India May Impose Spectrum Tax on Starlink and Other Satellite Operators

Starlink may be required to pay a spectrum tax in India, which was previously removed for regular telecom providers like Jio, Airtel, and Vodafone Idea. This tax could increase the cost of its services in the country. Since satellite spectrum will be allocated administratively rather than through auctions, the government plans to impose a spectrum usage charge (SUC), expected to be around 3% of adjusted gross revenue (AGR), though the final rate is still under discussion.

In addition to this, satellite operators will also have to pay the existing 8% license fee, similar to other telecom providers. The Telecom Regulatory Authority of India (Trai) is currently working on finalizing rules related to satellite spectrum pricing and taxation. Once Trai submits its recommendations, the Department of Telecommunications (DoT) will review them and seek approvals before the Digital Communications Commission (DCC) evaluates the proposal. After this, the policy will be forwarded to the Union Cabinet for final clearance. The new tax will impact not only Starlink but also other satellite operators like Eutelsat OneWeb and Reliance Jio-SES.

While the government had removed SUC for auctioned spectrum after September 15, 2021, this exemption does not apply to satellite operators receiving spectrum through administrative allocation. The final decision on SUC rates and related policies is still under discussion.

India May Impose Spectrum Tax on Starlink and Other Satellite Operators

Starlink, the satellite internet service by SpaceX, may face a new challenge in India: a spectrum tax. This tax, known as the spectrum usage charge (SUC), could increase the cost of Starlink’s services for Indian customers. Interestingly, this tax was removed a few years ago for regular telecom companies like Reliance Jio, Airtel, and Vodafone Idea. However, satellite operators like Starlink may still be required to pay it.

The reason for this distinction lies in how satellite companies acquire spectrum. Unlike traditional telecom providers, which obtain spectrum through auctions, satellite operators receive it through administrative allocation. This means the government assigns the spectrum directly at a fixed price rather than through a competitive bidding process. As a result, satellite companies like Starlink will likely have to pay an SUC, which could be around 3% of their adjusted gross revenue (AGR) in India. However, the exact percentage is still under discussion and may be higher.

In addition to the SUC, Starlink and other satellite providers must also pay an 8% license fee, which is a standard charge for all telecom companies in India. These fees could increase the overall cost of providing satellite internet services, potentially making them more expensive for users.

The Telecom Regulatory Authority of India (Trai) is currently finalizing the rules for satellite spectrum pricing, validity periods, and taxation. Trai is expected to recommend applying the SUC to satellite operators since they receive spectrum through administrative allocation rather than auctions. Once Trai submits its recommendations, the Department of Telecommunications (DoT) will review them and may seek further clarifications. The proposal will then go to the Digital Communications Commission (DCC) for evaluation. If approved, it will be forwarded to the Union Cabinet for final approval.

This policy won’t just affect Starlink. Other satellite service providers in India, such as Eutelsat OneWeb (backed by Airtel’s Sunil Mittal) and Reliance Jio-SES (a partnership between Jio Platforms and Luxembourg-based SES), will also be impacted. These companies are working to provide satellite-based internet services in India, and the new fees could influence their pricing and business strategies.

It’s worth noting that in June 2022, the Indian government removed the SUC for spectrum auctioned after September 15, 2021, across various frequency bands. While this exemption benefited traditional telecom companies, it does not apply to satellite communication providers. Since satellite operators receive spectrum through administrative allocation, they do not qualify for this exemption.

Beyond financial challenges, Starlink and other satellite providers must also navigate India’s strict regulations concerning internet shutdowns and data interception. These rules are designed to ensure national security and compliance with local laws but can add to the operational complexities for foreign companies like Starlink.

In summary, Starlink’s entry into the Indian market could become more expensive due to the likely imposition of a spectrum usage charge and the existing 8% license fee. While traditional telecom companies no longer pay the SUC, satellite operators are expected to bear this additional cost due to the way they acquire spectrum. The final decision on these fees will depend on the recommendations of Trai, the DoT, the DCC, and the Union Cabinet. Once finalized, these regulations will shape the future of satellite internet services in India, affecting not only Starlink but also other players like Eutelsat OneWeb and Reliance Jio-SES.