbit (MEO).

 

Unlike geostationary satellite orbit (GSO) satellites, LEO and MEO satellites do not occupy a stationary position but move in relation to the earth. Both Oneweb and Starlink are major players in this domain, while Project Kuiper has big plans. 

COAI believes Trai has grossly underestimated the capacities that satcom players wield.

 

While the current traffic catered to by Jio, Airtel and Vi is 23,012 million GB/month, the capacity planned for India by Project Kuiper and Starlink is 29,112 million GB/month, COAI said. 

In its early-May announcement, Trai had capped the 4 per cent charge for all NGSO and GSO-based fixed-satellite service (FSS) and mobile satellite service (MSS).

 

It had also mandated that charges would have to be at least ₹3,500 per MHz for both GSO and NGSO-based service, collected annually. For the latter, an additional ₹500 per subscriber will be charged annually in urban areas, while rural subscribers would be exempted.

 

No upfront payment

 

COAI has also come down hard on Trai’s decision to forego any entry fee or upfront payment for handing over the space spectrum, as is the norm for terrestrial spectrum, for which auctions are held. 

Trai Chairman Anil Kumar Lahoti had defended this by arguing that satellite spectrum is a pooled resource, and stressed that globally satellite spectrum is priced accordingly.

 

“Trai's position is inconsistent with the approach followed so far in case of administrative spectrum allocations. It is without any rationale, empirical analysis, international benchmarking, or economic justification,” COAI rebutted. 

“In stark contrast, operators are required to face substantial upfront auction determined charges, often amounting to thousands of crores. This translates into an effective spectrum cost of 18-53 per cent of the present AGR,” it added. 

COAI also pointed out that terrestrial operators are bound by long-term spectrum payment commitments extending over a 20-year period. But NGSO operators will not be subject to similar financial or operational obligations. Trai has allowed the space spectrum to be assigned for 5 years and extendable by two additional years.