Satellite firms like Starlink to pay 4% of revenue as Spectrum charges, Rs.500 annually per urban customer

TRAI recommends 5-year satellite spectrum allocation as Starlink nears entry

On Friday. Telecom Regulatory Authority of India (TRAI) recommended that satellite communication companies like Starlink pay 4 percent of their adjusted gross revenue (AGR) as spectrum charges to the government, a rate steeper than what these firms had been lobbying for. Operators offering satellite-based broadband internet services in urban areas would have to shell out an additional Rs.500 per subscriber annually, TRAI said in its recommendations to the Department of Telecommunications (DoT). No additional levy would be applicable for services in rural areas.

The levy recommended by TRAI is steeper than what satcom companies have been lobbying for. Elon Musk’s Starlink and Amazon Inc’s subsidiary Kuiper Systems had during consultations with the TRAI urged it to keep the spectrum charge below 1 percent of AGR with no other charge. TRAI recommended that satellite broadband spectrum be allotted for five years, which can be extended by another two years.

The satellite spectrum pricing as a percentage of AGR is for both non-geostationary satellite orbit (NGSO) and Geostationary satellite orbit (GSO) based fixed-satellite service (FSS) and mobile satellite service (MSS). NGSO refers to satellites occupying either a low-earth orbit (LEO) or medium-earth orbit (MEO). Unlike geostationary GSO satellites, LEO and MEO satellites do not occupy a stationary position but move in relation to the Earth.

TRAI said that 4 percent of AGR spectrum charge would be subject to a minimum annual spectrum charge of Rs.3,500 per MHz. AGR is used to calculate the revenue that telecom companies share with the government in the form of spectrum usage charges and license fees. AGR based spectrum charging is the existing practice for commercial VSAT service providers and BSNL.

Releasing the recommendations, TRAI chairman Anil Kumar Lahoti said that satcom services, once available, can play a vital role in taking connectivity to underserved areas where telecom networks are not available. They also play a critical role in disasters, in rescue and relief operations. Stating that spectrum charges should be levied as a percentage of AGR for simplification and as part of ease of doing business, TRAI said, “Overall, spectrum charges do not need to be any higher than the administrative costs required to cover the allocation of spectrum. It will also facilitate investment and innovation.”

DoT will process the recommendations. It can tweak them or accept them in totality and send them to the Cabinet for approval. Once approved, satellite companies can apply for licenses. Starlink, earlier this week, got a Letter of Intent (LoI) for the start of its services. It now has to procure a license before starting services in India.

SpaceX, the aerospace company led by Elon Musk, has already tied up with rivals Reliance Jio and Bharti Airtel to bring Starlink’s broadband internet services to India.

Both Indian firms will offer Starlink equipment through their network and also support customer installation and activation on devices.

Airtel-backed Eutelsat Oneweb and Jio Satellite Communication have already gotten the global mobile personal communication by satellite (GMPCS) services license needed to provide satcom services in India, while Elon Musk-led Starlink is set to soon get the license. Over the past few months, rivals Jio and Airtel have come together to demand an auction for awarding spectrum for satellite services in India. Musk, on the other hand, lobbied for administrative allocation as per international norms.

In October last year, the government sided with Musk on the issue of allocating airwaves to be used for offering low latency internet services using satellite, at a pre-decided price through administrative route. Both Reliance Jio, India’s largest wireless carrier, and Airtel, the No 2 player in the world’s most-populous nation, where data usage is rapidly rising, feared lower entry cost will chip away some of their subscriber base.

Based on the recommendations of TRAI, the DoT would now go to the Cabinet for pricing of satellite spectrum, and once approved, any satcom wanting to offer services in India can apply. Starlink is the world’s largest Low-Earth-Orbit (LEO) constellation operated by SpaceX. Bharti already partners with Eutelsat OneWeb, the second-largest LEO constellation. Similarly, Jio Platforms has a joint venture with SES, a leading global satellite-based content connectivity solutions provider.

Jio Space Technology Ltd, where Jio holds 51 percent and SES 49 percent, is to use multi-orbit space networks that are a combination of geostationary (GEO) and medium earth orbit (MEO) satellite constellations capable of delivering multi-gigabit links and capacity to enterprises, mobile backhaul, and retail customers across the length and breadth of India and neighbouring regions.

Eutelsat OneWeb, in which Airtel is the single-largest shareholder with a 21.2 percent share, and Jio’s joint venture with SES have already secured GMPCS licenses and IN-SPACe approvals.

Starlink currently operates over 6,000 LEO satellites, while Amazon’s Kuiper project plans to deploy 3,236 satellites starting in early 2025.

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