Trai yet to receive DoT's response on satellite spectrum pricings

Trai is unlikely to change its stance on satellite spectrum pricing even as it waits for the Department of Telecommunications' response, a senior official says.

The telecom regulator is unlikely to change its stance on its recommendations for satellite spectrum pricing, notwithstanding the opposition from private telecom operators who have said that it will not lead to a level playing field.

 

The Telecom Regulatory Authority of India (Trai) is also waiting for a response from the department of telecommunications (DoT) on the recommendations, a senior government official said. 

 

He said that the final pricing for satellite communications, which will incorporate DoT’s comments on Trai’s recommendations, is also likely to be released shortly by the government.

 

Under the Trai recommendations, satellite communications (satcom) providers would be required to pay 4 per cent of their adjusted gross revenue (AGR), in addition to an annual fee of ₹3,500 per megahertz and ₹500 per urban subscriber.

 

Elon Musk’s Starlink, Bharti group and Eutelsat-backed OneWeb, and Reliance Jio’s joint venture with SES, Jio Satellite Communications Ltd, are awaiting the government’s decision on the administrative pricing mechanism proposed by Trai on May 9.

 

The department issued a letter of intent to Starlink on May 7, several days before the pricing recommendations were announced. However, the trial spectrum for testing services has not yet been allocated.

 

OneWeb, a satellite services company backed by India’s Bharti Enterprises, merged its operations with Eutelsat in 2023 to become the second-largest satellite operator globally, with 669 satellites in orbit.

 

In July this year, the British government announced that it would invest 163 million Euros in Eutelsat through a reserved capital increase (RCI), thereby expanding the total amount planned to be raised by the French satellite services provider to 1.5 billion Euros.

 

Bharti Space Limited had then said that it would also increase its investment commitment to 150 million Euros.

 

Among the three applicants so far, only OneWeb and Jio Satellite Communications have received trial spectrum. These permissions, which were granted last year, have been extended into this year as well.

 

Musk-backed Starlink is yet to identify the location of its landing station in India and is likely to receive the nod for trial spectrum only after it has secured the necessary equipment, an industry executive had earlier said.

 

Telco-backed satellite operators have argued that allocating spectrum at 4 per cent of AGR is based on incorrect assumptions and that the charge would distort competition by creating a non-level playing field between satellite and terrestrial service providers.

 

They contend that the proposed regime would benefit satellite communications (satcom) operators at the expense of traditional telecom providers.

 

In a letter to the telecom department, the Cellular Operators Association of India (COAI), which represents Bharti Airtel, Reliance Jio, and Vodafone Idea, said satellite services could act as substitutes for terrestrial services and should therefore be subject to the same AGR-based charges.

 

COAI had also alleged that Trai’s pricing lacked a techno-economic assessment and was instead derived from “ad hoc” spectrum charges, such as those applied to non-competitive VSAT services using geostationary satellites, as outlined in a DoT memorandum dated November 11, 2023.

 

The industry body had also criticised Trai’s decision to forgo any entry fee or upfront payment for space spectrum, contrasting this with the auction-based approach for terrestrial spectrum.

 

Trai chairman Anil Kumar Lahoti defended the regulator’s approach, saying that satellite spectrum is a pooled resource and is priced administratively across global markets.

 

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

 

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

 

The association further noted that while terrestrial operators are bound by long-term spectrum payment obligations spanning 20 years and dependent on revenue from over a billion subscribers, non-geostationary satellite orbit (NGSO) operators will not face comparable financial or operational responsibilities.

 

Trai has proposed a five-year spectrum allocation term for sitcom operators, extendable by an additional two years. 

Finding the right connection 

*  Final pricing for satcoms may be released shortly by the government

  *  Under Trai recommendations, satcom providers would be required to pay 4% of AGR

  *  Telco-backed satellite operators argue that allocating spectrum at 4% is based on incorrect assumptions

  *  Starlink, OneWeb, Jio Satellite Communications awaiting govt’s decision on administrative pricing mechanism

  *  Only OneWeb and Jio Satellite Communications have received trial spectrum