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India’s telecom companies divided on Auction of Satellite Spectrum

Airtel and OneWeb advocate for administrative spectrum assignment, while Jio and Vodafone push for auctions.

Airtel and OneWeb push for an administrative assignment of satellite spectrum while Reliance Jio and Vodafone demand an auction-based approach, as per company comments sent in response to the Telecom Regulatory Authority of India’s (TRAI) consultation on space-based communications.

The “Consultation Paper on Assignment of Spectrum for Space-based Communication Services” seeks to assess the demand for space-based communication services and provide recommendations on the amount of spectrum in each band required to be auctioned.

Interestingly, while some platforms like Amazon and start-ups were unsurprisingly against the auctioning, it turns out even established telecom companies can’t come to a consensus on spectrum auctioning. MediaNama went through comments of the four abovementioned telecom companies to understand the reason for this divide.

Airtel’s reasons to oppose auctioning of spectrum

It is Airtel’s firm belief that auctioning the satellite spectrum is neither reasonable nor just or fair. The reasons for this are explained below:

Satellite spectrum is a shared resource: Airtel argued that satellite allows the same spectrum to be used by multiple users which also enhances its utility. However, in an auction-based scenario, the satellite spectrum will be made exclusive and not be shared.

Auctioning can distort satellite spectrum utility: Competitive forces can block spectrum capacity or hoard the same in an auction-based scenario, said Airtel. This can lead to non-utilisation issues since each satellite constellation uses a specific spectrum band which is assigned for use globally. A typical (Low Earth Orbit) LEO system cannot operate with different spectrums bands in different parts of the world. So an operator (who has a global assignment for the same spectrum) will not get access to the required band.

“This will severely constrain the available capacity for satellite services. For instance, a LEO operator requires spectrum in the entire band failing which it will not be able to utilize its constellation completely and provide seamless services,” said Airtel.

Sharing mechanism within auctioning system is self-defeating: Airtel likened sharing of the spectrum alongside auctioning to bringing an intermediary between the spectrum licensor and user licensee.

“There is no need to create a middle-entity (an intermediary) between the spectrum licensor, i.e., the WPC/DoT and the spectrum user, i.e., the satellite operators. Such an intermediary will have to initially buy the spectrum from DoT and then, through a mandatory sharing mechanism, offer the same spectrum to actual satellite spectrum users. This will bring in needless complexities since user satcom players will have to stitch multiple sharing arrangements together with different spectrum winners/ owners,” said Airtel.

Severe impact on wider socio-economic welfare: Auctioning satellite spectrum may only capture excessive producer surplus rather than consumer surplus, failing to provide any wider socio-economic gains like wider connectivity. It will result in higher costs for consumers and limited accessibility, particularly in the rural and economically disadvantaged areas.

India at a disadvantage in terms of global competition: The auction of satellite spectrum in India will put Indian players at a disadvantage in comparison to global competing operators who simply pay an administrative fee in other global markets. This will raise the cost for Indian satellite players in India as well as make Indian satellite bandwidth expensive compared to international markets.

Supreme Court judgment didn’t mandate auction in every case: Regarding the Supreme Court order discussed in the consultation paper, Airtel pointed out that the judgement was in the context of arbitrary grant of terrestrial spectrum for exclusive usage. However, space-based communication is non-exclusive by nature and “hence the SC order cannot be extrapolated to the satellite spectrum.”

Paying propensity should be proportionate to revenue generation ability: Airtel said that the paying propensity of a satellite communication operator cannot be compared to that of a terrestrial operator. “The generally accepted practice is to value an asset in proportion to the revenue from the asset. Hence, the pricing will need to factor that in. To that extent, it must be noted that assigning spectrum on a non-auctioned, i.e., administrative basis does not mean that spectrum is not being paid for, rather an auction is an erroneous method to ascertain its price,” said the company.

Too many complexities arising from auctioning: Airtel listed variables in an auctioning situation that can lead to complications and should be considered when any spectrum valuation cum pricing decision on satellite spectrum is done. These are as follows:

  1. What is the market size and how does one estimate it?
  2. Is it 1%, 5%, 10% or just a substitute for an entire terrestrial base? Is that a logical assumption? Theoretically, it can at best be a fraction of India’s population.
  3. Even here, will it serve only the rural/remote areas and some very niche requirements like maritime / disaster support?
  4. What will be the Average Revenue Per User (ARPU) for Satcom? To be competitive against terrestrial it must match the terrestrial ARPU of ~$2.5.
  5. Are there devices available in the market that can/will support consumer uptake? How many years will it take to reach even, say, 1% of the Indian population?

“If any of the assumptions were to be even slightly askew, it could disturb the entire business case/utility of satcom,” said Airtel.

