Satcom firms may pay 5% AGR spectrum charge, get 1% relief for remote areas

The proposed framework could shape the economics of satellite broadband as companies prepare to enter the market, although an actual rollout is still some distance away. The operators will have to secure government security clearances, while the broader spectrum allocation framework also needs Union Cabinet approval and detailed rules to be framed.

The Digital Communications Commission (DCC), in its September 2 meeting, took up the Telecom Regulatory Authority of India’s (Trai) recommendations on the terms and conditions for assigning spectrum for certain satellite-based commercial communication services, sources said. Spectrum is proposed to be assigned through a non-auction route for five years, extendable by two years.

The 5% AGR charge represents a higher levy than the 4% recommended by Trai in May 2025 for fixed and mobile satellite services. Trai had also recommended a minimum annual charge of Rs 3,500 per MHz and an additional Rs 500 per subscriber per year for fixed satellite service providers in urban areas.

The DoT, however, rejected the urban subscriber charge, on the ground that a disincentive-based approach could create implementation challenges, particularly in distinguishing between rural and urban users. Instead, the emerging framework is expected to offer a 1 percentage-point reduction in the AGR-based charge for operators meeting conditions for serving hard-to-connect areas.

These areas are likely to include border regions, hilly terrain and islands, where satellite connectivity can have an advantage over traditional mobile networks. The government is expected to notify the specific areas where the incentive would apply.

The approach marks a shift from Trai’s proposal to make urban customers more expensive for satellite operators. In its December 2025 response to the DoT, Trai had said that satellite providers could otherwise focus on urban customers because of their higher purchasing power and data consumption, potentially undermining the objective of extending connectivity to remote areas.

Trai had proposed the Rs 500 annual charge for urban subscribers as an incentive for operators to expand into rural and remote markets. The DoT has instead favoured an incentive linked to geography and the relative advantage of satellite technology over terrestrial networks.

The spectrum charge will be in addition to the annual licence fee of 8% of AGR currently applicable to satellite communication operators under the DoT’s authorisation terms. The overall regulatory cost will therefore be an important factor in determining the pricing of satellite broadband services, particularly as operators seek to build scale in a market where the addressable customer base is still uncertain.

The government had also considered a proposal by Trai for subsidy for fixed satellite user terminals in rural areas through direct benefit transfers or the Digital Bharat Nidhi fund. However, the DoT rejected Trai’s recommendation on this as well.