Governmental ₹1.73 trillion commitment to bridge the country’s digital divide — including a revamped BharatNet program and 4G connectivity for villages — has left little room in the Digital Bharat Nidhi (DBN) fund, officials said on condition of anonymity.
Other reasons include the absence of a direct benefit transfer (DBT) mechanism from the fund and potential overlap with existing initiatives already under Digital Bharat Nidhi, such as the 4G saturation project and other targeted schemes aimed at expanding mobile connectivity in villages, they said.
No subsidy means that both users will have to bear the cost of satellite terminals, the price of which varies around ₹1 lakh on average for each unit, otherwise the companies will have to absorb the cost. Starlink, Eutelsat OneWeb, Jio Satellite and Amazon’s Kuiper, which are set to launch satellite Internet services in India, have urged the government to provide subsidies to connect underserved or unserved rural areas with satellite Internet where it is not commercially viable.
Email queries to DoT and Trai did not elicit a response till press time.
On May, as part of its recommendations on spectrum allocation for satellite internet services in the country, Trai told the DoT that for targeted subscribers in unserved or underserved regions in rural and remote areas, the government may consider a subsidy for each fixed user terminal. The appropriate amount can be decided by the government, Trai said, adding that the government can provide subsidy either through DBT to eligible subscribers or operators through the Digital Bharat Nidhi fund.
In his November 12 response to Under Trai’s proposals, the Department of Telecommunications (DoT) has given several reasons for not accepting the regulator’s proposal to subsidize satellite internet services and user equipment, the first official quoted earlier said. One of the reasons is the limited scope for approving new projects under the Digital Bharat Nidhi fund available to it ₹90,900 crore but has a liability of Rs ₹1.73 trillion.
“DoT has conveyed to Trai the reasons for not accepting its recommendation on satellite internet subsidy. DBN does not process Direct Benefit Transfers (DBT) and no mechanism has been created for this purpose,” said a second official, adding that the DBN rules allow for an area-based approach to bridge the digital divide. The current subsidy approach that Trai is recommending for satellite internet is a one-to-one approach, which will mean giving a schematic subsidy to areas already covered, the official said.
“DoT is not in line with Trai’s proposal to provide blanket subsidies as this approach will raise the problem of adverse selection and could lead to inefficient targeting,” said a third official.
Trai is preparing its response to DoT’s comments, a fourth official said, without giving details.
Digital Bharat Nidhi (DBN) or erstwhile Universal Service Obligation Fund (USOF) was established to finance and implement projects to bridge the digital divide across India, especially in rural and remote areas. The fund currently subsidizes telecommunications operators for providing services with low commercial viability. Operators contribute 5% tax on their adjusted gross receipts (AGR) to the DBN.
At a press conference last month, Communications Minister Jyotiraditya Scindia said: “My understanding is that the erstwhile USOF (DBN) is for capital expenditure. It’s not for subsidizing the service. The DBN can only subsidize the tower that’s being built there, the capital structure that’s been built. You can’t subsidize the variable cost of the service.”
However, the Broadband India Forum (BIF), representing satellite communications companies such as Hughes, OneWeb and Nelco, among others, argued that DBN can subsidize satellite internet.
“One of the main purposes of the DBN charter is to provide sustainable connectivity for rural and remote areas and to promote new technologies and services. Satcom based on HTS-GSO/NGSO (High Throughput Satellite – Geostationary Satellite Orbit/Non-Geostationary Satellite Orbit) is already a new technology and service,” TV Ramachandran, president of BIF, said last month. “Therefore, the use of DBN funds to support satcom services and ultra-high-end consumer broadband satcom terminals (in the average ₹1 lakh) clearly falls within his purview.”
According to Ramachandran, Trai’s recommendations in this regard are legal and necessary. The sector is at such a nascent stage and satellite operators face low revenue potential in underserved markets – unserved and underserved regions – that they have to serve, he added.
Following Trai’s recommendations in May, telecom operators, represented by the Mobile Operators Association of India (COAI), turned away from subsidizing satellite internet services from DBN.
“The additional proposal to subsidize user terminals or satellite operators through the DBN fund further tilts the playing field towards the ground operator, especially considering that most of the DBN fees are contributed by competing ground operators,” COAI Director General SP Kochhar said in a letter to the government.
On 17 November, Mint reported that the government was considering a 1% spectrum usage fee rebate for satellite internet companies if a proportion of their users live in hard-to-connect areas such as borders, hills, islands and those notified by the government.