Detrimental impact on startups due to auctioning: Airtel said that auction-based spectrum allocation may discourage new start-ups and smaller players from entering the market due to the high initial costs and price of providing space-based communications, high cost of equipment and other associated logistics such as launch vehicles, etc. MediaNama has covered submissions of such start-ups and satcoms in a separate article that can be read here.

OneWeb’s reasons to oppose auctioning of spectrum

OneWeb submitted that administrative assignment of spectrum, on a non-exclusive basis, is “the only mechanism for space-based communication services, and any auction mechanism is detrimental to both the satellite industry and Indian citizens.” It elaborated the following in its comments:

Mobile spectrum management cannot be adopted for satellite: While mobile operators require exclusive access to a portion of a frequency range, several satellite operators can share the entire range of the spectrum. Therefore, mobile spectrum management and assignment, including auction mechanism, cannot be adopted for satellite.

The International Telecommunication Union (ITU) plays an essential role in managing the use of satellite spectrum globally, facilitate the implementation of various coordination and interference mitigation techniques that help maintain a harmonious and well-regulated satellite communications environment. Satellite systems operate within a predefined range of frequencies, which are filed with the ITU and undergo a lengthy and rigorous process of notification and registration into the Master International Frequency Register (MIFR), adhering to strict ITU Radio Regulations.

Satellite spectrum can only be assigned administratively: OneWeb said that satellite spectrum should be assigned on a shared basis with other satellite operators, considering the complexity and coordination required for satellite services. The ITU also recommended this approach and widely adopted it internationally, said ONeWeb. It ensures stability and confidence for satellite operators and for the satellite industry to thrive.

Airtel added, even jurisdictions such as the US and UK that have been auctioning terrestrial spectrum for decades do not auction satellite spectrum. In the handful of countries where auctions were attempted, they have been unsuccessful. Furthermore, the auction of orbital slots done in a few countries should not be confused with the auction of spectrum for satellite services.

Auctioning of satellite spectrum is not a feasible solution: This is because an auction introduces artificial scarcity and limits competition. The global nature of satellite operations serves multiple countries from a single satellite or satellite constellation. As such, spectrum assignment processes need to be harmonized and coordinated on an international level, rather than exclusively addressing national market considerations, said OneWeb.

Artificial scarcity may result in inefficient satellite spectrum use: Creating an artificial scarcity via auctioning will affect the satellite spectrum resource and violate the fundamental principle of spectrum management. This will limit the number of satellite operators in India to provide comprehensive services across multiple regions, reduce competition and prevent citizens and businesses from accessing the full readily available satellite capacity over India.

Satellite services provide connectivity to under-served communities: Satellite services can help under-served populations foster economic growth by enhancing educational opportunities, and improving access to healthcare services through telemedicine, ensuring no one is left behind through the digital society. Auctioning satellite spectrum could lead to a prioritization of revenue generation over these public interest considerations, ultimately undermining the essential services that satellite communications can offer.

Interference-free use of Ku&Ka bands required: Access to user and gateway links spectrum are both critical for our service and our network, although the spectrum band required, and timing may differ between different generations of our constellation. However, it is crucial to maintain a coordinated approach to ensure seamless operation of satellite services. OneWeb recently finished deploying all its gen-1 satellites and is working on deploying ground infrastructure, including two gateway earth stations in India. According to the company submission, the success of their move depends on the “efficient and interference-free use” of the Ku band for User terminals and Ka band spectrum for company gateways on a shared basis with other satellite operators.

27.5-28.5 GHz band is critical for satellite services: This band is particularly crucial for NGSO systems. Recent cancellation of 5G licenses in this band in Korea after five years demonstrated that mobile operators do not require this band. The TRAI should recommend the DoT to refrain from licensing this band for 5G, at least until further assessments of the mobile ecosystem’s needs and developments are carried out.

Counter comments from Reliance Jio comments

In its submissions, Reliance Jio made a case that non-geostationary orbit (NGSO) satellite operators are strategically planning their networks to compete with terrestrial communication service providers. It said satellite operators’ plans emphasize the allocation of substantial capacity for access services, showing alleged intent to instigate competition with terrestrial networks. It argued that spectrum assignment rules should be ensured for networks offering competing services. Jio said satellite spectrum emerges as the “sole viable strategy to guarantee a balanced competitive landscape” amongst competing providers. Thus, terming many industry arguments against auctioning of spectrum as “myths,” it gave the following counter comments:

On administrative satellite allocation: The deployment and utilization of user terminals across the country, in addition to alleged few gateways, make it imperative to assign spectrum on a pan-India basis through auctions.

