Spectrum prices must be nominal: Nelco managing director P J Nath

Joining the chorus of other competitors such as Sunil Mittal’s OneWeb, Tata-controlled satellite communications and VSAT services company, Nelco, wants spectrum to be offered at an administrative price.

If India wants to be a global player in this space, the government must take this option, says P J Nath, Nelco managing director.  

Nelco has tied up with Canadian-based satellite operator Telesat  and will offer broadband services in 2024. It foresees a large B2B market in the country of over Rs 3,000-4,000 crore per annum in five years. This estimate is based on the fact that 30 per cent of the country’s geography does not have reliable and uninterrupted terrestrial broadband alternatives for business-critical applications.

“We believe that for India to be a strong global player, it has to align with the rest of the world and not do something which is completely divergent. Globally, the norm is to give satellite spectrum based on administrative allocation and not auctioned,” said Nath.

Further, he argues that the way the spectrum is used in mobile operations is completely different from the way it is used in satellite communication. While Mittal and the Tatas are ranged on one side, Reliance Jio is pushing for auction of the spectrum, just as it is for mobile players.   

Nath adds that Nelco will concentrate on being a B2B player and has no reason to go for a tie-up with a Medium Earth Orbit (MEO) satellite operator (Reliance is tying up with SES in a joint venture to offer broadband through a MEO satellite) as it finds Low Earth Orbit (LEO) satellites the best for offering such services.  

“We believe that LEO satellites may provide more capacity than MEO satellites and latency will anyway be lower than MEO satellites and will be similar to the latency of fibre. So, we do not see any compelling reason to go for MEO satellites right now. We are already using GEO satellites and will also use LEO satellites (with Telesat) in future,” said Nath.

While its competitors may offer services earlier (some have said the end of 2022), Nelco has taken a call to offer ‘superior’ services.

“For the always-on high availability services to be made available, one needs to have the satellites to be operational in the LEO constellation. Otherwise, one may only get partial service, which is not our intention,” said Nath.   

Currently the price of satellite broadband services is very high and they cannot directly replace terrestrial broadband. For instance, the  price of a transponder on wide beam GEO satellites is around $2000 per MHz per month.

But with LEO this will cha­n­ge, both in terms of the market size as well as new use cases for satellite broadband. For one, as Nath points out, it is possible to build large data centres in remote areas where doing so is difficult due to the lack of effective fibre backhaul.

For another, LEO satellites provide fibre-in-the-sky which is flexible and the links can be shifted from one place to another as per the user requirement; in contrast, fibre is fixed between two areas.

Also, with LEO satellites, one can provide wide-ranging capacities, say, 10 Mbps to 1 Gbps, to users according to their requirement whereas this is challenging for fibre because it may be uneconomical to lay new fibre if the requirement is for low capacity.

Nath added that the company was trying to understand the demand for in-flight broadband connectivity for domestic airlines. 

“India is a price sensitive market. Moreover, a larger number of domestic operators are low cost carriers. There are other factors such as the various domestic routes and the different flying times etc which will also need to be evaluated carefully,” said Nath.