Why satellite spectrum requires non-exclusive assignment approach

The allocation of spectrum is a critical issue for the government and regulatory bodies, and the choice of assignment mechanism should be based on a careful consideration of the specific goals and priorities for the larger good. While an exclusive assignment through auction-based approach may maximise revenue for the exchequer, it could lead to fragmentation resulting in a loss of satellite capacity. It would potentially create monopolistic competition with deep-pocketed players, creating an anti-competitive environment Moreover, such an approach may prevent rural/unconnected users, startups, micro, small and medium enterprises (MSMEs), and various socioeconomic sectors such as disaster management, agriculture, healthcare, education, transportation, energy and others from accessing the necessary spectrum for their operations.

Further, the idea of splitting up spectrum into multiple parts followed by setting-aside for certain services and then further re-assigning on non-shared and exclusive blocks for flexible use would imply that the policy is only for the select operators that are significant in the present market, have lesser inclination to innovate and would essentially trade off the essential spectrum resource within their satellite/mobile operations. This will close the door for truly innovative companies and henceforth the market will have limited choices and see a sub-optimal usage of spectrum resource.

The basic tenets of auction and the idea of putting a public resource to optimal use would be jeopardised leading to inconsistencies at various fronts. There is simply no good policy reason to put satellite spectrum into the hands of a single party when that spectrum is technically capable of being used by multiple parties in India under well-established principles of international law. In fact, if India wants to encourage private participation in the Indian space sector and wants to avail itself of the full range of new and competitive satellite offerings available, then there are strong policy reasons to not assign satellite spectrum on an exclusive basis.

The 1995 Supreme Court judgement stated that airwaves are a public property and their use must be regulated in the public interest. In a 2012 telecom/2G case, the Supreme Court clarified that auction is not a constitutional mandate for natural resource allocation, and methods other than auction can be used. Spectrum assignment methodology should be determined based on technical factors, resource supply-demand mismatch, past precedence, and global practice. While auction may maximise revenue, it may not always be the best way to serve the public good.

In a broadcasting case, 1995 Supreme Court judgement on airwaves was delivered by a three-judge bench that mentioned, “The airwaves or frequencies are a public property. Their use has to be controlled and regulated by a public authority in the interests of the public and to prevent the invasion of their rights. Since, the electronic media involves the use of the airwaves, this factor creates an in-built restriction on its use as in the case of any other public property.”

Further, in a telecom/2G case of 2012, following were part of clarification document:

Para 129 of the judgement: Hence, it is manifest that there is no constitutional mandate in favour of auction under Article 14 (of the Constitution of India). The government has repeatedly deviated from the course of auction and this court has repeatedly upheld such actions…

The Supreme Court has indicated that revenue maximisation through auctions may not always serve the public good. Since satellite spectrum falls under the public good doctrine and is utilised by smaller players and startups, it should not be allocated through auctions. This approach would prevent fragmentation and ensure more efficient use of the spectrum. While revenue maximisation is important, it should not be the sole focus of spectrum assignment decisions. Factors such as fair and equitable access to resources, competition, and promoting the public interest should also be considered. High auction prices for spectrum allocation can create barriers to entry for various entities, such as startups, MSMEs, rural and remote users, and socioeconomic sectors.

Most countries, including major space-faring nations, use fair and transparent administrative processes to assign satellite spectrum. Auctions for satellite spectrum are rare and have been abandoned by the US and Brazil as inefficient and unnecessary. Mexico and Thailand have also had failed attempts at auctioning satellite spectrum, while Saudi Arabia has recently decided to conduct an auction for a specific type of spectrum. However, other countries have assigned the same spectrum through administrative processes.

Satellite spectrum is a shared resource among operators without fragmentation, enabling utmost efficiency. An auction-based approach leads to fragmentation, exclusive allocation to powerful players, and prevents smaller players, start-ups, and academia from accessing necessary spectrum.

Additionally, satellite spectrum is limited compared to terrestrial spectrum, and some bands have even been repurposed for International Mobile Telecommunications (IMT) use. Despite this, demand for satellite communications is increasing. Therefore, it is recommended that India’s spectrum use be fully harmonised with global practices and that satellite communications be given full and exclusive use of all spectrum bands.

