Administrative Allocation Of Satellite Spectrum Has A Downside For The Govt

Over the last week, India’s stock markets remained volatile. Fast moving consumer goods companies reported poor results, indicating the loss of economic momentum, also implied by a large build-up of automobile inventories. Hyundai Motors India Ltd shares were listed at a discount to the issue price and dropped further, as the overall market sagged. Israel continued to bomb both Gaza and Lebanon, inflicting mass suffering on the civilian population while killing leaders of Hezbollah and likely successors.

Air quality in the nation’s capital dipped, thanks to a weather formation that brings down the movement of air in the region to a standstill as much as to pollution from the vehicles on Delhi roads and the crackers Diwali enthusiasts insist on bursting, despite dire warnings about the risks of pollution from the authorities and environmental agencies. The burning of crop stubble in neighbouring states that adds to the pall of smog over the region is yet to take off on a large scale as yet.

Cyclone Dana hit Odisha and West Bengal, underlining the vulnerability of Indian lives to the vagaries of nature, whose damage potential is increased by climate change. Odisha is relatively well-prepared to manage the impact of cyclones, having learned its lessons the hard way from the super cyclone of 1999.

The listing of Hyundai Motors India Ltd shares saw the price drop 7% from the issue price of Rs 1,960. This has led many to conclude retail investors did well to steer clear of the issue for the most part, and that the issue had been overpriced. This is a one-sided perspective, looking at the share offering only from the perspective of retail investors. Seen from the perspective of the company raising capital, the issue must be considered a success, having been oversubscribed 2.3 times and mobilising some $3 billion for the South Korean parent, which sold some of its stake in the Indian subsidiary. When the demand for shares offered in a public offering far exceeds the supply, it is a sure indication that the issuance is underpriced and that the company is diluting control beyond what is required.

Govt’s Satellite Spectrum Conundrum

A development of note last week has been the government’s decision to assign satellite spectrum on an administrative basis, rather than auctions of the kind used to allocate spectrum for mobile communications. Domestic players Jio and Bharti favour auctions for allocating satellite spectrum as well, even as Elon Musk’s Starlink communication system, based on a few thousand satellites orbiting some 300 km above sea level, in what are called low earth orbits, strongly argues for administrative allocation of satellite spectrum.

Why do we need satellite broadband, when large investments have been made in laying optical fibre across the land, erecting telecom towers even in rural backwaters, and the government has a project, Bharat Net, to connect 250,000 panchayats? Bharat Net was started by the UPA government, when the Cabinet approved, in November 2011, the scheme, calling it, with that regime’s characteristic regard for the scheme’s ability to register in the popular imagination, NOFN, or National Optical Fibre Network. When the current government took over, it derided the predecessor’s supposed inability to get anything done, rebranded the scheme Bharat Net, and declared that the project would be completed in 2016. That deadline was missed. Other deadlines were set and missed. In India’s varied and complex geography, it is very difficult to lay cable in some regions: mountains, jungles, jungle denizens such as predatory animals being crowded out by human encroachment and armed rebels against state injustice, rivers, floods and intra-government feuds over who has the authority to grant right of way come in the way. The sensible solution is not to declare the project complete, even if only a quarter of the target number of panchayats have broadband routers that are ‘lit’, but to rise above the problem — all the way into outer space. Use satellite broadband.

All satellite broadband is not the same. The simplest method is to bounce the signals from the earth off a satellite that seems to be at the same place above the earth, geostationary satellites. Satellites do not stand still, of course. To become geostationary, a satellite must have the angular velocity of the earth’s rotation, that is, orbit around the earth once in 24 hours, travel in the same direction as the earth’s rotation, and not be dragged down to the ground. Such satellites have to be almost 36,000 km above the earth. That means a signal sent to the satellite and sent back to the ground by the satellite’s transponder must travel 72,000 km.

Electromagnetic waves travel at a speed of 300,000 km per second. That is fast, of course. But it would still take nearly a quarter of a second, 0.24 second to be precise. This is fine, for television broadcast, connectivity between an ATM and the bank’s routers, and other such purposes, for which the delay between sending a signal and achieving the expected outcome, called latency in the jargon, matters little. If you have watched cricket on your phone while the same game plays out on a TV in the background, you would have noticed that the TV commentary lags the action you see. The terrestrial network on which the phone receives its signals is much smaller and faster. Here the latency of satellite connectivity is only a source of irritation. But if you are carrying out remote surgery, playing a shooter game or actually trying to shoot at a moving enemy located by satellite positioning, latency is not acceptable.

Enter low-latency satellite broadband. This is achieved by placing the satellite close to the earth, in near-earth or low-earth orbits. These cannot be geostationary: they have to whiz around to escape the earth’s gravitational pull. The closer a satellite is to the ground, the smaller its footprint. So you need multiple satellites. Instead of the satellite that receives the signal from the ground bouncing it directly back to the earth, it would bounce it another satellite, and that, in turn, to yet another one further along its orbit, and so on, till it finds a satellite that has the intended earth receiving station in its footprint. Musk’s Starlink deploys thousands of satellites. These would achieve decent speeds and low latency. Low earth satellites eventually get dragged into the earth’s atmosphere and burn out. They need to be replaced. In SpaceX, Musk has the capacity as well, to launch thousands of replacement satellites.

The Downside For The Govt

To reduce the number of satellites, and reduce the number of launches and shrink operational costs, an alternative is to have satellites in the Middle Earth Orbit, above an altitude of 2000 km. Bharti’s One Web uses Middle Earth Orbit satellites. Whatever the type of satellite used, all of them need a spectrum to communicate. What is the sensible way to allocate satellite spectrum?

Whatever method lowers the cost of providing service based on the spectrum in question is the right method. The strongest argument in favour of auctions for allocating a scarce resource like spectrum is that it eliminates discretion and arbitrariness in the process. Auctions are fair to service providers. But this could end up in the same category as operations that are successful but kill the patient. If auctions push up the cost of spectrum, which must be reflected in the price of the spectrum-based service, it would be bad for consumers. The higher the cost of being fair to service providers, the higher the disservice to consumers.

If the price to be paid for keeping the cost of satellite broadband low is to leave some billionaire or the other feeling discriminated against, we can live with it. Perhaps, the government should throw in a strip of Pantocid for those on which its allocation decision inflicts dyspepsia.

The only downside, from the government’s point of view to administrative allocation of satellite spectrum, is that it would cut the legs out from under the so-called Devas scam. Devas was a project to provide satellite broadband service, conceptualised in 2003 and concretised during the time of the government led by Dr Manmohan Singh. It had envisaged administrative assignment and pricing of spectrum, just as in the case of all spectrum used for satellite broadcast. But this had been dubbed a scam, and the UPA government itself scrapped the project. Now that administrative assignment of satellite spectrum is deemed the norm, Devas looks like a project ahead of its time, rather than a scam.

Policy should look to the future, rather than turn the gaze at the lint in the government’s own navel.