Satellite Spectrum — Auction vs Administrative Assignment (Pros & Cons)
On 24th Sept 2022, ET published a story quoting the Telecom Minister stating that the DoT has sent a reference to the Telecom Regulatory Authority of India (Trai) to give recommendations on the rules for assigning satellite spectrum through auction. The purpose of this note is to analyze whether auctioning airwaves for providing satellite services is feasible in all situations, if not, then what alternate assignment strategy is available before the DoT, and how such a strategy will significantly increase the workload of the DOT for managing the satellite spectrum.
The note also analyses if the DoT chooses to auction the airwaves for providing satellite services then how the auction rules need to be tweaked, and what additional flexibilities it will have to empower the satellite operators with in order to ensure that the airwaves are efficiently used and the data speeds (throughput) do not get compromised.
The Basic Principles
Typically a regulator’s spectrum assignment strategy is driven by some basic principles — a) airwaves are efficiently used; b) the market stays competitive; c) the assignment process is transparent and fair; d) the quality of service (speeds, spread & choice) is not compromised; e) the need to protect and preserve existing services using the airwaves targeted for assignment.
Now let's analyze the various assignment strategies mapped to these principles to evaluate how they perform.
Auction
It goes without saying that the auction is the most transparent way of assigning spectrum. India has been using this strategy of assigning spectrum for terrestrial services since 2010 with tremendous success. Now the question is can the same means be adopted for assigning spectrum for providing satellite services? If not why? And if yes, what additional steps the regulator needs to take to in order to make the “auction” a success, and without compromising the basic principles? In order to answer these questions, we need to first understand how a satellite service works and how it is different from a conventional terrestrial service.
Terrestrial vs Satellite
The terrestrial and satellite networks have different capabilities when it comes to harnessing the full capacity of the assigned spectrum. Terrestrial networks have a higher capability (exponentially more) compared to their satellite counterparts. Why? This is due to higher frequency reuse capability driven by a smaller cell radius, made possible by the RF signal’s ability to attenuate much faster on the ground than in free space. However, the satellite networks have limited spectrum reuse capabilities, due to the satellite numbers being significantly less compared to the BTS numbers of the terrestrial networks, and their (satellite’s) RF beams on the ground have a very large footprint compared to that of a terrestrial BTS’s coverage.
Hence, the assignment of airwaves for satellite services through the process of auctions will result in the fragmentation of their spectrum which in turn will decrease throughput and data speeds in proportion to the fragmentation.
Mitigating Fragmentation
Now going on the path of auctions, the only way to prevent fragmentation is to allow the winners of the auction to share/lease airwaves with each other freely. This will enable the operators to prevent fragmentations by allowing each of them to use the full bandwidth thereby preventing loss of data speeds. Leasing has another advantage, it will empower other operators to enter the space as well who did not participate or win in the auctions.
Auction Pros
Apart from ensuring transparency, the main advantage of auctions is that the DoT/WPC will have no role to play in deciding the rules of coordination (interference management) between satellite operators, as the same will be driven by the players themselves purely driven by commercial considerations — a typical responsibility that DoT has to undertake when the spectrum is assigned administratively, and this process is quite complex (technically) and onerous. [Read the section in my earlier note — How satellite networks coordinate?]
Auction Cons
The biggest disadvantage of auctioning airwaves for providing satellite services is the creation of gatekeepers who will decide the fate of other players’ attempts to enter the market at different points in time in the future. As stated above, no single satellite provider will be able to use the assigned spectrum efficiently — resulting in a large proportion of capacity lying fallow and unused —especially true in case the winners of the auction decide to block the entry of other players into the market. And this will be against the basic regulatory tenets of managing natural scarce resources whose purpose is to enable their optimal usage in the larger public interest and prevent monopolies.
Auction Feasibility
There is one more dimension left to evaluate, i.e whether the auction is feasible for all satellite spectrum or not — given the fact that most of them (targetted for satellite services) are not laying fallow, and are currently being used for providing other services.
The figure above lists all the satellite bands and maps them to existing usages. Note that only the blocks which are marked green are free from encumbrances and therefore can be auctioned without any issues. However, those marked amber have both terrestrial and GSO usages and auctioning these bands needs to take these occupancies into account. In other words, DoT cannot ensure exclusive usage (interference-free usage) of these blocks without defining the rules of coordination — and such rules can be quite complex and might have to be tweaked later, thereby violating the terms of the NIA already defined.
Hence, even following the process of auctions cannot fully prevent the DoT’s role of defining rules in managing coordination between satellite and existing services. On the contrary, it will significantly reduce DoT’s capabilities to tweak these rules at a later date if needed given the commercial ownership of airwaves has already been established as a result of the auctions.
