Ever since the telecom sector opened to the private sector, India has taken many controversial U-turns. The 1994 policy preferred the discovery of annual fees for spectrum through auction, but the government introduced the revenue sharing model in 1999. Initially, mobile meant GSM, but later local WLL operators were allowed to offer services across the nation. — Representational Image

The Digital Communications Commission (DCC) has approved a revenue sharing model recommended by the telecom regulator Trai for the administrative allocation of satellite spectrum, bringing India closer to the commercial rollout of satellite broadband.

The companies will get spectrum for five years and they will be required to pay a spectrum usage charge (SUC) of five per cent of adjusted gross revenue (AGR), which will be lowered by one per cent in rural and remote areas. The decision will benefit companies such as Elon Musk’s Starlink, Bharti Airtel led Eutelsat OneWeb and Reliance Industries’ Jio Satellite, which are preparing to offer commercial satellite broadband services in India.

Satellite broadband can connect remote villages, islands and border regions, where laying terrestrial networks is either difficult or uneconomical. However, the method chosen for allocating spectrum, a valuable public resource, could potentially to questions of fairness, transparency and equality.

According to Section 4(4) of the Telecommunications Act, 2023, spectrum will ordinarily be assigned through auction but allows administrative allocation for services listed in its First Schedule. The 19 exempted services include certain satellite-based communication services. An administrative assignment does not involve competitive bidding, which was preferred by the Supreme Court.

In Centre for Public Interest Litigation vs Union of India (the 2G judgment), a two-judge bench held that public auctions must be adopted for allocating spectrum to ensure fair price discovery. In its opinion for a Presidential Reference, the five-judge bench said competitive mechanisms like auctions are the baseline to maximise public revenue and avoid Article 14 violations, if finite resources are transferred to private entities for commercial profit. However, it said the state may adopt non-auction routes for public welfare and statutory mandates.

Though the government is justified in choosing the administrative sanction of satellite spectrum because of its distinctive technical characteristics, the satellite broadband service providers are multinational companies and they do not come under the categories enlisted by the Supreme Court.

The administrative allocation will put satellite broadband companies in an advantageous position compared to terrestrial telecom companies, who were forced to pay thousands of crores of rupee to stay in business. This creates two sets of companies targeting the same customers with the same product but with two different spectrum pricing, which violates the fundamental right to equality guaranteed by the Constitution under Article 14.

Ever since the telecom sector opened to the private sector, India has taken many controversial U-turns. The 1994 policy preferred the discovery of annual fees for spectrum through auction, but the government introduced the revenue sharing model in 1999. Initially, mobile meant GSM, but later local WLL operators were allowed to offer services across the nation. In 2012, the auction route was brought back. In 2013, companies with cheaper Broadband Wireless Access spectrum, which could be used only for data services, were allowed to offer calls over their data spectrum.

Inconsistent policies are one of the major reasons that prevent foreign capital from coming into India. The government, therefore, should ensure that its policy on satellite spectrum does not end up in litigation by taking public opinion and evolving consensus on the issue.

Tags: