Up in the air: High-flying battles for satellite broadband services

The industry is sharply divided over whether spectrum should be auctioned or distributed by administrative fiat

The market for satellite broadband services may be tiny still — just $10-15 million, according to Bharti’s Sunil Mittal. But the big potential that lies in reaching remote locations, especially in rural areas, factories and eventually homes and even mobile phones has attracted global satellite companies in droves to India. That is why industry arguments over spectrum pricing have become crucial to the future of the business.

The battle lines were clear last week following a consultation paper circulated by the Telecom Regulatory Authority of India (Trai) asking stakeholders about the best way to allocate spectrum.

There was broad consensus among low earth orbit (LEO) satellite constellation owners such as OneWeb controlled by Mittal, Elon Musk’s Starlink, Canadian giant Telesat and Amazon’s Kuiper and Tata Communications: They want satellite spectrum distributed by administrative fiat.

The lone player on the other side of the fence is Reliance Jio, which wants nothing but the auction route. The Department of Telecom (DoT) concurred and asked the regulator to prepare for a minimum base price and modalities of auction. But Trai is yet to take a call.

Satellite service providers contend that spectrum allocation for satellite communication services is fundamentally different from terrestrial communication services. In the latter, operators require exclusive frequencies carved out for each player in different bands and earmarked geographies with no interference. That is why spectrum auction is the preferred route.

But in satellite services, spectrum is globally shared by satellites that work mostly within a particular band (such as Ku and now Ka, which have high throughput and enable speeds equivalent to 5G telecom services). And spectrum use is already coordinated by satellite companies through a dynamic automated system on a good-faith basis. So, the argument runs, shared spectrum should be offered administratively. Some countries such as Thailand, Mexico, US and Brazil did try the auction route but eventually shifted to administrative allocation.

“Sharing increases spectrum efficiency of usage. It also enables, say, 200 small satellite start-ups offering services in India such as connectivity to fishermen at sea to get access to spectrum. In an auction they will all close down and the spectrum will be cornered by a few,” said a senior executive of the Broadband India Forum.

But Jio, the country’s largest mobile services and fixed broadband player, has equally strong logic. The company holds a licence to operate satellite services and has tied up with Luxembourg-based SES, which has geostationary and medium earth orbit satellite constellations, to provide broadband services in India. Jio could also launch its own LEO constellation if it looks viable, say sources in the know.

The company pointed out that the announcements of OneWeb, Starlink, Kuiper and Telesat suggest mega-plans to offer competing broadband services just like mobile players do. In that case, the assignment of spectrum has to be the same to ensure a level playing field.

The bigger concern, Jio sources pointed out, is that early entrants who have been given preferred orbital slots by the UN’s International Telecommunication Union on a first come-first served basis could block later applicants for spectrum. In India, that could well mean that domestic players seeking to enter the business would be closed out by the three or four global players.

The concern is not without basis. In the US, in April the Federal Communications Commission (FCC) issued a series of orders to ensure that earlier non-geostationary orbit (NGSO) satellite systems that were licensed to coordinate spectrum in good faith do not block those who enter later. FCC has also acknowledged that spectrum is finite and should be used to increase competition.

First, it has capped to 10 years the protection that earlier NGSOs had in perpetuity, so that newer players get spectrum on an equal basis. Second, if early entrants do not come to an agreement on spectrum-sharing with later players, the latter would have to do an analysis to ensure that there is no interference on the operations of the incumbent operators to ensure fair play.

“FCC is already slowly acknowledging that the administrative method of spectrum allocation has problems. What Jio says is that to resolve this problem the best option is to auction spectrum, which is fair and transparent,” said a source close to Jio.

A satellite company executive counters that the regulator can intervene if competition is unfair. Mittal has also argued that there is no model that has demonstrated how auction can be implemented in this instance. Jio has taken up that challenge and suggested to Trai that auction of spectrum for the gateways (which uplink and downlink from the satellite) should be done district-wise where an exclusion zone of 1-2 km would be earmarked. In the exclusion zone, Jio has suggested, mobile operator towers will not be allowed to ensure that satellite operators do not face any frequency interference from them. And this spectrum would be auctioned in the same way as is done for mobile services with a minimum base price. They say that initial requirement for gateways from multiple players with satellites beaming to India would not be more than 20, but as the number of subscribers increases and spreads geographically, the number of constellations entering Indian space would hit 100. Spectrum needed to power user terminals would also be auctioned.

From a legal point of view, those supporting auction reinforce their view by saying that the Supreme Court judgment on the 2G scandal in 2012 makes it amply clear that when “transferring” or “alienating” all scarce resources the state must opt for auction.

But Starlink said assigning spectrum is in consonance with the order because it does not discuss the technical possibility of shared spectrum; in spectrum-sharing scarce resources are neither “alienated” nor “transferred” because its use by one operator does not stop its use by another service provider.

The final verdict lies with Trai — and for DoT and the government to take the tough final call.