Satellite Spectrum and Allocation Practices in India

1. On 22nd oct 2024, Union Communications Minister Jyotiraditya Scindia clarified that satellite communication (satcom) spectrum will be allocated through an administrative process, rather than through auctions as suggested by Reliance Jio.
2. This decision highlights important issues in how countries manage satellite spectrum, which is different from terrestrial (ground-based) spectrum.

What is Airwaves/Spectrum?

1. Airwaves refer to radio frequencies within the electromagnetic spectrum that can transmit information wirelessly.
2. Used for various services, including telecommunications, broadcasting, and data transmission.
3. Governed and allocated by the government to ensure organized use and avoid interference among users.
4. The government auctions a fixed amount of spectrum within specified frequency bands.
5. Allocated to operators for providing communication services to consumers.
6. To facilitate wireless communication and enable a range of technological services.

 What is Satellite Communication?

1. Satellite communication uses satellites in orbit to provide connectivity to homes and businesses.
2. Unlike ground-based systems like cable or fiber optics, satellite systems do not require physical wires.
3. Benefits:
   1. Wider Coverage: Satellite systems can reach remote and rural areas where traditional mobile networks may not be available.
   2. Resilience: These systems are generally more durable during extreme weather, as they have fewer components on the ground that could be damaged.

The Nature of Satellite Spectrum:

1. International Character: Satellite spectrum is different from terrestrial spectrum, which is confined to specific geographical areas.
2. Because satellite signals can cross borders, they require international coordination, primarily managed by the International Telecommunication Union (ITU), a UN agency.
3. Administrative Allocation: The recent Telecommunications Act, 2023, in India added satellite spectrum to the list that will be allocated administratively. This means that the government will assign frequencies without conducting an auction.

Global Practices in Spectrum Allocation : Exclusivity vs. Non-Exclusivity:

1. Terrestrial Networks: Spectrum for these services is exclusive, meaning only one operator can use a specific frequency in a given area.
2. Satellite Networks: The spectrum is non-exclusive and can be shared among multiple operators, making administrative allocation more practical.

Historical Attempts at Auctions

1. United States: The last auction for satellite spectrum was held in 2004, focusing on broadcasting services. Since then, the U.S. has moved back to administrative assignments due to the challenges of the auction process.
2. Brazil: In 2020, Brazil replaced satellite auctions with an administrative licensing process, although it still assigns landing rights through bidding.
3. Saudi Arabia: Recently held an auction for the S-band spectrum used for mobile satellite services, but the technical nature of this band allows for exclusive assignments, which differs from typical satellite spectrum.

Benefits of Satellite Communication

1. Wider Coverage: Satcom services can reach remote and rural areas that lack ground infrastructure, making them essential for connectivity in underserved regions.
2. Satellite systems are generally more durable during natural disasters, as they rely on fewer ground components. This makes them less likely to be affected by severe weather.
3. India’s satcom sector is expected to grow from $2.3 billion annually to $20 billion by 2028, offering significant investment opportunities in untapped markets.
4. India ranks 4th globally in terms of investments in the satellite communication sector.
5. Untapped Households: According to Morgan Stanley, around 290.4 million households in India lack broadband access, representing a strong market opportunity for satellite operators.

Auction vs. Administrative Allocation

Auction

Administrative Allocation

Process: An auction is a competitive bidding process where the government sells spectrum licenses to the highest bidder. Benefits: Efficiency: Auctions allocate resources to those who value them the most, ensuring optimal usage. Revenue Generation: Auctions can generate significant income for the government. Transparency: The process reduces the chances of favoritism or corruption. Usage: Primarily used for commercial telecommunications spectrum in competitive markets.

Process: This method involves the government directly assigning spectrum licenses to selected entities without a bidding process. Benefits: Flexibility: The government sets eligibility criteria and grants licenses accordingly. Lower Fees: Involves a nominal fee that covers administrative costs rather than reflecting full market value. Support for Emerging Industries: Encourages the development of new sectors, like satellite communications, by providing easier access to resources. Usage: Commonly used for government-related services or specialized sectors where competition may not apply.

Key Differences

1. Competition: Auctions are competitive and market-driven, while administrative allocation is a direct government assignment.
2. Revenue: Auctions generate substantial revenue; administrative allocation typically involves lower fees.
3. Transparency: Auctions are more transparent, while administrative allocation may lack this clarity but offers more flexibility.

Controversies, especially with the shift from auction-based allocations to administrative assignments. Notably:

1. 2G Spectrum Scam: This scandal involved allocating licenses on a first-come, first-served basis, leading to significant financial losses and legal actions. The Supreme Court indicated a presumed loss to the government of ₹30,984 crore and a potential loss of ₹1.76 trillion due to the allocation of 122 2G licenses to telecom companies.
2. Supreme Court Mandate: In 2012, the Supreme Court mandated auctions as the preferred method for spectrum allocation, influenced by the fallout from the 2G scandal.
3. Telecommunications Act 2023: Despite past controversies, this act provides a non-auction route specifically for satellite spectrum allocation.

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