India Mulls Spectrum Discount for Satellite Internet to Connect Remote Areas

The Indian government, through the Department of Telecommunications (DoT), is exploring a policy to offer a discount on spectrum usage charges for satellite internet service providers. This potential incentive aims to encourage companies such as Starlink, OneWeb, and Jio Satellite to extend their services to remote and hard-to-connect regions within India, including border areas, hilly terrains, and islands.

Under the proposed plan, satellite internet providers might receive a 1% reduction on the annual spectrum charge, which is expected to be 5% of their Adjusted Gross Revenue (AGR). This proposed charge is higher than the 4% suggested by the Telecom Regulatory Authority of India (Trai) in its earlier recommendations. The DoT has requested Trai to re-examine these recommendations, indicating a divergence in views between the two regulatory bodies.

The DoT's approach favors an incentive-based model for serving remote areas, arguing that Trai's previous suggestion of a ₹500 per urban user 'disincentive' could be difficult to implement due to challenges in clearly differentiating between rural and urban service areas. The DoT believes that incentives tied to serving areas where satellite technology (like Low-Earth Orbit/Medium-Earth Orbit satellites) offers a distinct advantage over terrestrial networks are more practical.

This policy shift is also influenced by concerns raised by existing telecom operators, who fear competition from satellite services, particularly in urban markets. Satellite providers, represented by the Broadband India Forum, counter that their operational costs and revenue potential in remote areas are significantly lower than terrestrial providers, necessitating supportive policies to ensure viability.

Impact

This news can significantly impact the Indian stock market by influencing the investment landscape for telecommunications and technology companies involved in satellite services. It could lead to increased competition and potentially lower prices for consumers in remote areas, while also creating new revenue streams for satellite providers. The regulatory approach will shape the future growth and competitive dynamics within India's digital connectivity sector. The rating is 7/10.

Difficult Terms:

• Spectrum Usage Charge: A fee paid by telecom and satellite operators to the government for using radio frequencies (spectrum) to provide their services.
• Adjusted Gross Revenue (AGR): A calculation used by the Department of Telecommunications to determine license fees and spectrum charges. It generally includes all revenues earned by a telecom company, though its exact definition has been subject to legal disputes.
• Telecom Regulatory Authority of India (Trai): The independent regulatory body in India responsible for making recommendations for policy and regulating the telecommunications sector.
• Department of Telecommunications (DoT): The government ministry responsible for policy, administration, and the legal framework for telecommunications in India.
• Low-Earth Orbit (LEO) / Medium-Earth Orbit (MEO): Orbits around Earth. LEO satellites are closer to Earth (typically 160-2,000 km), offering lower latency, while MEO satellites are further away (typically 2,000-35,786 km), offering broader coverage.
• Terrestrial Service Providers: Traditional telecom operators that provide services using ground-based infrastructure like mobile towers and fiber optic cables.