India plays a leading role within the South Asian satellite communications sector. Other international satellite operators, such as SES, Measat, and Intelsat, also have significant market shares, though their capacity is leased through ISRO/Antrix. The composition of market shares for the latest generation of satellites, high-throughput satellites (HTS), is however different. ISRO has already launched its own satellites with significant HTS capacity, which is likely to expand in the future. Some international service providers are already providing HTS capacity in India. The price for satellite bandwidth across all bands (C, Ku, and Ka) has been progressively decreasing, and is likely to decline further with the introduction of new technologies, viz., Ka band and HTS technologies. The growing supply of HTS capacity (both from ISRO and foreign operators) is likely to lower these prices further.
Direct to home (DTH) broadcasting. DTH broadcasting is one of the primary applications of satcom in India. India is the largest market of DTH subscribers in the world. DTH operators are permitted to lease foreign capacity only if it is not available on an ISRO satellite. They are currently using satellites launched by ISRO as well as Asiasat, Asia Broadcast Satellite, Eutelsat, Intelsat, and other foreign satellite service providers. While coverage is not a problem for most Indian DTH operators, capacity is. The capacity of a satellite depends on the number of transponders on it. However, hiring transponders can significantly increase costs for DTH operators, who are already beginning to face stiff competition from IPTV and over-the-top (OTT) services.
Distribution of cinema. For over a decade now, distribution networks in Indian cinema have adopted satellite-delivery formats, which address problems associated with film distribution, and ensure that even the remotest part of the country can view all films. This format is similar to video-on-demand (VoD) as it builds in a lot of flexibility with programming. Satellite film-distribution models also help combat piracy as prints of the film are no longer required to be physically delivered. The use of satellite networks to distribute digital cinema is now a popular trend in the Indian film industry.
Potential for satellite broadband in India
Demand for satellite communications in India will undoubtedly increase in the future. While fixed satellite service (FSS) is likely to grow in the short and medium term, long-term prospects point toward an unprecedented rise in HTS.
While the global satellite industry is in the midst of a significant transformation, India is struggling to keep pace. India launched its first HTS only in 2017, when the global industry had already evolved into innovative applications of HTS. Given the global innovations in satellite communication and ISRO finally venturing into the domain of HTS, there will also be a widening of satcom applications in India. The projected demand for satcom technologies in South Asia shows withering of FSS and a sharp rise in the HTS category. The slowdown in distribution and DTH services in India is much more measured than in the rest of the world.
DTH broadcasting. The DTH ROIS and multicasting approach enables interesting new business models, where DTH operators that have substantial fallow capacity in the off-peak hours of the day can easily add a multicast extension service themselves, or sublease the required capacity during late-night and early morning hours to companies that will be able to take advantage of these existing satellite networks for new multicast internet services. However, DTH operators have not been able to achieve the potential of this technology. Moreover, DTH operators in India largely operate on the Ku-band. With an increasing number of TV channels in India, requirement for additional Ku-band transponders is escalating. According to a report by Comptroller and Auditor General (CAG) of India, ISRO cannot meet the current backlog of demand either with its existing constellation of satellites or with its currently planned future programs. ISRO and Antrix have periodically, albeit informally, floated RFPs to lease capacity from foreign satellite system operators. More recently, however, DoS has requested the ministry of information and broadcasting (I&B) to ask broadcasters to migrate from foreign satellites, without providing due consideration to the total bandwidth available of Indian satellites. Such a move, if mandated, could seriously hurt the potential of broadcasting sector.
A global comparison of policy frameworks on satellite communication
One of the fundamental regulatory principles for satellite operators around the world is the Open Skies policy. It allows licensed service providers to choose any satellite operator or satellite services required for their end-users. National regulators do not impose any additional requirements or restrictions on foreign satellite operators vis-a-vis domestic/national operators.
