Space spectrum is in the news and not just because of Boeing’s woes -- first a faulty Starliner launch, abandoning Nasa astronauts at the International Space Station, and now, a satellite exploding in orbit, outing services globally. Nearer home, India takes tentative steps to complement terrestrial spectrum services with direct to phone satellite services, a serious spat between tech titans, which is set to benefit consumers.
Mukesh Ambani -- still the richest Indian, and not given to frivolous public comments -- believes the Union government and TRAI have erred in opting for the administrative route to allocate spectrum for satellite broadband services (satcom).
Elon Musk, with the opposite view, is a serious contender with around 6,000 satellites in orbit, increasing soon to 16,000. But owning satellites is not the only game in town.
In developed markets, it is telecoms which do the heavy lifting, serve retail customers, and generate the revenue stream. But the telecoms, like most utilities, tend to become stolid, not disruptive, tech innovators.
Elon Musk’s disruptive credentials speak for themselves. Rescuing Nasa astronauts from space, catching a returning 300-ton booster rocket in mid-air; conceiving the iconic Tesla automobile; pioneering the underground hyper link -- a futuristic transport option; substituting lost neural functions with chip implants. His preference in satcom telephony for the administered allocation of space spectrum -- a view also echoed by Jeff Bezos of Amazon Kuiper, another contender -- reflects a curious facet of the American dream where enlightened government regulations develop a globally competitive private sector. Hence the Musk-Bezos preference for administered allocation, over the auctions of space spectrum.
Sadly, in India, administered allocation has a seamy side. Three examples will suffice. Consider the sorry 2005 Antrix Devas multi-media saga, in which a publicly owned company of the department of space contracted an unqualified private company, allegedly floated by previous employees of Antrix, to provide satcom services, using Antrix transponders. Unsettled by the unfolding 2G spectrum scam, Antrix unilaterally ended the agreement in 2011, alleging fraud. It moved the National Company Law Tribunal in 2021 to liquidate Devas and won. Meanwhile, Devas sought compensation from Antrix in the United States and moved the NCL Appellate Tribunal, where they lost. Litigation moved to the Supreme Court, which upheld the NCLAT order of liquidation, holding Devas to be a product of fraud.
In 2006, terrestrial spectrum was allocated administratively for 2G services. But widespread complaints of improper allocation led to the Supreme Court cancelling all 122 licences issued by the government.
In 2010, 218 coal mines were allocated administratively to private companies and the public sector as per the existing regulations. Responding to a public interest litigation that the allocations were inappropriate, the Supreme Court in 2014 annulled 204 auctions. Christened the “Coalgate scam”, it eroded the waning credibility of the United Progressive Alliance then in power, illustrating that resource allocation is best left to transparent market mechanisms like auction, rather than decided administratively.
Auctioning spectrum is not only transparent. It is also profitable. 54.6 GHz of terrestrial spectrum auctioned during 2010 to 2024 fetched Rs 5.96 trillion, or about 1.5 per cent of the total Union government receipts over this period of Rs 387.3 trillion. An economy where fiscal deficit since 2009 has been about Rs 3.07 trillion, more than the norm of four per cent of GDP, could well use the extra revenue space auctions earn.
The contention that space spectrum, unlike terrestrial spectrum, is a shared resource as per the International Telecommunications Union and cannot be split across users into defined bandwidths is correct but specious. There is nothing to stop the government from charging a fee for the right to beam radio waves from satellites in Low Earth Orbits (less than 2,000 km away, versus Geo Stationary Satellites, 36,000 km away from Earth). This fee does not have to be set by physical auctions. It can be based on a notional price derived from domestic auctions to ensure that satcom does not beggar domestic terrestrial spectrum telephony. Communications minister Jyotiraditya Scindia said as much, by assuring that space spectrum will not be costless.
Both Jio and Bharati Airtel have completed the formalities for applying for a licence for satcom services. The primary reservation of the domestic players is that they have bought terrestrial spectrum from the government at an average price of Rs 104 million per MHz Unless space spectrum is similarly priced, new players will have a cost advantage over legacy service providers.
The second bogey is about space spectrum being reserved for serving underserved rural areas. Confining satcom to rural areas is perverse and competition and innovation retarding, including for end-use appliances. Instead, competition should be encouraged between the two technologies, simply by neutralising any cost benefits due to regulatory constraints, which legacy terrestrial systems face, like the high price of auctions.
In the past, TRAI was more concerned about reducing the access price for consumers than enhancing competition. Consumers applaud predatory pricing because it lowers their bills in the short term. But it also results in degraded quality of services as telecom profitability gets impacted along with their capacity to invest in innovation. The average revenue per existing user is a low $2.5 per month, lower than it was in 2016, which needs to double to $5 per month if service providers are to invest to improve access and service quality. Competition and choice are not a bug. They are a feature of creative disruption in the existing mobile services and broadband market.
Satcom should be encouraged to compete with legacy broadband suppliers for the Digital Bharat Nidhi funds. Out of the Rs 2.49 trillion collected by the government since 2002 via a Universal Access Levy (UAL), only Rs 0.8 trillion has been spent on connecting 60 per cent of the 0.59 million inhabited villages with broadband services.
Satcom can provide a cheaper alternative for ensuring earlier, fuller coverage at lower cost.
US President Joe Biden appointed a new Interagency Spectrum Advisory Council on November 13, 2023, for spectrum policy matters. The last such review was in 2002. Among other tasks, it will advise on identifying 1500 MHz of spectrum for repurposing, sharing, or optimising spectrum governance by adopting licensed, unlicensed, or shared use regimes, either exclusively or a mix thereof. The bottom line is that there is no one size that fits all systems, all the time and plans must be updated contextual. Not a bad way to rethink India’s spectrum policy.
The writer is a former IAS officer, and a governance and economic regulation expert
