Pricing spectrum

Airwaves for satellite-based services should be allocated judiciously

The highly stressed telecom industry finds itself in the midst of another policy confusion; this time it’s related to spectrum allocation for satellite-based services. Ahead of the much-awaited 5G spectrum auction in 2022, the current controversy must be resolved by the government and the sector regulator Telecom Regulatory Authority of India (Trai) at the earliest through a sound policy that makes a clear distinction between terrestrial telecom services and satellite broadband, and how they use airwaves in the two modes. The Supreme Court judgment of February 2, 2012, in the 2G case had held that spectrum was a scarce resource and that the state was duty-bound to adopt the method of auction while “transferring and alienating these natural resources”. But policymakers must place things in context rather than making spectrum auction mandatory for one and all. Only that will put an end to suggestions that satellite-based telecom companies are trying to grab precious spectrum for free through the backdoor.

The issue relates to Sunil Mittal-led Bharti group — also a contender for 5G spectrum — applying for licence to operate satellite broadband services, which could help bridge the digital divide by connecting even the remotest parts of the country. Mr Mittal is of the view that spectrum for the satellite service must not be allocated through auction and that it should be given out through an administrative process. Not surprisingly, in a high-stakes telecom market, this demand for spectrum allocation without an auction process has triggered a fresh battle. Apart from Bharti Group’s OneWeb, Amazon and Elon Musk-led Starlink too are among the potential players in the commercial satellite communication space in the country.

But the opponents, including Reliance Jio and Vodafone Idea, have in consultation with Trai highlighted the need for a level-playing field while insisting on spectrum auction for satellite broadband services. It is in this backdrop that the Department of Telecommunications (DoT) needs to draw up a policy for commercial communication services or “telecom in space” operating through low-earth orbit (LEO) and medium-earth orbit (MEO) satellite constellations. The fact that airwaves for this service are required only in select places such as landing stations, in contrast to airwaves everywhere in the case of terrestrial telecom services such as 2G, 3G, 4G, and 5G, should form the basis of ground rules for satellite-based telecom. Spectrum in this case is also not exclusively used by any one operator, unlike in terrestrial telecom. As internationally commercial satellite telecom services have been around for long, India can draw from global examples too. Nowhere in the world has satellite broadband spectrum been auctioned, and India need not be different. Even in India, in the case of direct-to-home broadcasting where spectrum is used for uplinking and downlinking signals, the auction method has not been used for allocation of airwaves.

However, this does not mean that anything should come for free, least of all spectrum. The government must do due diligence while allocating spectrum to satellite communication services through administrative methods. The appropriate amount and mechanism for spectrum usage fee must be fixed after consultation with the industry. It can either be a fixed administrative usage charge or spectrum usage charge as part of a company’s adjusted gross revenue. In short, a balance must be struck between the need to provide better connectivity, which will help improve economic activity, and revenue maximisation. Excessive focus on short-term revenue has already damaged the sector immensely.