Space communications (Spacecomm) spectrum is used to communicate with satellites. It has a variety of applications, such as satellite imaging, space missions, direct-to-home (DTH) services, satellite phones, satellite broadband services (such as Starlink), etc. The Department of Telecommunications (DoT) has proposed to auction spacecomm spectrum on an exclusive basis. The proposed mechanism is similar to how telecom spectrum is auctioned in India. Industry bodies representing the spacecomm industry, such as Indian Space Association and Spacecomm Industry Association of India, have opposed this proposal. In their view, an auction of spacecomm spectrum will not be in public interest.

There are three key technical reasons why spacecomm spectrum can and should be allocated on a non-exclusive basis:

• Directionality of signal transmission: Satellites use directional signals to communicate with the ground. So long as there is sufficient separation between satellites, interference between signals transmitted on the same frequency will not occur. Because of advanced telemetry, tracking and command systems, the precise position of a satellite in the sky is almost always known with certainty. Ground stations, satellite phones, DTH antennas, etc., are capable of receiving signals only from the direction of the relevant satellite. Moreover, the Radio Regulations of the International Telecommunication Union have established a widely accepted international framework to ensure that sufficient separation is maintained between satellites.

• Impracticality of satellites changing transmission frequencies: If spacecomm spectrum is allocated by auction, it is possible that a satellite operator is unable to win a bid for the frequency band its satellite uses to communicate with ground stations. To be able to communicate with ground stations in India, the satellite will need to use a different frequency over the territory of India compared to other geographies. It is operationally impractical for satellites to vary their transmission frequencies based on the geography of the base station it is communicating with. Satellites are configured to utilise an optimal frequency for transmission, and this cannot be varied without significant quality loss.

• Monopolistic effects of exclusive allocation: Satellite antennas, by design, have a large beam width. They transmit and receive signals to and from a large area of the earth’s surface at the same time (known as ‘footprint’). Depending on the orbit of the satellite, the footprint can extend from a sub-continent to 40-50% of the earth’s surface. Exclusively auctioning a frequency band to a single operator will give them an effective monopoly over a very large geography, by preventing all other operators’ satellites with footprints extending to India from using the same band.

Besides the technicalities, non-exclusive administrative assignment is also the better policy decision. Under the doctrine of public trust followed in India, the State owns all natural resources and holds them in trust for the benefit of the public. In the 2G Spectrum Case, the Supreme Court invalidated the administrative assignment of the 2G spectrum on a first-come-first-served basis. It held that the spectrum should have been auctioned instead as that would have maximised the revenue of the State and would, therefore, have been in public interest. However, later in the Presidential Reference on Natural Resources Allocation, a larger Constitution Bench of the Court clarified that an auction is not necessary for every distribution of natural resources, and that the decision in the 2G Spectrum Case is unique to the peculiar facts of that case. Although auction may be the best method to maximise revenue, it may not always be in the public interest. In such cases, the State may adopt an alternative method that better advances the public interest. Therefore, the Court held that the only requirements are that the procedure adopted must: (i) maximise public interest; and (ii) be just, transparent, reasonable (i.e., non-arbitrary) and non-discriminatory.

An auction, by design, must be exclusive. The highest bidder is paying a market-determined price to 'buy' a spectrum band. This acquisition will be meaningless unless they are granted an exclusive right of use that prohibits others from using the same band without paying a price. An administrative assignment is conceptually different. The State grants a license to any eligible entity upon charging a nominal administrative fee. The fee is usually pegged at a rate sufficient to recoup the actual costs of administering the mechanism. It is not the market price or 'fair value' of the spectrum band. Since the grantee is not 'buying' a band, there is no need to grant exclusivity.

Therefore, an auction risks causing sub-optimal usage of spacecomm spectrum, forcing a business model upon the satellite industry that is incompatible with its fundamentals, and creating a monopolistic market in the spacecomm industry. The alternative, administrative assignment, avoids each of these problems, and is therefore a better policy choice. So long as the process is designed to be fair, administrative assignment can both withstand a constitutional challenge and maximise the benefit to the public.

More in this issue