The Telecom Regulatory Authority of India’s (TRAI) latest recommendations on spectrum allocation fees for satellite-based communication services may pose significant entry barriers for small players and start-ups, experts have cautioned, according to reports by The Hindu BusinessLine. While the proposed fee structure aims to streamline operations and encourage investment, it could potentially slow down efforts to democratise access to satellite communication services in India.
In its proposal, TRAI has suggested levying 4 percent of the Adjusted Gross Revenue (AGR) for both Geostationary Orbit (GSO) and non-Geostationary Orbit (NGSO) satellite services. Additionally, an annual charge of Rs 500 per subscriber in urban areas has been recommended, which TRAI describes as a move to simplify processes and enhance the ease of doing business.
Commenting on the recommendations, T V Ramachandran, President of the BIF, stated in the report dated May 17: “While not making it a cakewalk for satcom, TRAI has ensured the healthy coexistence of both terrestrial and satellite-based players and made the end consumer the real winner. The great message delivered by them through these recommendations is that satcom and terrestrial are absolutely complementary – not competitive, and need to grow together to build a fully connected India.”
BIF also raised concerns about the proposed 4 percent AGR charge, which is four times higher than the earlier suggested rate of 1 percent. It further noted that the suggested licence tenure is 5 years, significantly shorter than the 20 years BIF had hoped for. Ramachandran added that this creates a challenging business situation for the nascent satcom operators who are “the de facto ‘lender of last resort’ for connecting the unconnected.”
Industry experts argue that the recommended charges could create a challenging business environment for emerging satcom operators. “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,” said Ramachandran reiterated in a separate report dated May 18.
Previously, TRAI had proposed a more modest spectrum fee of 1 per cent of AGR. The revised fee is unlikely to significantly impact large industry players such as OneWeb (backed by Bharti Enterprises), Starlink, or Amazon’s Project Kuiper, who have deep financial resources. However, smaller operators may find the additional burden of spectrum and licence fees prohibitive, an unnamed policy expert noted, according to the report.
Tony Verghese, Partner at JSA Advocates and Solicitors, reportedly said, “While the increase in the license fee contribution may impact smaller players and start-ups, it is unlikely that the smaller players will look at providing similar services such as OneWeb and Starlink. They would be focused more on niche services within the sector and would rather fall back on the infrastructure of the larger service providers who would take the hit on the license fee contribution.”
TRAI, in its recommendations, argued that an AGR-based fee structure would ultimately benefit small operators by allowing a more balanced and sustainable market structure. The regulator also acknowledged concerns raised by stakeholders regarding the dependency of AGR-based charges on service rollout and tariff strategies, which may delay payments.
Sources involved with the terrestrial parties said entities are still deliberating on this front, the report added.
In urban areas, where terrestrial mobile and broadband services are well established and competitively priced, satellite communication services are expected to be priced higher due to infrastructure costs and the proposed regulatory charges. This could affect the commercial viability of satcom services in the short term, Verghese noted, as per the report.
“Large enterprises subscribers may likely continue to rely on established terrestrial and mobile networks for primary connectivity needs,” Verghese reportedly said. However, he added that satcom services, like mobile telephony in its early days, could see a gradual reduction in costs over time, eventually improving affordability and adoption.
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