Starlink, Kuiper push for zero upfront charge on satellite spectrum

The companies have echoed the government’s call for administrative allocation of satellite spectrum, but said the pricing should be affordable so that affordable services be provided through satellite broadband.

Meanwhile, Reliance Jio has stuck to its stance of allocation of the satellite spectrum via auction route, advocating for a level-playing field amid potential competition from satcom companies to telecom operators.

Comments from satcom companies and the telecom operators have come at a time when the government is looking at pricing models for satellite spectrum and other terms and conditions to allocate the spectrum for satellite broadband services.

In their response to the Telecom Regulatory Authority of India (Trai) on a consultation paper on the subject, the satcom companies said an AGR-based model, that too at less than 1%, would lead to a more equitable distribution of expenses and an incentive to use spectrum efficiently.

They said the levies at below 1% of AGR would be enough for the government to cover their administrative costs of managing the spectrum.

However, telecom operators, represented by the Cellular Operators Association of India (COAI), have called for a differentiated spectrum pricing strategy. This means different assignment approaches for satellite services competing directly with terrestrial networks and for satellite services not directly competing for maintaining a level playing field.

COAI’s concern stems from the fact that companies such as Starlink and Kuiper, would enter into the territory of telecom operators and start poaching the user base. The association has maintained a balanced approach in auctioning and administrative allocation of satellite spectrum.

“Comparable spectrum pricing to terrestrial services should be enforced for satellite services providing services in urban areas/retail customer, while administrative assignments with nominal pricing may be applied for traditional use cases in rural and remote areas including government  functions, disaster recovery, cellular backhaul and sectors like defence, maritime, and aviation,” COAI told Trai.

In its response, Amazon’s Kuiper said, “Amazon respectfully reiterates that the calculation of spectrum charges for NGSO (non-geostationary orbit)-based satellite communication services/systems should be levied on a percentage of AGR basis, and should not be levied on a per MHz basis.”

According to Kuiper, a satellite operator would need to launch more satellites and possibly build more gateway stations, and that requires a cost  benefit analysis to determine if the cost of the additional capacity would yield positive benefits. Therefore, it has said that at this stage there is no need to specify a minimum spectrum charge to address the issue of inefficient utilization of spectrum.

Regarding the minimum spectrum charge, Trai in the consultation paper had asked if a minimum spectrum charge should be specified to address the issue of inefficient utilisation of spectrum.

“The most effective way for Trai to prevent inefficient utilisation would be to encourage market entry and healthy competition, which would also improve consumer choice and affordability,” Starlink said, adding that satellite spectrum should be assigned for a period of 20 years.

Starlink added that Trai must ensure that satellite broadband services are affordable, reliable and universally available and it should recommend conditions for satellite players that are favourable, predictable, and fair.

The Broadband India Forum, which represents technology companies, said the cost of satellite spectrum should be as low as possible and just sufficient to cover the cost of administering and regulating the spectrum.

“Government should not desire to make any profit out of this. Administrative and regulation costs for Satcom works out to be a fraction (Approx. 0.1%of the sector Revenues). Hence the SUC (spectrum usage charge) should be of that order only,” BIF said.

Jio, however, countered the arguments on spectrum charges for satellite spectrum. The operator said, “the cost of spectrum for satellite services should be recovered upfront on either full down payment or deferred payment basis along with applicable interest rate.”

“If it is assumed that auction-based assignment methodology is not opted for assigning the spectrum, the authority should at least ensure that valuation and payouts against the use of spectrum are same for both terrestrial and satellite-based communication services,” Jio said.

In their response, telecom operators also called for a lower spectrum tenure of upto 3-5 years for satellite operators to ensure fair competition.

Bharti Airtel said satcom and terrestrial access operators are in direct competition in serving the individual customers directly in the retail category. For this category, it is essential to maintain parity between satcom and terrestrial operators.