Feasibility of Satellite Spectrum Auctioning - The Case for India
Executive Summary:
Telecommunications Regulatory Authority of India (TRAI) released its consultation paper on the subject of satellite spectrum auctioning prospects in India on 6th April 2023 and invited comments on the same.
Considering the New Space Race that India is now a part of TRAI and other government bodies in India have started to consider the viability of the auction based allocation system for the assignment of crucial space satellite spectrums which until now have (globally) been assigned through the administrative allocation process.
This received considerable pushback from the SatCom Industry Association (SIA-India) alongside many other private players, many of which are the new space startups like Dhruva Space who have been in the satellite manufacturing business since 2021.
While players like Jio and Vodafone are backing the auction based bidding process, others like Amazon and Bharti Airtel’s OneWeb are supportive of the current procedure of administrative allotment citing lack of global precedent for the auction based method when it comes to satellite spectrums.
The SIA-India are likely to submit their own comments on the process of spectrum allotments by August of 2023.
The advent of the New Space Race has given the young but rapidly growing Indian space sector the opportunity to have a larger footprint with private space startups becoming more heavily involved in the activities that were up until this point carried out by the Indian Space Research Organisation (ISRO). The recently updated Indian Space Policy 2023 outlines various agencies and their roles in streamlining and developing this sector and given EY estimates the Indian space economy is likely to grow to $13B by 2025 at a CAGR of 6%. The contribution by satellite segment and application systems is likely to form the largest share of this economy with 36% contribution to the overall revenue by 2025.
The Telecommunications Regulation Authority of India (TRAI) alongside other agencies like the Department of Space (DoS), Indian National Space Promotion and Authorisation Centre (IN-SPACe) and the SatCom Industry Association (SIA-India) are in the process of discussion the allocation of satellite spectrums both for telecommunications (telecom) based satellites as well as space communications (space com) based satellites in the Lower and Middle Earth Orbits (LEO & MEO).
What is Satellite Spectrum Allotment?
Satellites and their respective spectrums and frequencies are part of the global wireless communications infrastructure that are responsible for providing broadcasting, communications, tracking and other key services to maintain global connectivity. These spectrums and frequencies are managed by the International Telecommunication Union or the ITU and its member states who act in accordance with international and domestic laws when it comes to spectrum coordination.
Satellite spectrum management is one of the main challenges faced by the international community today given the rise in capabilities of multiple countries in the space satellite economy. The efficient use of satellite spectrums is becoming the main driver when it comes to governmental allocation methods of the satellite spectrums.
To this end, two main methods have emerged so far in the spectrum allocation debate. Administrative Allocation and Auction-Based Allocation :-
Administrative Allocation – The standard way of allocating spectrums is through the administrative process which is the method used by all countries globally when it comes to spectrum allocation to private players. This is done through a case-by-case analysis of each player who wants to use the spectrum and is carried out directly by the government bodies without any bidding process. There is usually a set of predetermined domestic and international standards for compliance with various regulatory and technical standards that these players need to have in order to qualify for the administrative allocation process.
Auction-based Allocation – The other method that many countries have considered over the years but no one has implemented yet is the auction-based allocation method. In this method, the regulatory bodies conduct a competitive bidding process wherein the spectrum rights are assigned to the highest bidder thereby generating more revenue for the government while also increasing competition in the sector. This method would also potentially require meeting certain predetermined criteria in order to qualify for the bidding process.
What is the debate about?
The Department of Telecommunications (DoT) and TRAI first started the discussion regarding the satellite spectrum auctioning process in December 2022. However, immediately after this, there was significant pushback from the space startup infrastructure as well as SIA-India. Keeping this in mind, TRAI floated their consultation paper titled “Assignment of Spectrum for Space-based Communication Services” which was released on April 6, 2023. They invited comments on the subject of best methods for spectrum allocation procedures with regards to the space spectrum auctioning process and whether the practice should follow an administrative allocation route (which is the standard globally) or whether the auctioning process is the best way to go. As per the reports regarding the comments received so far on the consultation paper, nearly 73% or 47 out of 64 respondents noted that the non-auction route is the preferable way to go. That being said, DoT and TRAI alongside other government bodies are yet to arrive on a final decision regarding the spectrum allocation process. The current TRAI consultation paper however notes that the auction route which was attempted by US, Mexico and Brazil was later discontinued due to impracticality when it came to spectrum allocation and they had to resort to the administrative allocation process instead. On the other hand, given various public reports so far, Indian Space Association (ISpA) and SIA-India are largely on the same page concerning the non-feasibility of satellite spectrum auction given the failure of the process at the global levels as described above alongside the lack of dispute resolution mechanism as well as regulatory and enforcement challenges that the Indian space sector currently faces other than the service and security challenges which are getting more and more sophisticated every day.
#To this end, SIA-India is likely to submit its own set of recommendations on the spectrum allocation as well as spectrum sharing (between telecom and spacecom providers) process by August 2023. This is likely going to include details regarding reserve prices for the sale of satellite spectrums. While big players like Amazon and Bharti Airtel’s OneWeb are against the auction method, billionaire Mukesh Ambani’s Reliance Jio and Vodafone are citing Indian Supreme Court decisions on the same and pushing for the auction approach in order to ensure a level playing field. The administrative allocation versus auction debate is likely to keep raging until SIA’s recommendations come out. However given their public statements so far SIA- India is likely to recommend the administrative allotment of spectrum bands given the push it would provide for the smaller spacecom sector players who are less likely to win these (expensive) auction bids if big players like Jio and Vodafone are also in the mix. Moreover, spectrum allocation on sharing basis between telecom and space communication agencies is going to give rise to numerous regulatory disputes and the mechanisms to resolve these are yet to be put in place. While India goes full steam ahead on the space resource development route, it's worthwhile to note that given the discussions in DC with key individuals like Musk and the signing of the Artemis Accords between the US and India is likely to come into play in the decision-making process especially regarding SpaceX and Starlink services in India.
Conclusions and Recommendations
On the subject of the auction, an important factor of concern regarding the process is the fact that there is a risk that the bigger players will take up more of the satellite spectrums. This is likely to heavily limit the access and service capabilities of the space satellite startups as well as academia amongst other groups, unless special provisions are put into place during the discussions between SIA-India, TRAI, DoT and DoS amongst other regulatory bodies and private companies. The many advantages of space-based satellite communications services lie in the capacity that it has to provide coverage in the rural and remote areas of India and during natural disasters and conflicts where telecommunication systems get compromised. These developments and research in the satellite sector are key to the success of the Digital India initiative as well and one of the ways to ensure this keeps happening is to provide protections for the indigenous space satellite manufacturing sector. Keeping these goals in mind, it is necessary for the regulatory bodies to assess whether given current policies the auction way is the best way to go or if a unique system needs to be adopted keeping in mind global as well as domestic players such that the revenue of the government, competitive pricing of services as well as research-oriented usage of these spectrums are not hampered in the long run given the current growth projections for the Indian startup industry.