DoT clears 5% spectrum charge for Starlink, OneWeb, Jio Satellite

The Digital Communications Commission has approved a spectrum usage charge of 5% of adjusted gross revenue for satellite internet providers including Starlink, Eutelsat OneWeb and Jio Satellite, according to officials and industry executives familiar with the decision.

The commission, the Department of Telecommunications’ top decision-making body, took the decision at a meeting last week, the people said. Operators serving users in government-notified hard-to-connect areas such as border regions, hills and islands will be eligible for a one percentage-point reduction, they said. Commercial launches will remain subject to security and other regulatory clearances.

Far-flung areas to be notified would include places where satellite internet connectivity offers an advantage over traditional mobile networks, said a government official.

The spectrum will be assigned administratively rather than through an auction for five years, with an option to extend the assignment by another two years, according to the people. The decision clears a key regulatory hurdle for satellite broadband companies seeking to expand commercial services in India, although the DoT will still need to take the proposal through the remaining approval process.

Trai recommendations

The DCC’s decision follows a review of recommendations made by the Telecom Regulatory Authority of India on the terms and conditions for assigning spectrum for satellite-based commercial communication services. Trai had recommended a 4% AGR-linked spectrum charge, subject to a minimum annual charge of ₹3,500 per MHz.

The DoT, however, rejected Trai’s ₹500-per-subscriber charge for serving urban areas, believing a disincentive-led model could lead to implementation challenges, as it would have been difficult to differentiate between rural and urban areas.

“The idea is that the incentives should be based on areas where LEO/MEO (low-Earth orbit/medium-Earth orbit) satellites work better than regular technologies, like border regions, hilly areas, and islands,” said another official.

Mint's queries emailed to the DoT on Tuesday evening remained unanswered.

Rural-urban divide

On 17 November, Mint first reported that the government wanted to levy 1% less AGR than the standard 5% AGR if a certain percentage of satellite internet users served by the companies lived in hard-to-connect areas. The DoT had sought Trai’s recommendations on the same at the time.

In its response last December, Trai said the rural-urban bifurcation is well established in the Indian telecom regulatory framework, providing a reliable basis for policy implementation and compliance monitoring.

“Given the relatively higher purchasing power of subscribers in urban areas compared to rural areas and hence the high demand/consumption of data in these regions, it is possible that NGSO (non-geostationary satellite orbit) -based FSS (fixed satellite service) providers may focus more on urban areas. This could potentially undermine the goal of bridging the digital divide in rural and remote areas,” Trai had said.

The regulator had added that imposing a per-subscriber charge of ₹500 per annum in urban areas, therefore, would provide an incentive for operators to expand their services into rural and remote areas.

As part of a back reference to Trai on satellite spectrum assignment, the DoT also rejected Trai’s recommendations on the provision of a subsidy for each fixed satellite user terminal in the rural areas at an appropriate amount through a direct benefit transfer or Digital Bharat Nidhi (DBN) fund, which is there to bridge the urban and rural digital divide.

To be sure, satellite communication (satcom) operators will also have to pay an annual license fee of 8% of AGR, as per the DoT's current authorization terms.

“Satellite internet is being projected as a rich users’ service. It does not seem affordable for the common man. The government should normally recover the cost of managing the spectrum. They should not make it a profit-earning thing but only to recover operational expenditure,” said Satya N. Gupta, former principal advisor at Trai.

Satcom, according to Gupta, can never be affordable to the remote and rural masses. If the purpose is to bridge the digital divide through this expensive medium, a very high level of subsidy will be required.