Satellite Firms Say TRAI's Satcom Proposal Will Make Business "Challenging": Here's Why

An industry body representing satellite companies has warned that the Telecom Regulatory Authority of India’s (TRAI) recommendations—such as a 4% spectrum usage charge on satellite operators and a five-year spectrum assignment—will create a “challenging business situation” for Satcom service providers in India. This follows TRAI's May 9 proposal recommending a minimum annual spectrum charge of Rs 3,500 per MHz for providers offering fixed and mobile satellite services.

So far, Bharti Airtel-backed Eutelsat-OneWeb and Reliance Jio with SES have received all the necessary approvals to launch satellite internet services. Both have secured the GMPCS, VSAT, ISP licences, and IN-SPACe authorisation.

Meanwhile, earlier this month, Elon Musk's Starlink received a Letter of Intent from the Department of Telecommunications for its application, which has been pending since 2020.

What TRAI Recommended

On May 9, TRAI released its recommendations on how spectrum should be allocated for satellite-based communication services. These will now be reviewed by the Digital Communications Commission before going to the Cabinet for approval.

TRAI proposed assigning spectrum to satellite companies for five years, with a possible two-year extension. It also advised the Department of Telecommunications (DoT) to allocate spectrum in the Ku, Ka, Q/V, L, and S bands for these services.

Satellite companies wouldn’t have to pay any upfront fees for the spectrum. Instead, they would pay 4% of their Adjusted Gross Revenue (AGR) as spectrum usage charges.

According to a report by JM Financial, this rate is more than satellite firms had hoped for, though it is still lower than the 5% telcos used to pay before the 2022 reforms brought it down to zero. TRAI also proposed an 8% AGR licence fee—the same as what telecom operators pay—and Rs 500 per year for each subscriber in urban areas. This move is seen as an attempt to appease telecom giants who were concerned that global Satcom players like Starlink would take their users.

Satellite Operators See Challenges

According to a report by Moneycontrol, T.V. Ramachandran, President of the Broadband India Forum, outlined several issues with TRAI’s recommendations in a note.

“On the spectrum front, not only has Satcom been suggested to pay four times the Spectrum Usage Charge than TRAI’s earlier view of 1%, but the tenure has also been kept quite tight at five years. One could say this makes for a rather challenging business situation for the nascent Satcom operators who are the de facto ‘lender of last resort’ for connecting the unconnected and underserved and tackling the sizable digital divide,” Ramachandran said.

BIF, which represents satellite operators like OneWeb, Kuiper, and Hughes, as well as tech giants like Google and Meta, welcomed TRAI’s recommendation for government subsidies to support fixed satellite user terminals in unconnected and underserved areas. The body also praised TRAI for promoting fair coexistence between terrestrial and satellite services, ultimately benefiting consumers.

“The key takeaway from these recommendations is that satellite and terrestrial services should work together, not compete, to build a fully connected India. TRAI had a tough job, but they’ve done an impressive job,” said Ramachandran.

“...it may be recalled that terrestrial operators have been provided over Rs 60,000 crore in subsidies through USOF and other schemes in past years,” he added, suggesting that similar support for Satcom could be given via direct benefit transfers (DBT). “This is a very laudable recommendation of immediate benefit to the end consumer waiting to get into the connected mainstream.”

Analysts See No Threat to Telecom Operators

TRAI Chairman Anil Kumar Lahoti, in his recommendations, reiterated that Satcom and terrestrial connectivity services are complementary due to the significant differences in network capacities and scale of operations. He dismissed concerns over Satcom's impact on terrestrial services, noting that the capacity ratio ranges from 60:1 to 250:1 in favour of terrestrial networks.

He also pointed out that the satellite constellation for which Starlink has applied for IN-SPACe permission operates in the Ku and Ka bands, which are not supported by mobile phones. Therefore, it remains to be seen whether Starlink can offer direct-to-mobile services in India after paying the required spectrum charges. It’s worth noting that globally, Satcom players often rely on terrestrial operators to provide satellite-to-mobile services.

"We continue to believe that Starlink’s satellite broadband services pose limited threat to telcos’ home broadband business, given its higher pricing (7–18 times more expensive) and limited speeds. Further, Starlink’s direct-to-cell satellite services are also unlikely to disrupt telcos’ core wireless business due to their dependence on telecom operators and relatively weaker performance. Hence, we believe these recommendations are largely neutral for Bharti and Jio; we also don’t foresee any significant risk to growth potential for Indus Towers," said JM Financial in a note.