You can’t compare a Satcom service with a telecom service

You can’t compare a Satcom service with a telecom service

New Delhi: An agreement between the Antrix Corp. unit of the Indian Space Research Organisation (Isro) and Devas Multimedia, a Bangalore-based multimedia technology firm, to lease transponders aboard a proposed government-funded satellite to provide commercial multimedia services, has led to a controversy over spectrum allocation. Ramachandran Vishwanathan, CEO and president, Devas Multimedia, said in an interview that his company finds the actions of Isro and the government (including the cancellation of the deal) perplexing. He elaborated on why the issues raised thus far are not relevant. This includes a query by the controller and auditor general, or CAG, on why Devas got spectrum cheap and without an auction. Edited excerpts

Isro has said it’s annulling its agreement with you? Will you consider legal action?

As far as I am concerned, I have a legally binding contract and we’ve had no communication from Isro regarding cancelling the agreement. As recently as October 2010 (three months after the Space Commission suggested that Antrix annul the agreement) we’ve had discussions where we were assured (ORALLY?)that all plans are on track. It would be premature to speculate (on)legal action now.

Could you explain the technology that your firm holds and wanted to collaborate with Isro to develop? Does this technology exist anywhere else?

The best analogy would be the World Space (satellite radio) system. You had a large box and an antenna fixed outside your door. Imagine that you have shrunk it to the size of your recorder (a wallet-sized recorder used for this interview) and also imagine you don’t need to have the antenna outside your door. That is the technological innovation that we have (made). In India, it is the first of its kind. We are the ones who developed this technology and approached Isro with the concept. Around the world, however, it’s a similar concept that is beginning to catch up. However, we were able to provide this technology at a cost substantially lower than ever before.

Is it possible then that there were other companies who could have been in touch with Isro to offer similar satellite-based services?

There were. As a matter of fact they were ahead of us. There were two large companies in India who had already signed MoUs (memoranda of understanding) with Isro and Antrix (which is the commercial arm of the space agency) prior to us. However, I understand they didn’t go forward with their plans, partly because I guess it was financially unviable. (Vishwanathan didn’t elaborate on the company’s names.) All this was prior to 2003, the year we started discussions with Isro, which culminated into an agreement in 2005.

So what’s the criteria based on which you got these transponders?

The same criteria which the DTH (direct-to-home) players (such as Tata Sky, Dish TV) and V-Sat players did and that is, the criteria which is provided for in the SatCom policy (a 1997 policy that allows satellite spectrum to be made available to non-governmental organization for commercial exploitation). There’s a fundamental distinction between satellite services governed by government’s SatCom policy and telecom services which are governed by telecom policy. You can’t compare apples and oranges when you take a SatCcom service and then compare it to a telecom service and then say there is a differentiation in various aspects such as spectrum allocation, pricing. Spectrum allocation maybe the wrong word because it’s actually transponder capacity allocation, which (for Devas) is 70 Mhz, of which only 90% (63 Mhz) is available with Devas as opposed to every DTH operator in India today, which has between 250 to 400 Mhz.

We are paying in the neighbourhood of $3 million per year per transponder for leasing transponders, so if you normalize it on a per MHz basis, it’s about $350,000 per Mhz per year. Contrast that with DTH, which is paying $30,000 per Mhz per year. On a transponder basis, we are paying $3 million per transponder, theirs is about $1.2 million per transponder. So, whichever way you cut the pie, we’re still paying more.

Given that spectrum is a precious resource and there were other players also interested in that resource for offering similar technologies, isn’t there a legitimate case for auctioning these transponders?

Fine, but you have to compare Devas to SatCom operators. Now let’s take Tata Sky, take Zee (which owns Dish TV), take Airtel, Reliance (Big TV), these are all the main operators on the DTH side and you also have V-Sat operators. Under the provisions of the SatCom policy, the deals (leasing transponders) were done in the same way as the deal with Devas was done.

Isro just gave it?

Isro doesn’t give it. There’s a due process where the operators approach Isro for transponder leasing based on the available capacity and the negotiation that Antrix does with the third party. They arrive at a transponder lease contract with appropriate pricing. So if you ask why didn’t Devas go through an auction I would ask why didn’t Tata go through an auction, why didn’t Airtel or Reliance go through an auction.

Typically, what’s the procedure followed for approving satellite construction and leasing transponders?

There are two parts in the approval process. One is the satellite itself and the other is the transponder lease. The satellite is a government asset and therefore goes through the Space Commission for approval, then the finance ministry, then Cabinet. All satellites that Isro has built have gone through this process and this has been no exception. Transponder lease agreements have always been arrived at by the commercial arm of Isro, that has always been the case.

Is the cabinet made aware of the purpose for which the transponders are going to be used? Isro chairman Radhakrishnan has said that ideally Cabinet should have been made aware (of Devas using the transponders).

No transponder lease, no customer has been discussed, approved or put forward to the Cabinet ever. They just approve the construction of the satellite. Tomorrow the transponder users may change. It’s like building a house. How do you know who is going to be your tenant?