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DoS’ failures caused Indian DTH players to opt for foreign satellites: CAG

MUMBAI: India has failed to seize the opportunity to build its own satellites for providing Ku-band transponders to direct-to-home (DTH) operators. The Comptroller and Auditor General of India (CAG) has blamed the Department of Space (DoS) for this.

The majority of DTH operators in India have opted for Ku-band transponders on foreign satellites as the DoS was unable to realise its communication satellites and failed to utilise available satellite capacity, said the CAG in its audit report.

In its report on the management of satellite capacity for DTH service by DoS, CAG said that DoS’ failure led to competitive disadvantage to India vis-à-vis foreign satellite system.

“Out of the total 76 Ku-band transponders used by Indian DTH operators (as of July 2013), only 19 transponders (25 per cent of total) belonged to Indian satellites. The remaining 57 transponders (75 per cent of total) were on foreign satellites,” it noted.

Moreover, with Tata Sky, which was using 12 transponders in the INSAT system, also deciding in July 2013 to migrate to foreign satellite arrangement as a permanent measure, only 10 per cent of the satellite capacity for the DTH service would be serviced by the INSAT system, the audit said.

Incidentally, the future requirement of transponders for DTH services was also planned to be met largely from foreign satellites.

CAG in its report said that being a satellite builder and research and development agency, it was a major opportunity for DoS not only to exploit its research efforts in establishing indigenous satellite communication technologies for the DTH sector, but also to generate revenue for the country.

However, it could not realise the planned/committed satellite capacity due to delayed satellite launches, power problems in the existing satellites, allocation of capacity for other purposes, etc.

“As a result, satellite capacity was arranged from foreign satellites for DTH services. Greater dependence on foreign satellites for Ku-band transponders for DTH services eventually led to their dominance over Indian sky,” CAG said.

It noted that the failure to realise the satellites for Ku-band transponders also resulted in a situation where foreign satellites had occupied five orbital slots above Indian sky, thereby putting India at a disadvantage in maintaining its own INSAT fleet.

“DoS did not consider procured launches or hiring satellites to reduce the demand–supply imbalance of Ku-band transponders despite having sufficient funds,” it lamented.

Incidentally, a large amount ranging between Rs 792 crore (Rs 7.92 billion) and Rs 2,809 crore (Rs 28.09 billion) were surrendered annually during the last five years.

“In addition, the communication satellites GSAT 8 and GSAT 10, which were planned for DTH service, remained idle for seven to 10 months. While GSAT 8 was eventually allocated for non-DTH purpose, capacity on GSAT 10 was not allocated due to special terms of first right of refusal over the orbital slot extended to Tata Sky,” CAG said.

The audit stated that the arrangement of foreign satellite capacity to Indian DTH industry was envisaged to be a short-term measure to ensure that the service could be brought back to the INSAT system as and when Indian satellite capacity was available.

For the same, DoS and Antrix entered into back-to-back agreements with the DTH service providers and foreign satellite owners respectively so that foreign satellite capacity was arranged for the Indian DTH service providers for a short term. However, this arrangement was unsuccessful due to inherent issues with the migration of satellite capacity such as substantial migration expenses for the DTH service provider and inconvenience to the millions of customers in re-orienting their TV dish antennas.

“The inability of DoS to provide satellite capacity from its own system created a trust deficit due to which most of the DTH service providers such as Reliance Digital TV, Videocon d2h, Sun Direct and Airtel Digital TV moved to foreign satellites. Tata Sky, the major non-government DTH service provider in the INSAT system, had also decided to move to a foreign satellite for a long-term engagement,” CAG said.

It said that despite being aware of the risks in the ‘open sky’ policy of allocation of satellite capacity, DoS failed to take adequate measures to protect the interest of the country and exploit the commercial opportunity.

The allocation of satellite capacity for DTH service was to be done in accordance with the SATCOM policy, which stipulated that ICC was to earmark a certain percentage of the capacity in the INSAT system for non-government users and evolve a procedure for allocation of satellite capacity to the users. Once the capacity was earmarked by ICC, allocation of the satellite capacity was to be done by DoS in a transparent manner, which could be any equitable method such as auction, good faith, negotiation or first come-first served.

However, the audit observed that ICC was not convened for nearly seven years between June 2004 and July 2011. In the meantime, three satellites were launched, the capacity of which was allocated to the DTH service providers directly by DoS without an ICC-approved procedure.

In its report, CAG has made following recommendations:

  1. DoS and ICC may frame a transparent policy for allocation of satellite capacity for DTH services and all future satellite capacity allocations may be made based on the same.
  2. DoS may consider creating Ku-band satellite capacity for DTH services commensurate with the demand in the sector and requirement for national and strategic applications.
  3. DoS may clearly define short- and long-term strategies for allocation of Ku-band satellite capacity to DTH service providers on domestic and foreign satellites to ensure continuity for the existing users as well as to bring those DTH service providers using foreign satellites back to the INSAT/GSAT system.
  4. DoS may incorporate price revision clause in long-term transponder lease agreements and revise the transponder prices in time to avoid extending undue benefit to the service providers.

Also Read:

Why CAG feels that Tata Sky was unduly favoured by DoS

DoS undercharged, reduced price of transponders for Sun Direct: CAG

Tata Sky’s refusal to swap transponders caused revenue loss of Rs 82.8 cr: CAG

DoS incurred loss of Rs 36.17 cr due to non-revision of transponder prices: CAG