Open Skies is adopted by several countries around the world. Among Asian countries, Australia, Hong Kong, Indonesia, Japan, Malaysia, Philippines, Taiwan, have all adopted the Open Skies policy, outnumbering others with relatively restrictive environments such as China, India, Korea, and Thailand. India’s ecosystem is perhaps the most restrictive. Regional satellite operators often experience short-term setbacks. It limits their ability to position products and services. Mitigation of these inconsistencies requires cooperation among countries. Moreover, countries may diverge in their de jure (by law) versus de facto (in implementation) status of Open Skies. Countries may not always implement the entire suite of agreed upon prerequisites of the Open Skies approach.
While India has had a satcom policy since 1997, which contains provisions for private satellites, in spirit the policy has not been able to create a competitive ecosystem for the growth of private operators. Despite ISRO’s efforts to enlarge its fleet of available satellites with the launch of new HTS, a bulk of the demand is still met by hiring/leasing capacity on foreign satellites. India relies on foreign private satellite providers for more than 50 percent of its capacity. ISRO has, however, indicated a plan to migrate users from foreign satellites to domestic ones in the next couple of years. A comparison of India with global averages for price and capacity finds that not only is the available capacity in India significantly lower than in most other countries, the cost of bandwidth capacity in India is significantly higher than the global average.
Policy and regulatory framework for satellite communication in India
The Indian Telegraph Act, 1885, along with the Indian Wireless Telegraphy Act are the principal statutes that continue to regulate both terrestrial and satellite telecommunications in India. The inception of Antrix, ISRO’s first commercial arm for space-related activities, coincided with the entry of private sector operators in telecommunication services and broadcasting. In June 1997, the Union Cabinet approved the framework for a satellite communications policy. This policy, notified as India’s Satcom Policy, is the only dedicated policy on space activities till date. The fundamental aim of India’s Satcom Policy was to develop a healthy and thriving ground equipment as well as satellite communications services industries in India. In 2000, the government framed norms and procedures for implementation of this policy, emphasizing on the preferred use of the INSAT network. As per the norms, only Indian registered companies are allowed to establish and operate an Indian satellite system. FDI rules restrict foreign investments in such a company up to 74 percent.
Institutional framework governing India’s Satcom sector
The current institutional framework governing satellite communication is spearheaded by DoS, along with DoT and I&B ministry. DoS’s operating arms ISRO and Antrix are tasked with managing satellite launches and transponder capacities and governing contractual arrangements for both domestic and international satellite capacity utilization. Its new unit NewSpace India Limited (NSIL) was established to commercially exploit R&D work of ISRO centers and constituent units of DoS.
The complex web of administrative requirements and the occasional unpredictability in policy making by DoS can often deter private sector operators from entering this market, despite its potential. The bureaucratic process requires approaching multiple administrative departments in order to secure frequency allocations and orbital slots in addition to other regulatory hurdles. The norms severely limit the use of foreign satellites for domestic communication, and lack clarity on the use of foreign satellites for international communication. The capacity available on Indian satellites is still significantly lower and not adequate to meet domestic communication and broadcasting demand. The pricing of commercial satellite bandwidth is completely controlled by ISRO/Antrix unlike the market-led price mechanism in most other countries.
The symptoms of regulatory failure are also noticeable in the rapid decline of India’s traditional satcom industry, with private sector operators losing interest in an environment of uncertain and unpredictable government policy. Almost all SSOs, VSAT service providers, and equipment vendors are operating at a low-level equilibrium, focusing on low-bandwidth satellite applications. A large part of the problem is the institutional design governing India’s satcom sector that leads to conflict of interest within the government. The DoS along with ISRO currently engages in policymaking, licensing, operations, and research. The policy structure is often defended as crucial to national security. The government, being the sole provider of space capacity for satellite communication, monopolizes the supply of satellite bandwidth in India. Every time DoS or Antrix contract capacity, the opportunity to negotiate in a typical buyer-seller setting is completely lost. Being government entities, neither ISRO nor Antrix are subject to scrutiny by competition authorities for misconduct or abuse of market power. Often the contracts offered by Antrix are not commercially viable and operators are left with no choice but to accept them.
