New Delhi, May 9 (PTI) Telecom regulator Trai on Friday recommended that satellite communication companies like Starlink should pay 4 per cent of their adjusted gross revenue (AGR) as spectrum charges to the government -- a rate steeper than what these firms had been lobbying for.

Operators offering satellite-based broadband internet services in urban areas would have to shell out an additional Rs 500 per subscriber annually, Trai said in its recommendations to the Department of Telecommunications (DoT). No additional levy would be applicable for services in rural areas.

Besides the spectrum pricing, an 8 per cent licence fee would also be applicable for satcom players.

The regulator has also favoured a subsidy for satcom user terminals in unserved/ underserved regions of rural and remote areas (typically one-time hardware cost ranges between Rs 20,000-50,000). It said high cost could be a barrier to adoption, potentially impeding the adoption of such services in difficult-to-reach areas.

Trai Chairman Anil Kumar Lahoti countered arguments that the regulator's suggestions of fixing the spectrum levy at four per cent of revenue for satcom companies like Starlink would distort the market or deal a blow to terrestrial players, such as Reliance Jio and Bharti Airtel.

Lahoti asserted the perception that satellite services have started competing with terrestrial services in other markets is "not a factually correct statement". Incidentally, these satcom terminals will be 'geofenced', meaning that the users will not be able to take them around, and roaming will not be allowed.

Citing a case, the Trai Chief said that in Delhi, against a requirement of 50 lakh broadband connections, a single satellite constellation can offer just 10,000-20,000 connections.

"After detailed examination, we have found that the satellite services will be complementary and not compete with the terrestrial services," he said.

While the spectrum is assigned exclusively in the case of terrestrial broadband services, for satcom services, it is a pooled resource, and hence "the two cannot be priced at par".

In the global context, also, the pricing of spectrum for satellite services in other markets is very low, the Trai chief said.

The levy recommended by Trai is steeper than what satcom companies have been lobbying for. Elon Musk's Starlink and Amazon Inc's subsidiary Kuiper Systems had, during consultations with the regulator, urged it to keep the spectrum charge below 1 per cent of AGR with no other charge.

The Telecom Regulatory Authority of India (Trai) recommended that satellite broadband spectrum be allotted for five years, which can be extended by another two years.

The satellite spectrum pricing as a percentage of AGR is for both non-geostationary satellite orbit (NGSO) and Geostationary satellite orbit (GSO) based fixed-satellite service (FSS) and mobile satellite service (MSS).

NGSO refers to satellites occupying either a low-earth orbit (LEO) or medium-earth orbit (MEO). Unlike geostationary GSO satellites, LEO and MEO satellites do not occupy a stationary position but move in relation to the Earth.

Trai said the 4 per cent of AGR spectrum charge would be subject to a minimum annual spectrum charge of Rs 3,500 per MHz.

AGR is used to calculate the revenue that telecom companies share with the government in the form of spectrum usage charges and license fees. AGR-based spectrum charge is the existing practice for commercial VSAT service providers and BSNL.

Releasing the recommendations, Lahoti said satcom services, once available, can play a vital role in taking connectivity to underserved areas, where telecom networks are not available. They also play a critical role in disasters, rescue and relief operations.

Trai said, "Overall spectrum charges do not need to be any higher than the administrative costs required to cover the allocation of spectrum. It will also facilitate investment and innovation".

The DoT will review the recommendations. It can refer it back to Trai for tweaks or accept it in totality and send it to the Cabinet for approval. Once approved, satellite companies can apply for licenses.

Starlink, earlier this week, got a Letter of Intent (LoI) for the start of its services. It now has to procure a license before starting services in India.

SpaceX, an aerospace company led by Elon Musk, has already tied up with rivals Reliance Jio and Bharti Airtel to bring Starlink's broadband internet services to India. Both Indian firms will offer Starlink equipment through their network and also support customer installation and activation on devices.

Airtel-backed Eutelsat Oneweb and Jio Satellite Communication have already gotten the global mobile personal communication by satellite (GMPCS) services license needed to provide satcom services in India, while Starlink is on the path to getting the license.

Over the past few months, Jio and Airtel have come together to demand an auction for awarding spectrum for satellite services in India. Musk, on the other hand, lobbied for administrative allocation as per the international norm.

In October last year, the government sided with Musk on the issue of allocating airwaves to be used for offering low-latency internet services using satellite at a pre-decided price through an administrative route.

Both Jio, India's largest wireless carrier, and Airtel, the No. 2 player in the world's most populous nation, where data usage is rapidly rising, feared that lower entry costs would chip away some of their subscriber base.

Based on the recommendations of Trai, the DoT would now go to the Cabinet for pricing of satellite spectrum, once approved, any satcom wanting to offer services in India can apply.

Starlink is the world's largest Low-Earth-Orbit (LEO) constellation operated by SpaceX. PTI MBI ANZ MBI BAL BAL