Trai recommends 4% of adjusted gross revenue as satcom spectrum charges; 5-year spectrum term

The much awaited recommendations by Trai will now pave the way for users in the country to get satellite broadband connectivity soon.

In addition to the 4% AGR spectrum charge, the satcom operators will also have to pay a licence fee to the government at 8% of the AGR, as per the authorisation terms.

This is steeper than what these companies had been lobbying for. Elon Musk’s Starlink and Amazon Inc.’s subsidiary Kuiper Systems had during consultations with the Telecom Regulatory Authority of India (Trai) urged it to keep the spectrum charge below 1% of their AGR, with no other charges.

Trai, however, has recommended ₹3,500 per MHz as annual minimum spectrum charges for companies offering both fixed satellite services and mobile satellite services. 

This means if the 4% of AGR turns out to be a smaller amount, the telecom operator still has to pay at least ₹3,500 per MHz of spectrum they hold. This sets a floor on the charges to ensure a minimum revenue to the government. 

Further, Trai has introduced an additional annual charge of ₹500 per subscriber for fixed satellite services providers in urban areas. “This has been done to take care of the concern that the satellite operators may primarily target the urban users because of their high-paying capacity," Trai said.

The annual spectrum charges should be paid quarterly, within 15 days of the commencement of a quarter, Trai said, adding that the minimum charges should be paid in advance at the time of assignment of spectrum and at the beginning of every year.

Next steps: the department of telecommunications (DoT) will have to act on the Trai’s recommendations and start with the process of inviting applications from the companies for spectrum allotment.

The spectrum will be given to the operators via a non-auction route for a period of five years, which can be extended by the government for two years. Trai did not recommend any upfront payment to get spectrum for such operators unlike telecom operators, which have to pay to get spectrum in auction.

“We have examined in detail whether there is any case of real competition or level-playing field between the terrestrial services and the satellite services. And after detailed examination, we have found that the satellite services will be complementary and not competing with the terrestrial services," Trai chairman Anil Kumar Lahoti said during a media briefing.

“Since satellite spectrum is a shared pool, the two (terrestrial and satellite) cannot be priced at par," Lahoti said, adding that it has recommended to assign spectrum for five years as satcom is currently in a nascent stage, and their business potential would emerge after some years of operations. Further, the life of LEO (low-earth orbit) satellites is just half a decade.

Satellite communications companies had pitched for a 20-year validity of spectrum.

However, the satcom players have welcomed Trai’s recommendations. “The proposed framework for spectrum charges in the Trai recommendations balances the need for government revenue with the imperative to keep satellite services affordable and accessible along with a level-playing field," said A.K. Bhatt, director general, Indian Space Association (ISpA), which represents companies like Nelco, OneWeb, and Hughes, among others.

The pricing structure recommended by Trai for satcom operators is in line with existing norms in India and is not going to affect them, positively or negatively, said Shivaji Chatterjee, CEO, President, & MD at Hughes Communications India. He added that from a security point of view, the government will have to go through their norms and controls and verify the actual networks as they get deployed.

According to Chatterjee, since satellite spectrum is a shared resource, there is not going to be any first mover advantage for operators that come first and start the services.

Addressing the concerns around threat to telecom operators with the arrival of satcom services, Lahoti explained that a city like Delhi may be having around 5 million broadband connections requirement and against that a single satellite constellation can support only about 20,000 connections. This disparity is unlikely to change in the foreseeable future, at least over the next five years, he added.

Fixed satellite services deliver data communication and internet to fixed locations like homes, offices, or remote sites using stationary satellite dishes. Mobile satellite services provide voice calls, text messaging, data, and internet access to users who are on the move—such as people on ships, airplanes, or in remote vehicles—using mobile terminals that can maintain a connection while in motion.

For remote regions

Trai’s recommendations come after the government on Wednesday issued a letter of intent to Starlink for providing its satellite internet services in India. Eutelsat OneWeb and the Jio-SES joint venture, which have already secured licences, have been waiting to secure spectrum from the government to commercially launch satellite internet services in the country.

In September, Trai issued a consultation paper on the terms and conditions for the assignment of spectrum for certain satellite-based commercial communication services.

For targeted subscribers in unserved or underserved regions in rural and remote areas, the regulator has recommended that the government consider a subsidy for each fixed user terminal at an appropriate amount. The amount of subsidy may be decided by the government, Trai said, adding that the government can give the subsidy either through direct benefit transfer (DBT) to eligible subscribers or to the operators through Digital Bharat Nidhi fund.

According to Trai, the one-time hardware cost for user terminal ranges between ₹20,000 and ₹50,000.

Also read | Starlink, Kuiper, other satcom firms told to meet 20% local manufacturing target

“Trai’s recommendation to assign spectrum for only 5 years (extendable by 2 years) appears to be a balancing act. Trai has attempted to address concerns of both terrestrial players, who wanted an auction, and the newer entrants who wanted spectrum to be administratively allocated, but for a longer period of time," said Shashank Mishra, Partner, Shardul Amarchand Mangaldas & Co.

Satellite spectrum being a shared resource, Trai recommended that the frequency spectrum in higher bands like C, Ku, Ka, and Q/V for satellite telecommunication services be assigned on a shared basis. It also suggested that all authorized entities using such shared spectrum coordinate with each other in good faith.

It recommended that the government provide spectrum to satcom firms in the frequency of C-band (4-8 GHz), Ku-band (10-15 GHz), and Ka-band (17-31 GHz, Q/V band (33-75 GHz), and L&S bands (1-4 GHz).

Trai added that frequency ranges already identified for telecom services, such as 27.5-28.5 GHz and 42.5-43.5 GHz, satellite earth station gateways should be permitted to be established at uninhabited or remote locations where there is less likelihood of telecom services being provided.

“DoT should prescribe the exclusion zone requirement for co-existence of IMT and satellite earth station gateways," Trai said.

To mitigate a scarcity of gateway sites, satellite earth station gateways should be installed and commissioned within 12 months from the date of permission granted to the satcom companies, Trai said.