From the historical perspective, if we analyse, in 2018, the Indian telecom ministry sought the opinion of the attorney general regarding its decision to allot spectrum worth Rs 11.7 trillion in the E- and V-bands without an auction. “As we get into the 5G technology era, we might need to go ahead with legislative reforms because there will be an enormous demand for backhaul spectrum. And if we have to allocate them instead of auctioning them as a principle, this might require a different framework,” said K Rajaraman, chairman, Digital Communications Commission, and secretary (telecommunications), Department of Telecommunications (DoT). In addition, he mentioned that the second generation of telecom reforms would focus on spectrum rationalisation, including the consolidation of redundant licences.

Telecom secretary’s aforementioned statement is worth noting in the context of satellite’s capability for serving as an important and most promising satellite backhaul. India’s low fiberisation rates could pose significant challenges for the effective implementation of 5G technology. However, by leveraging the strengths of satellite, it may be possible to bridge this gap and create a robust and reliable telecommunications infrastructure in India. With only around 22 per cent of towers being fiberised, as against the global average stands at close to 80 per cent highlight the urgent need for improving the country’s telecommunications infrastructure to keep up with global standards.

It is also worth noting that when the DoT had previously sought the Telecom Regulatory Authority of India’s (TRAI) opinion on the E and V bands matter, the regulator stated that the main issue was whether spectrum could be assigned by a means other than auction, and that it was up to the DoT to make a policy decision in consultation with the Ministry of Law. Furthermore, TRAI had recommended delicensing both E and V bands and allotting them administratively on a ‘link to link basis’ as early as August 2014.

It is noteworthy that while DoT currently focuses on auctioning satellite spectrum based on a Supreme Court verdict, it is not excluding administrative methods of assigning spectrum for commercial use. In 2022, the DoT proposed amendments to the law that would permit the allocation of E and V band spectrum through administrative means, rather than auctions.

TRAI’s latest consultation paper on ”Assignment of Spectrum for Space-based Communication Services” cites international best practices and highlights that auctions have not been entirely successful in assigning satellite spectrum. Despite DoT’s request for recommendations on auctioning spectrum, TRAI is considering both auction and non-auction routes.

As a matter of fact, it must be noted that initially the question was whether to assign spectrum on exclusive basis or to be shared among multiple service licences and DoT gave reference that all/any other bands maybe included and determine demand assessment for various services and proposed “envisaged auction” as one of the methodologies in 2022.

The question is not whether to auction or not, the question is whether to keep sufficient spectrum shared for optimal use or to make it available on exclusive basis deviating from the optimal use of a public resource principle.

Satcom Industry Association (SIA)-India appreciates the fact that the TRAI is considering social cost benefit at distant places with optimal utilisation of a public resource for a shared and administrative licensing. This also emphasises the benefits of adopting international approaches for allocating satellite spectrum. Overall, the TRAI’s approach is commendable and shows a commitment to creating a regulatory framework that can support the growth of both the telecom and satcom industries in India by embracing a balanced approach.

SIA-India also backs India’s Draft Telecommunications Bill 2022, which permits spectrum allocation via different methods. The bill authorises administrative allocation of spectrum for specific satellite services in Schedule 1, however, SIA-India recommends expanding the list to cover all satellite services, as per global standards.

In India, it is apparent that the government officials, regulators, and policymakers have taken diverse positions on spectrum allocation to determine the best approach to satellite spectrum assignment.

While mobile operators in India generate annual revenues of Rs 2.5 trillion, Indian very small aperture terminal (VSAT) satellite operators earn only Rs 5 billion, making it unjust to apply the same spectrum rules for both. As per Article 14 of the Constitution of India, treating unequal entities differently is necessary. Therefore, decisions on spectrum assignment should consider factors such as industry needs, frequency availability, and unique challenges to ensure fair and equitable treatment for all. The “same service, same rules” principle may not always be practical, especially given the significant revenue disparity between mobile and satellite operators in India.

In conclusion, the Indian Space Policy is set to bring significant growth to the space sector, and a stable regulatory and policy environment is crucial to support this growth. The launch of high-throughput satellites with large bandwidth and steerable beams will complement terrestrial networks, offering reliable and affordable communication services to people across the country. This will have a positive impact on several sectors, including disaster management, agriculture, healthcare, education, transportation, energy, and tourism. By leveraging the benefits of space-based technologies and services, these sectors can enhance their operations, improve efficiency, and offer better services to consumers. Therefore, policymakers must prioritise creating a long-term policy framework that ensures ease of doing business, supports the growth of the space sector, and promotes innovation and development for the socio-economic development of the country.