India’s present regulatory environment essentially requires providers of Indian domestic services (i.e., up linked from India, with intended coverage of India) such as Direct to Home (“DTH”) and VSAT services to use Indian National Satellite System (“INSAT”) satellites. India is a relatively mature satellite market, with its own domestic satellite operator, Indian Space Research Organization (“ISRO”), providing geostationary satellite services since 1982. ISRO established in 1969 manufactures and successfully launches satellites, as INSAT. Till the early 1990s, the Indian satellite market was dominated by INSAT and by Intelsat, which was then an international treaty organization, one of whose signatory was the then Government of India (“GoI”) owned telephony carrier, Videsh Sanchar Nigam Limited.
The key component of DTH and VSAT services is satellite capacity and Ku-band is the frequency of choice for all DTH and VSAT operators. Under India’s present regulatory regime, any company wishing to provide subscription based television services to customers in India must uplink from Indian territory, and further must use either an Indian satellite, or a satellite system approved by the Indian Department of Space (“DoS”). Several VSAT operators are also very keen to start using Ku-band to lower equipment costs through the use of smaller dishes. Some independent industry analysts forecast that the demand from these two market segments for Ku-band will outstrip the demand for C-band within the next 2 – 3 years. VSAT operators are also required to use INSAT satellite for national connectivity or a satellite system approved by DoS, though the preference is always given to INSAT satellites. Internet Service Providers are however authorized to set up international gateways directly using C and Ku-band (and variant thereof) transponders in foreign satellites for global connectivity, i.e., without any intervention by ISRO. Similarly, an International Long Distance service provider is permitted to offer all types of bearer services from an integrated platform using foreign satellites for provision of international voice, data, fax, video and multi-media tele-services.
The approval process for using a non Indian satellite or a foreign satellite by a DTH service provider involves DoS, the Wireless Planning & Coordination Wing of the Department of Telecommunications and the Ministry of Information & Broadcasting. Preference is always given to INSAT satellites, operated by ISRO. In instances where INSAT does not have sufficient in-orbit capacity available for any particular service, the lease of foreign satellite capacity is canalized through ISRO. Approval when granted is usually on a short term basis until INSAT is able to launch future additional capacity. Presently, several leases have been signed with foreign satellite operators by ISRO to cover shortfalls in transponder capacity including leases with Thailand’s Thaicom for C-band capacity and with New Skies and SES Americom for Ku-band capacity. The Telecom Regulatory Authority of India has been consistently recommending for an ‘Open Sky’ policy for all satellite users. However, this recommendation has so far not been accepted by GoI and it is unlikely that the same would be considered by GoI in the near future. However, this closed regulatory regime severely limits the ability of foreign satellite operators to offer Ku-band services to customers up linking from within India.
In view of the foregoing and from a regulatory viewpoint, presently the only operator capable of supplying Ku-band capacity in India for DTH or VSAT use is ISRO/INSAT. Clearly, INSAT does not have sufficient capacity to satisfy the current and future demand of the Indian market. Though, ISRO has received approval to begin building additional satellites to provide expansion capacity, but these will not be available for another 2-3 years. According to a Report prepared by Loft Communications for GVF and CASBAA, INSAT C-band capacity is virtually fully leased, with foreign operators providing necessary additional bandwidth. The Report states that the total supply of Ku-band capacity is limited to 36 transponders, assuming successful launch of proposed INSAT series satellites and its Ku-band offering is fully committed on launch with no additional growth opportunity for customers and no significant capacity available for VSAT customers. With several DTH players in the Indian market including the state broadcaster Doordarshan, Space TV (Tata Sky), Sun TV, Reliance, Bharti, Essar, Videocon; increased VSAT traffic; increased channels offerings by existing DTH operators, the gap between the available bandwidth capacity and required capacity is increasing rapidly. Consequently, unless additional Indian satellite systems are established in India or an Open Sky policy is introduced in India, potential DTH companies will have no choice but to either curtail their operations or postpone them until such time as sufficient capacity is available.
This article is introductory to the series of articles on provision of foreign satellite services in India. My next article on the subject will discuss possible entry strategies for foreign companies and satellite operators in India.
Areas of Practice:
Infrastructure, Telecommunications, Power, Mergers/Acquisition, Software/Information Technology, Business Process Outsourcing, Media & Entertainment, Private Equity and Venture Capital, General Corporate and Commercial, International Arbitration.
Seema Jhingan’s practice spans over fourteen years during which she has acquired substantial expertise in representing developers, sponsors/lenders, venture capital investors, international corporations, financial institutions, and other strategic investors involved in the establishment, development and financing of major infrastructure and IT projects in India.