Terrestrial telecom operators such as Reliance Jio, Bharti Airtel and Vodafone Idea, have been at loggerheads with Satcom operators – Bharti backed OneWeb, Amazon’s Kuiper and Elon Musk’s Starlink. Both need access to spectrum, a scarce natural resource.
In its 2012 verdict in the 2G case, the Supreme Court ruled that spectrum must be distributed through auctions. This judgment caused confusion about the allocation of natural resources in general. Later that year, the then President of India sought clarification from the Supreme Court, which clarified that its observations were specific to the 2G spectrum distribution during 2007-08 and not a general mandate. The Supreme Court acknowledged that auctions aren't always the best method for distributing natural resources. It further noted that alternative methods could be considered depending on the situation, leaving the government with ample discretion.
The following decade saw a flurry of policy decisions and clarifications on the issue of spectrum assignment for satcom. After years of regulatory uncertainty, in December 2023, the government enacted the Telecommunication Act, 2023 (Telecom Act) taking a definitive stance: while auctions remain the primary mode of spectrum assignment, satcom spectrum will be assigned administratively. However, terrestrial telecom operators have recently reignited the debate requesting a ‘level playing field’ with satcom providers through a uniform spectrum policy.
The road to a decision favoring administrative assignment was already bumpy. Terrestrial telecom operators argued that satcom is similar to terrestrial telecom and that both would likely serve the same customer base as the technology converges. Citing regulatory filings from leading satcom providers in various jurisdictions, they highlighted satcom’s intent to eventually compete in the telecom market. Based on this, telcos have pushed for the principles of ‘same-service-same-rules’ and a ‘level playing field’ in the government’s spectrum policy. Additionally, they have contended that the Supreme Court’s ‘mandatory auctions’ ruling applies universally, insisting that spectrum assignment of any nature should mandatorily undergo auctions.
In response, satcom players have argued that their services complement rather than compete with terrestrial telecom, providing crucial last-mile connectivity in remote areas unreachable by terrestrial networks. Additionally, they argue, satcom services are not limited by territorial or geographical boundaries, enabling Indian satcom providers to offer services internationally. India would be an outlier if it were to auction satcom spectrum. This was acknowledged recently by the Hon’ble Minister for Communications himself.
Satcom business model differs significantly from that of terrestrial telecom. Satcom primarily targets B2B and enterprise markets, while terrestrial telecom serves both enterprises and individual consumers, creating a substantial business and revenue gap between the two. Reports estimate the Indian telecom sector’s gross revenue at INR 3.36 trillion, potentially surpassing INR 5 trillion within two years. In contrast, the entire satcom market in India is estimated at around INR 200 to 216 billion, a fraction of terrestrial telecom revenues. This may explain why countries like the USA and Brazil initially attempted satcom spectrum auctions but ultimately reverted to administrative assignments.
Auctioning satcom spectrum would be detrimental to public interest. Satcom provides unique societal benefits, including cost-effective, widespread coverage in rural areas, difficult terrains, and in-flight and maritime zones where terrestrial telecom cannot reach. Reflecting on the goals of the National Telecom Policy 2012, the Digital India Mission, and National Digital Communications Policy 2018, it is clear that the government prioritizes satcom for connecting unserved regions. Satcom is also critical in disaster management, climate control, and national security. Achieving these socio-economic objectives requires efficient, affordable spectrum access for satcom providers, which is impossible under an auction model. Auctions would drive up costs, limit investment, and restrict service availability for rural and enterprise users alike.
Consumer interest demands a definitive spectrum policy
Despite the Telecom Act’s clear mandate to administratively allocate satcom spectrum, telcos’ ad-hoc representations requesting a re-determination of spectrum policy create unnecessary regulatory roadblocks that not only harm satcom businesses, but are also detrimental for consumers. Prolonged delays distort market dynamics, favoring incumbent operators and deterring new entrants, which can further elevate prices and limit consumer choice.
It is time that the DoT adopts and enables a clear, consumer-centric and tech-friendly spectrum assignment policy for the future.
Author credits: Anirudh Rastogi and Bobby Jain, Managing Partner and Senior Associate, respectively, at Ikigai Law.
Image credits: Adobe Stock Images