Further, it said that administrative assignment of spectrum refers to an approach of “first-come, first-served” basis. Jio said this methodology has faced criticism and scrutiny, including from the Supreme Court.

On satellite spectrum authorization is assigned by the ITU: The assignment of spectrum within a nation’s jurisdiction is an inherent sovereign right. The ITU cannot imposed limitations on the methodology used for spectrum assignment. Further, it said ITU does not establish rules or guidelines regarding the methodology for spectrum assignment or the pricing decisions made by sovereign states.

On auctions being an uncommon practice so far: Dismissing this claim, Jio said there are several countries that use auction methodologies to assign satellite frequencies like Saudi Arabia and Thailand, where spectrum for satellite services has been auctioned. Further, it said India’s policy framework and auction methodology for spectrum have been widely adopted by numerous countries worldwide, “highlighting its effectiveness and influence in shaping international practices.”

On auction depriving spectrum access: Jio argued that since gateways are limited in number and require the entire spectrum band to support aggregated traffic, the assignment can be carried out exclusively for specific geographical areas.

“These designated areas would serve as exclusion zones for IMT/backhaul. Consequently, ensuring the exclusivity of spectrum assignment through a transparent auction process becomes crucial,” it said.

Similarly, Jio argued that exclusive assignment of spectrum management is necessary for user links to ensure satellites and user terminals operate without interference.  It said that the widespread geographic distribution of user terminals would make it infeasible for terminals deployed by different service providers to operate on the same frequency. If a group of service providers would want to enhance their spectral efficiency by sharing their spectrum, they can do so through private contractual agreements.

Vodafone’s arguments in favour of spectrum auction

Auction should be LSA-based only: The spectrum, for space-based communication services, should not be fragmented and be auctioned on a LSA wise basis only. 2. Level playing field should be upheld for all the licensees and spectrum assignment should be done through auction on a LSA basis, without any separate treatment for any service.

Exclusive spectrum assignment: We recommend model number 1 i.e. exclusive spectrum assignment to be implemented for assignment of spectrum for space based communication services (irrespective of the spectrum bands), similar to the auction of the IMT spectrum.

Time-limit on spectrum validity: The validity of spectrum should be kept at 20 years only. The spectrum for space-based communication services should also be made part of annual auction, which is being done presently for IMT spectrum.

Same service same rules: For the minimum net-worth or any other eligibility condition for assignment of spectrum for each type of space-based communication service, same service, same rules, same commercials should apply and thus, such conditions should be same across different services and should be as is applicable for the existing licensees operating terrestrial services.

Consistency should be ensured in all principles and policies for determination of valuation of spectrum band for commercial entities. Thus, the valuation models and approaches being used over the last decade for spectrum for terrestrial networks, should also be considered for user links and gateway links.

Jio added to this that same service same rules should be established as the foundation of the regulatory regime for communication services. The company argued that doing so guarantees a level playing field, and a fair, equitable environment for space-based and terrestrial service providers.

Need for a spectrum cap: Prescribing spectrum cap is a prerequisite to prevent large holdings of spectrum taken by one/few TSPs, which will lead to concerns of inadequate competition in the market.

27.5 GHz to 29.5 GHz to be put on auction: The spectrum from 27.5 GHz to 29.5 GHz (including 27.5 GHz to 28.5 GHz) should be put to a fair and transparent auction in line with the Supreme Court Judgment of 2012 and principle of same service same rules.

Reserve price of spectrum at 70 percent valuation: The reserve price of spectrum for user links and gateway links should be set at 70% of the valuation of spectrum, as has been recommended by Authority during last recommendations dated 11.04.2022. The payment options and terms and conditions should remain same as have been provided under the NIA 2022 as well as TRAI’s recommendations dated 11.04.2022.

However, Jio termed this too high a reserve price and instead recommended the price to be 50% of the spectrum valuation. According to Jio, “This approach is likely to facilitate true market price discovery and benefit the industry in the long run by increasing spectrum uptake, minimizing unsold spectrum waste, maximizing overall returns rather than focusing on unit price, and contributing to the achievement of proliferation goals while simultaneously boosting overall license fee proceeds.”

Ku&Ka bands for space-based communication services: Ku and Ka band should be considered under this consultative process for space-based communication services at this stage, after excluding the frequency ranges along with sufficient guard bands in mmWave bands, E&V bands, MWA-MWB bands as well as C band (4 GHz – 8 GHz), which are being utilized or reserved for IMT services or is in evolution path of IMT services.

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I'm interested in the shaping and strengthening of rights in the digital space. I cover cybersecurity, platform regulation, gig worker economy. In my free time, I'm either binge-watching an anime or off on a hike.

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