Until a few years ago, Antrix allowed industry operators to buy available foreign capacity, now all purchases have to be routed through Antrix. It is reported that operators are coerced into buying Indian capacity, which may not be always the most suitable or competitively priced. Operators looking to scale satellite capacity on foreign satellites, are also forced to buy domestic capacity. This increases their costs as ground equipment needs to be realigned and reoriented.
The institutional system governing any regulated sector should comprise the political, administrative, and market processes that describe the logic for investments, the implementation of the plans through law and subordinate legislation, and through industry bodies, and consumer groups and other means. DoS, ISRO, and the Space Commission, constituting a largely indistinguishable unit that functions as a policymaking, regulating, and commercial activity-overseeing supremo, are headed ex-officio by the same individual (Secretary, DoS; Chairman, ISRO; and Chairman, Space Commission), creating serious conflicts of interest, and puncturing important firewalls that ought to be built into the institutional design.
The spectacular rise of the telecom market in India embodies the success of an enabling-policy environment. If the satcom sector is to make comparable advances, then ISRO must be shorn off its policy and regulatory powers and be restricted to its original mandate of R&D, as well as launching satellites, in order to achieve clear distinction of powers and functions. Concomitantly, policy and regulation of all commercial telecommunications services via satellite, need to be brought under exclusive purview of DoT and TRAI, respectively, on the lines of terrestrial services. In such a scenario, DoS and ISRO could play a consultative role with a view to identifying coordinated satellites and frequencies, in line with ITU procedures, to be used for telecom networks. This will go a long way in reducing the distortionary monopoly power of a single government entity in a critical sector such as satcom and serve the need to reduce the multiple administrative departments that need to be approached in order for a private firm to secure frequency allocations and orbital slots.
There is potential for satcom applications in India’s digital future. The government has also acknowledged the role of satcom to meet the demands of the emerging era of hyper communication and data utilization. DoT recognizes that meeting ambitious targets laid down in the National Digital Communications Policy (NDCP 2018) will require a mix of technologies. Reference Interconnect Offers of DTH operators and multicasting with content caching, flight and maritime connectivity, consumer broadband, and satellite backhaul are among the key applications for satcom in the future. For this growth to be unleashed, some policy recommendations are listed.
Moving toward market-led mechanisms for provision of satellite bandwidth. The comparison of policy architectures and regulatory interventions that govern satcom in India vis-à-vis other countries presents a case for moving toward a market-driven regime for satellite services in India. Opening the supply of satellite capacity to private players will improve access to latest and innovative technologies at an affordable cost. Selective deregulation may not necessarily come at the cost of national security concerns; where possible, the government must consider opening up satellite services for private participation that lowers cost of bandwidth and encourages its adoption across potential applications. In order to address concerns related to security and loss of oversight on content transmitted over foreign satellites, the government can adopt alternate principles proposed by the EMEA Satellite Operators Association (ESOA) instead of imposing additional regulatory burdens such as the installation of costly local technical facilities.
Separation of regulatory powers and functions. Liberalization of satellite communication must be encouraged. ISRO’s focus could be realigned to its original mandate of R&D, as well as launching satellites, in order to achieve a clear distinction of powers and functions. The commercial arms Antrix and NSIL, if corporatized and spun off as separate public sector entities, can compete alongside other private sector operators. A clear delineation of functions is necessary for the commercial units. Policy and regulation for all commercial telecoms via satellite could be brought under the purview of DoT and TRAI in consultation with DoS and ISRO to ensure coordinated satellites and frequencies.
Capacity augmentation through indigenous private satellite service providers. India’s satcom capacity is much lower than desirable for achieving the objectives of Digital India. While DoS has previously claimed that India has less than 50 percent of the satellite capacity it needs, the actual figures might in fact be much lower. Private players must be allowed to set up India-centric commercial broadband satellite systems to bridge the capacity gap. The government must encourage domestic companies to provide commercial broadband using emerging HTS technologies. Based on Liberalizing Satellite Communications in India: Opportunities for Enhanced Economic Growth – An ICRIER-BIF report.