India’s satcom vs telecom fight just refuses to die

Rebutting the operators’ claims that the regulator kept the spectrum pricing low and non-transparent, Google, Meta, OneWeb, Hughes, Amazon, Tata’s Nelco, among others, have argued that the argument for a “level playing field” between satellite-based communication services and terrestrial networks is both legally unsound and factually incorrect. 

The Broadband India Forum (BIF), which represents Big Tech and satellite companies, wrote to the Centre on Wednesday that there was no question of a level playing field, given the vast differences in technologies, services, infrastructure costs, and spectrum assignment methods.

“The association (read the Cellular Operators Association of India) has made misleading submissions to block entry of legitimate next generation satellite services and deny consumers their constitutional and fundamental right to exercise a choice of services and service providers,” said TV Ramachandran, president of BIF, in a letter to telecom secretary Neeraj Mittal. Mint has seen a copy of the letter.

Also read | Telcos slam Trai’s satellite spectrum pricing as unfair, call for comprehensive review

“No review is warranted, and the attempt to mischaracterize and misinterpret the recommendations must be firmly rejected,” Ramachandran said, adding that the telecom operators’ association is delaying the process of bridging the digital divide and the acceleration towards achieving a digitally empowered India.

The letter was also marked to Telecom Regulatory Authority of India (Trai) chairman Anil Kumar Lahoti, economic affairs secretary Ajay Seth, DPIIT secretary Amardeep Singh Bhatia, MeitY secretary S. Krishnan, and members of Digital Communications Commission . DPIIT refers to the department for promotion of industry and internal trade, and MeitY is the ministry of electronics and information technology.

Market size

The COAI had written to the government on 29 May to the government, arguing that Trai’s pricing for satellite spectrum is unjustifiably low, non-transparent, and does not lead to a level-playing field. It had said the recommendation of spectrum usage charges—set at 4% of adjusted gross revenue—without any entry fee or upfront payment is inconsistent with the approach followed so far in case of administrative spectrum allocations, and is without any rationale, empirical analysis, international benchmarking or economic justification. Further, the COAI also argued that the satellite internet will compete with terrestrial services, rather than being complementary.

However, BIF’s Ramachandran said, “The association’s (COAI) claims are far detached from reality as its own members have made public announcements of forming a business/commercial partnership with global satellite service providers, thereby demonstrating complementarity between terrestrial and satellite services.”

To be sure, telecom operators Bharti Airtel and Reliance Jio in March announced partnership with American satcom player SpaceX to distribute Starlink’s satellite services in India. Still, the operators have flagged concerns over the sustainability of satcom services in case Trai’s recommendations are implemented in the present form. Recently, Starlink got the licence from the department of telecommunications (DoT) to start its satellite services in the country.

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On the argument of competition, the BIF said the economic scale of telecom and the two are vastly different. Terrestrial operators in India generate over ₹3.36 trillion annually, while the combined satellite communication market barely touches ₹540-600 crore—a mere 0.2% of telco revenue, according to BIF. “This comparison alone discredits any claim of market overlap or substitutability. Device costs and installed base also show a scale disparity. The cost of the devices is of the order of ₹25,000 (satcom) vs ₹5000 (terrestrial) – the scale being of the order of 1:5,” Ramachandran said.

Even minister of state for communications Chandra Sekhar Pemmasani had told the media on 6 May that firms such as Starlink would only play a small role in India’s connectivity owing to their expensive service, slower speed than mobile connectivity, and small market size as compared to traditional mobile networks. 

“Around the world, Starlink only has less than 50 lakh (5 million) connections. The speed is much lower. Third, it’s quite expensive, both for installation as well as monthly payment,” Pemmasani said. “This (Starlink service) is mainly for maritime, people who are really remote, and where traditional networks cannot reach,” Pemmasani said.

Spectrum charge

Opposing the argument of “low-pricing” of satellite spectrum as claimed by COAI, BIF showed a comparison of the spectrum cost for satellite and telecom operators to the government in the letter. 

“The per-user spectrum charge is ₹635 higher than the spectrum charge levied on cellular or terrestrial broadband services in urban areas. The comparison reveals that even if a satcom operator were to earn zero revenue in urban areas, it would still pay a minimum SUC (spectrum usage charge) of ₹500 per customer per annum, which is approximately 1.85x the per-customer spectrum burden of terrestrial service providers,” Ramachandran said.

He added that the total spectrum charge per year to be paid by the telecom operators comes to ₹28,293 crore, and the total mobile subscribers of the private operators are 106.8 crore. This brings the spectrum charge paid per mobile customer by the terrestrial players to ₹265.

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

Satcom companies will have to pay annual spectrum charges of either 4% of their adjusted gross revenue (AGR) or ₹3,500 per MHz, whichever is higher. Additionally, Trai has recommended an additional annual charge of ₹500 per subscriber for such service providers in urban areas. To be sure, satcom operators will also have to pay an annual licence fee of 8% of AGR to the government, according to the current authorization terms of the DoT.

“These figures decisively show that the claims of “low” spectrum charges are incorrect, and there is in fact no case of “favourable treatment” or “regulatory advantage” or “regulatory arbitrage” towards satellite-based services”, Ramachandran said.

Data capacity 

In its letter, the COAI had also alleged that Trai underestimated the potential capacities of satellite networks while possibly overstating those of terrestrial networks while arriving at the pricing. It had said that companies such as Kuiper and Starlink are expected to have planned capacities of 29 billion gigabytes (GB) data per month, and are well-positioned to serve a significant portion of India’s growing telecom data demand. This is greater than the operators’ 23 billion GB current data traffic, according to the COAI letter.

However, Ramachandran said, “The Association (COAI) has projected estimates of future planned capacity numbers for both the Starlink and Kuiper constellations that they assume will exist upon the completed full-scale deployment of both constellations several years in the future. This understanding is based on unverified public data and inaccurate facts.”

Read this | Trai, telecom companies spar over data demand

He added that the comparison of satcom capacity (through unverified data and inaccurate figures) with traffic of terrestrial services is erroneous, as it is not a like-for-like comparison. “As per Starlink Progress Report 2024, the total global capacity of Starlink is 340 Tbps. If we distribute this over India in proportion to the surface area of India as a percentage of the earth’s surface (340 Tbps x 0.64%), it will be 2.1 Tbps. This is also the capacity figure estimated by Trai in its recommendations,” Ramachandran said.

The COAI had claimed that companies such as Kuiper and Starlink are expected to have capacities of 51 Tbps and 83 Tbps over India.

Subsidy

Against the telecom operators’ argument that there should not be any subsidy for satellite user terminals through the Digital Bharat Nidhi Fund, BIF said that where commercial viability is structurally difficult, targeted support is not only permissible—it is essential to reduce the financial burden on unserved and underserved subscribers in rural and remote areas.

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.

“As their (COAI) claims lack credibility and are contradicted by public announcements by the members of the Association, this is a case of misrepresentation before the Regulator and the Government,” Ramachandran said, adding that there should not be any review of Trai’s recommendations basis the arguments of telcos.

The government is finalising the spectrum pricing and other rules for satellite internet firms to start services in the country.

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