In a significant move to bridge the digital divide, the Indian government is considering a financial incentive for satellite internet providers who extend their services to the country's most remote and challenging terrains. This initiative could see companies like Starlink, OneWeb, and Jio Satellite receive a discount on their annual spectrum usage charges.
Discounts for Difficult Terrain
According to sources familiar with the matter, the Department of Telecommunications (DoT) is planning to offer a 1% discount on the 5% annual spectrum charge it intends to levy on satellite internet service providers. This discount would be applicable if a certain percentage of their user base, potentially around 5%, is located in officially designated hard-to-connect areas.
These regions include border areas, hilly regions, islands, and other zones where traditional mobile networks struggle to provide reliable coverage. The idea is to incentivize the use of Low-Earth Orbit (LEO) and Medium-Earth Orbit (MEO) satellite technology, which holds a distinct advantage over terrestrial methods in such locations.
DoT and TRAI: A Diverging Approach
This proposed model marks a shift from the recommendations put forth by the Telecom Regulatory Authority of India (TRAI). In its May 9 recommendations, TRAI had suggested a 4% charge on Adjusted Gross Revenue (AGR) or ₹3,500 per MHz, whichever is higher. To address concerns that satellite providers would focus only on lucrative urban markets, TRAI also proposed an annual disincentive of ₹500 per user in urban areas.
The DoT's new plan replaces this disincentive model with a positive incentive for serving rural and remote customers. Officials believe an incentive-led approach is more practical and easier to implement than trying to police a disincentive for urban users. The DoT has sent a back reference to TRAI, asking the regulator to re-examine its recommendations on spectrum assignment and charges.
Industry Reactions and Pricing Debate
The pricing of satellite spectrum has been a contentious issue. Traditional telecom operators have argued that TRAI's recommended charges are too low, creating a non-level playing field. They fear that satellite services will directly compete for their high-value urban customers.
On the other side, bodies like the Broadband India Forum (BIF) have lobbied for lower charges. BIF President T.V. Ramachandran highlighted the vast revenue disparity, noting the satellite market generates around ₹540-600 crore compared to the ₹336,000 crore terrestrial market. Starlink has also emphasized that its business model in India relies on connecting rural users, warning that capacity would remain underutilized without them.
Other Regulatory Developments
Beyond spectrum charges, the DoT has suggested several other modifications to TRAI's framework. It has rejected a proposal for a subsidy for rural user terminals via the Digital Bharat Nidhi fund. The department is also seeking to ease rollout obligations, proposing an additional 30-day grace period after the initial 12-month rollout deadline.
Furthermore, for service discontinuation, companies would now need to provide a 60-day notice to the government, up from the 30 days recommended by TRAI. Since satellite spectrum is shared, the government also expects providers to enter into coordination agreements to prevent harmful interference.
With global players like Starlink, Eutelsat OneWeb, Jio Satellite, and Amazon's Kuiper preparing to launch in India, the finalization of these spectrum rules is the last major hurdle before services can begin, potentially revolutionizing connectivity for millions in India's remotest corners.
