The Telecom Regulatory Authority of India (TRAI) has released recommendations for a new Satellite Network-as-a-Service (SCNaaS) model. This framework limits satellite infrastructure providers to a wholesale-only role, requiring them to partner with existing telecom companies instead of selling services directly to consumers. Investors should note the proposed 8% revenue-based fee and annual spectrum costs, which will impact the financial viability of these satellite projects.
The Telecom Regulatory Authority of India (TRAI) released its formal recommendations on November 5, 2026, introducing a new Satellite Communication Network (SCN) Provider Authorisation framework. The highlight of this proposal is the Satellite Network-as-a-Service (SCNaaS) model, which aims to reshape how satellite internet and connectivity services are delivered across the country.
Under this new structure, authorized satellite network providers will focus exclusively on building and maintaining infrastructure, including space and ground segments. Crucially, the regulator has prohibited these companies from selling telecommunication services directly to end users. Instead, they must lease their capacity to established telecom service providers. This move ensures that the retail interface remains with traditional mobile carriers, preventing potential price wars and protecting the revenue models of incumbent telecom players.
From a regulatory standpoint, the framework suggests granting these authorizations for a 20-year term, with the possibility of renewal. This long-term visibility is designed to support capital-intensive satellite projects, which often require significant upfront spending before they can generate consistent returns.
However, the financial structure of this proposal introduces specific costs that investors should watch closely. The regulator has recommended an 8% Adjusted Gross Revenue (AGR) based fee for the authorization. Additionally, there are proposed annual spectrum charges set at ₹3,500 per MHz. While these fees provide a clear cost structure, they represent a recurring expense that could put pressure on profit margins for both new entrants and existing players looking to integrate satellite capabilities.
One of the main goals of this policy is to facilitate Direct-to-Device (D2D) connectivity. This technology allows mobile handsets to switch seamlessly between terrestrial cellular networks and satellite links, which is expected to bridge coverage gaps in remote and underserved regions. By mandating a wholesale model, TRAI aims to encourage collaboration between deep-pocketed satellite operators and national telecom carriers, rather than creating a fragmented market where satellite firms try to compete directly with mobile networks.
There are risks to consider. This framework is still in the recommendation stage, and the government must finalize and notify these rules. Past efforts to authorize satellite-based services have faced regulatory and operational hurdles, so execution remains a key concern. Furthermore, the restriction preventing satellite firms from going directly to consumers limits their revenue flexibility. The success of this model will depend on whether the revenue-sharing agreements between satellite providers and telecom operators are commercially viable for both sides.
Investors should track the final government notification of these rules and any official partnerships announced between major satellite operators and telecom companies in the coming months.