Administrative
This norm is being followed internationally. The reasons are simple — Flexibility to allow entry of additional players in the market at different points of time in the same block of airwaves without causing any significant impact on the existing services (as explained earlier, a single satellite player is only capable of using a fraction of the total spectrum capacity).
Administrative Pros
There are many advantages of assigning spectrum for satellite services using the administrative process — a) No operator can act as a gatekeeper; b) the market can stay competitive; c) the airwaves usage efficiency can be increased by enabling new players and new services in the left out capacity; d) the DoT will have the full flexibility to make and alter rules of coordination based on technology evolution and market needs; d) the consumers will have more choices of services at optimal speeds and throughput.
Administrative Cons
The biggest disadvantage of administrative assignment of satellite spectrum will be the need for DoT to define coordination rules between satellite operators sharing the same block of spectrum for offering services. These rules will need to be continuously updated based on the ground experience and technological advancements. Unfortunately, the past experience in DoT in defining rules for enabling services hasn’t been that good. Take the example of “subscriber-based criteria”, used for assigning spectrum for GSM and CDMA services. Unfortunately, these rules were responsible for the poor take-off of mobile services in the rural areas as the operators didn’t find enough subscribers there for them to be eligible for additional spectrum.
International Rule-Making Experience
The first set of rules for enabling coordination between NGSO satellite services operating in the same block of airwaves was defined by FCC on 27th Sept 2017. However, on 15th Dec 2021, FCC released a proposal with the purpose of refining the earlier rules for coordinating and sharing spectrum between NGSO FSS systems. The purpose is to facilitate satellite broadband competition. FCC’s existing default spectrum sharing rule (being refined) mandates band splitting to deal with inline interference between the satellite system by measuring the noise temperature infused by the interfering system. As soon as this metric goes beyond a threshold value (6%), the band splitting between system get triggered, otherwise, the individual satellite systems have access to the full spectrum. The need for such refinement was felt to mitigate the uncertainty being faced by the existing satellite operators in face of the new entrants. The existing operators have made huge investments, and they need some certainty in the environment in which they function. This is mandatory to keep the sector healthy and the interests of the investors stay alive.
Similar attempts are in place by other regulators over the world, and therefore, it emphasises on the point that the regulators all over the world have choosen the path of assigning airwaves for satellite spectrum administratively due to the key reason that lot of capacity is left unused which can be harnessed at a later point of time by introducing new players and services in the same block of spectrum currently used for providing satellite services.
Sharing Spectrum with IMT
Staying on the path of auctions one more strategy can be adopted especially for spectrum with heavy IMT usage, for example, the 28 GHz band (27.5 GHz to 28.5 GHz). This block of airwaves (1 GHz) has no existing usage and can therefore be auctioned without any problem. But in order to ensure airwaves get efficiently used both services (IMT and Satellite) should be permitted to play in this band simultaneously. Now we know that IMT and satellite services can’t coexist with each other in case the services are to be managed by two different operators who need full flexibility in the deployment of ground terminals. But the problem vanishes if both services (satellite and IMT) in this block of airwaves are managed by the same operator — this is a likely practical possibility. 80% of this block of the spectrum has O3B and Telesat deployments (uplink for user terminals). Assume that the winner of this spectrum block has IMT interest as well. Then the operator can easily coordinate both services between himself by placing these services apart from each other (IMT in urban areas, and Satellite in rural areas) — enabling the DoT to realize the full value of this spectrum, and consumers also get the benefit due to the possibility of additional service (5G) in the same block of spectrum.
Conclusion
Hence it is clear from the above discussion that both options — Auctions and Administrative have their own advantages and disadvantages. Auction ensures transparency and relieves the DoT from the ownership of defining complex rules of coordination. Auctions also can enable both IMT (5G) and Satellite services to coexist in the same block of spectrum managed by the same operators. However, the auction also creates the risk of the winner acting as a gatekeeper — preventing the entry of other players in the market even at the cost of keeping huge capacities fallow and unused. On the other hand, administrative assignment mitigates this problem, but it will need the DoT to define coordination rules and keep updating them based on the ground experience and the evolution of technology. In the past, our experience of assigning spectrum on basis of technical rules hasn't been that great. It is prone to arbitrage, and arbitrary tweaks by DoT in favor of entities with regulatory clouts (in the past GSM being an inefficient technology was given twice the spectrum compared to CDMA — today it sounds bizarre!). Also, staying in the auction route will require DoT to manage existing services already running in some targeted spectrum for satellite services. This will be very difficult if not impossible for DoT to achieve. Therefore, whatever strategy the DoT decides to adopt can’t be uniformly applied to all blocks of airwaves targeted for satellite services. It has to be decided on a case-by-case basis depending on the ground situation in alignment with the basic tenets of managing natural resources optimally and effciently.
(Views expressed are my own and do not reflect that of my employer)
PS: Find the list of other relevant articles in the embedded link.
