DoT may stick to its 5% charge for satcom spectrum

New Delhi: The department of telecommunications (DoT) is likely to charge 5% adjusted gross revenue (AGR) as usage fee for satcom spectrum, rejecting the sectoral regulator's proposal to levy a 4% fee. The Telecom Regulatory Authority of India (Trai) had in December reiterated majority of its original proposals on satcom spectrum, including on pricing, despite objections from the DoT.

Officials told ET DoT has studied Trai's clarifications on the issue and decided to stick to its option to levy 5% AGR as usage fee with a 1% discount for serving hard-to-connect areas as it is better suited and easy to implement. While Trai can give recommendations, the final call has to be taken by the government and it is not binding on the government to accept all the recommendations.

In the past also, DoT had stuck to its options and not always followed what has been recommended by Trai.


The final proposal now is likely to be taken by the Digital Communications Commission (DCC), the highest decision-making body of DoT, in the coming weeks, after which the Cabinet will approve the pricing.

The move will have implications on Elon Musk-owned Starlink, Bharti group-led Eutelsat Oneweb, Amazon Leo and Jio Satellite, etc., which plan to launch broadband from space services in the country.

Replying to DoT's reference back, Trai had reiterated its proposal to charge 4% AGR as usage fee for satcom spectrum while suggesting imposing an additional ₹500 charge per urban customer to address the competitive advantage non-geostationary orbit players have over those using traditional geostationary orbit satellites. DoT, however, felt that classifying customers between rural and urban areas could be challenging to implement. Trai, though, rejected the view, claiming geolocation binding rules ensure the location of user terminals is known, which will remove any implementation challenges of the rule.

Currently, firms like Hughes and Nelco are utilising capacity from geostationary orbit-based fixed satellites. These companies primarily provide services only to enterprises and these firms pay spectrum charges in the range of 3-4% of AGR. But non-geostationary firms like Starlink, Amazon Leo, Eutelsat, etc. offer better speeds and capacity and will provide services to retail consumers. The government feels going forward, such players have better revenue potential and therefore, a flat 5% charge should be levied, with 1% discount given to such firms for serving hard-to-connect areas.

DoT had also opposed Trai's recommendation to offer targeted subsidies to subscribers in unserved/underserved regions of the rural and remote areas to discount high, one-time hardware cost of user terminals. It said such option for direct-benefit-transfer is not codified under the Digital Bharat Nidhi or the erstwhile Universal Service Obligation Fund, rejecting the recommendation to subsidise.

In response, Trai reiterated the need for subsidies adding that the government may consider doling out the subsidies by engaging third-party implementers.

India's space economy is reckoned to have a potential to hit $44 billion by 2033 and account for around 8% of the global share, as per IN-SPACe, which regulates India's private space activities. The country's annual satcom business revenue opportunity currently is pegged at $1 billion.