The Indian government has cleared a crucial regulatory hurdle with the Digital Communications Commission (DCC), the key decision-making body of the Department of Telecommunications (DoT), approving a spectrum usage charge (SUC) equivalent to 5% of adjusted gross revenue (AGR) for satellite communication service providers, according to a media report. Satellite spectrum will be allocated for five years, with an option to extend it by another two years, under the new framework. The DCC has also approved a 1% reduction in the spectrum charge for service providers serving government-notified hard-to-connect and remote areas. This is intended to encourage satellite operators to focus on locations where low-Earth Orbit (LEO) and medium-Earth Orbit (MEO) satellites can provide better coverage than terrestrial networks.
The decision marks a departure from the recommendation by the Telecom Regulatory Authority of India (TRAI) of a 4% AGR-linked SUC, subject to a minimum annual charge of 3,500 Indian rupees(US$36.66) per MHz. The government has also not accepted TRAI’s recommendation to charge INR500 ($5.2) per subscriber in urban areas.
The proposal still needs to go through the remaining government approval process before spectrum can be assigned for commercial operations. It could bring India closer to the commercial rollout of LEO and MEO satellite broadband services, although companies will still need to get other regulatory and security approvals.
The launch of commercial satellite services has been delayed for quite some time in India. Satcom service providers still await security clearances, and there is a lack of clarity about the terms of spectrum allocation to satellite players.
Significantly, satellite companies will be charged the SUC as well as an annual license fee of 8% of AGR. This could put pressure on the economics of satellite broadband, especially in rural and remote areas, where the return on investment (RoI) may take longer to materialize.
Key hurdle removed
The DCC decision is significant because spectrum allocation has been one of the major regulatory questions holding back the commercial launch of satellite broadband in India.
Several players, including Starlink, Eutelsat OneWeb and Jio Satellite, have already received the Unified Licence authorization for Global Mobile Personal Communications by Satellite (GMPCS) from the DoT. Amazon Leo, previously Project Kuiper, which is also targeting the Indian market, is still awaiting one. There are also new players, such as Singtel, hoping to enter the market.
India presents a big opportunity for satellite broadband providers as there is a significant population in places that are remote or difficult to connect via terrestrial networks. The government has, however, been concerned satellite operators will focus on urban and higher-income customers rather than the areas where satellite connectivity can provide social and economic benefit. There are also security concerns, including the use of Starlink terminals in the ongoing conflict in the Middle East.
