What is satellite spectrum, why most countries prefer not to hold auctions

Spectrum for satcom is part of the first schedule of The Telecommunications Act, 2023 (“Assignment of spectrum through administrative process”). Under Section 4(4) of the Act, telecom spectrum shall be assigned through auction “except for entries listed in the First Schedule for which assignment shall be done by administrative process”.

“Administrative process” under the Act “means assignment of spectrum without holding an auction”, and “‘auction’ means a bid process for assignment of spectrum”.

The Department of Telecommunication (DoT) had asked the Telecom Regulatory Authority of India (Trai) to come up with a methodology to assign the spectrum. As Trai explored pricing models for the service, Jio submitted to the regulator that administrative allocation may not be able to ensure a level playing field between satellite and terrestrial services.

In response, Musk posted on X on October 14 that an auction process “would be unprecedented, as this spectrum was long designated by the ITU as shared spectrum for satellites”.

Satcom & its benefits

Satcom services use an array of satellites in orbit to provide connectivity on the ground. They do not require wires to transmit data, and are an alternative to ground-based communication, called terrestrial networks, such as cable, fibre, or digital subscriber line (DSL).

For end-users such as homes and businesses, satellite-based communication and broadband services offer two key benefits: wider coverage, and a more resilient network. Even though the latency of satcom services can at times be higher than terrestrial broadband networks, they can cover vast areas without needing to install much physical equipment.

The use of satellites allows communication networks to reach remote locations that mobile telephony cannot access. It is generally understood that when satcom services become more mainstream, low-lying and rural areas, and areas prone to natural disasters, will benefit from constant connectivity.

Satellite-based Internet is also believed to be more resilient than terrestrial-based services, since they have comparatively fewer components on the ground. The equipment for satellite communication is, therefore, less likely to sustain damage due to extreme weather events.

Size of satcom sector

Consulting firm KPMG in India has estimated in a recent report that the country’s satcom sector, which currently stands at $2.3 billion a year, will reach $20 billion by 2028.

India is ranked fourth in terms of investments in the sector globally. Investment bank Morgan Stanley has estimated roughly 290.4 million households in India are untapped with broadband, which present a strong market opportunity for satellite operators.

Auction vs allocation

It is important to understand the key difference between spectrum for terrestrial networks and satellite communication, and why the distinction between allocation and auctioning arises in the first place.

For terrestrial mobile services, spectrum is exclusive, and is managed only by a single mobile operator in a given geographical area; therefore, this cannot be shared between or amongst operators.

In the case of satellites, the same spectrum is non-exclusive in nature — and can be used by multiple satellite operators to serve the same geographical area.

The general trend, therefore, is to allocate satellite spectrum administratively.

Auction experiment

A few countries such as the United States, Brazil, and Saudi Arabia, have held auctions for frequency spectrum in the past. The US and Brazil conducted an auction of satellite spectrum along with orbital slots. Both countries have since reverted to administrative assignment after finding the auction process infeasible.

The US last conducted an auction for satellite spectrum in 2004 for three domestic orbital slots for broadcasting services. The annual regulatory fee for VSAT and equivalent C-Band antennas operating in the 12 GHz and 14 GHz frequencies is $595 per licence or authorisation.

Brazil amended its regulatory framework in 2020 to replace satellite auctions with administrative licensing. Though satellite landing rights are assigned through bidding in the country, the spectrum to be used for satellite services is not auctioned separately.

Saudi Arabia recently conducted a spectrum auction in the S-band, which ranges from 2 GHz to 4 GHz and is used for mobile satellite services (MSS) as well as weather and air traffic control applications. The technical characteristics of the S-band are such that it is assigned on an exclusive basis for MSS; auction can, therefore, be conducted in a manner similar to the spectrum auction for terrestrial mobile services.