Starlink to Telesat, why India’s spectrum auction is a hurdle for satellite internet players

Representative image | Commons/ Tony Webster (CC BY 2.0)

During his visit to the United States last month, Prime Minister Narendra Modi met SpaceX founder Elon Musk, who expressed his intention to launch ‘Starlink’, a satellite internet service, in India. So far, Starlink has launched over 2,000 low earth orbit satellites and offers services in over 32 countries worldwide. SpaceX had started Starlink pre-orders for Indian subscribers in October 2021. But it ran into regulatory roadblocks after the Department of Telecommunications notified that Starlink lacked the requisite licence to operate in the country. After it obtains the licence, Starlink will require the assignment of satellite spectrum from DoT’s wireless planning and coordination. However, a decision by the DoT to auction spectrum instead of licensing it administratively will be a hurdle for Starlink’s India plans.

The DoT proposes to disrupt the existing administrative licensing mechanism for spectrum allocation and switch to an auction-based one. In April 2023, the Telecom Regulatory Authority of India (TRAI) floated a consultation paper to solicit public opinion on the proposition. Of the 64 responses to the TRAI’s consultation, about three-quarters favoured the current administrative allocation process. For the first time, global satellite internet services such as Starlink, Amazon’s Project Kuiper and Telesat responded to the consultation. They argued that spectrum auctions would make their services expensive, defeating the purpose of connecting remote and rural areas to the internet. Conversely, Reliance Jio and Vi, along with Jio’s subsidiaries in the TV distribution market, favoured auctions with the intention of acquiring satellite spectrum to expand their 5G network capabilities.

DoT’s proposition gives telcos a headstart

An auction mechanism creates an uneven playing field and picks winners even before the satellite communications race begins. Financially strong bidders may acquire spectrum capacity and gate-keep other service providers for a fee. Currently, the sector has three competitors – telcos, broadcasters, and satellite broadband services. Satellite spectrum auctions will likely allow Telecom Service Providers (TSPs) to dig into their deep pockets and acquire higher spectrum quantities to disseminate their services.

TSPs want additional spectrum to meet their 5G and potential 6G requirements. Part of the C-band spectrum, a frequency band that telcos need to enhance their capacity, is currently occupied by broadcasters. The DoT has proposed to vacate broadcasters and shift them to a smaller adjacent frequency band. Broadcasters fear the move might involve coughing up a significant amount of money. The high cost might deter them from improving television content services and even force them to increase subscription costs. India had over 900 million TV viewers in 2020; projected 5G subscribers are expected to reach only a third of that number by 2025. Therefore, a spectrum allocation mechanism that prioritises 5G rollouts over broadcasting is not in the interest of the majority of India’s population.

On the other hand, auctions may make it costly for emerging satellite internet companies, such as Starlink, Project Kuiper, OneWeb and the likes to enter the Indian market. Satellite broadband has the potential to provide internet access to rural and remote areas that are underserved by TSPs. However, expensive spectrum purchases will result in satellite internet companies increasing subscription costs to recover their investments. The whole exercise will make it unviable for them to do business in India. Thus, an auction mechanism effectively closes the door on the entry of a potentially beneficial emerging technology segment into the Indian market and counts as a lost technological opportunity for the country.

Auction concerns

The satellite spectrum is an abundant global public good that necessitates administrative oversight and planning. It is not restricted by geographical boundaries, and several countries can share the same spectrum, subject to specified guard bands. As a result, an auction mechanism is likely to fail and lead to two adverse consequences.

First, spectrum auctions across satcom services will indirectly appoint telcos as arbiters of India’s connectivity needs. Technologies like broadcasting that serve the majority of India’s population, and emerging ones that have the potential to deepen internet connectivity in remote areas, will be sacrificed in favour of 5G rollouts. More than 23 countries have auctioned satellite spectrum for 5G services, but no other country has done so for satcom services. If India does indeed do so, it will be contrary to globally followed practices. Thus, by forcing 5G auction designs across satcom services, the government might harm the competitiveness of these incumbent industries.

Second, an auction mechanism will create artificial scarcity and restrict the number of players for an otherwise abundant resource. It may lead to higher unutilised capacities because auction winners will decide and monitor spectrum usage. These will subsequently lead to increased subscriber costs, prevent the entry of new players and stifle innovation in the Indian satcom sector.

The way forward

Strong stakeholder opposition to the auction proposal shows that the DoT is unaware of the industry’s spectrum requirements. In its 2022 spectrum management report, the Comptroller and Auditor General (CAG) of India advised the DoT to commission technical research studies and review international best practices for efficient spectrum utilisation. The DoT must follow them and make research-driven decisions based on feasibility tests and impact assessments on issues concerning spectrum assignment.

Satellite communications are a key component of digital infrastructure today, and the mode of spectrum assignment will play a pivotal role in India’s digitalisation. In the past, India has lost out on economic growth and investment avenues due to policy decisions that were not backed by evidence, and that deviated from globally followed norms. Regulation on Web3 building blocks like the RBI ban on crypto assets is one such instance that compelled entrepreneurs and developers to shift base to favourable nations like the UAE. Later, by lifting the ban and bringing it under the regulatory net by taxing crypto assets, India has shown some welcome flexibility. However, such a policy reversal in case the spectrum is auctioned may prove to be a costly decision. Thus, the verdict on spectrum assignment should ensure optimal resource utilisation while securing public interest and promoting ease of doing business for satcom services. Regulations that facilitate these objectives will help India maintain its competitive edge in the satellite communications race.

The authors work at Koan Advisory Group, a technology policy consulting firm in New Delhi. Views are personal.

This article is part of ThePrint-Koan Advisory series that analyses emerging policies, laws and regulations in India’s technology sector. Read all the articles here.

(Edited by Zoya Bhatti)