Inquiry reports point to how the Antrix-Devas agreement evaded scrutiny at key points in the approval process.

It wasn't just that the ‘Antrix-Devas deal' was iniquitous and deeply flawed. Reports from two government appointed committees that probed the deal tell a startling tale of how Indian space officials set about securing some Rs.800 crore in public funding in order to implement the agreement, evading scrutiny at key points in the approval process.

The agreement signed in January 2005 between Antrix Corporation, the marketing wing of the Indian Space Research Organisation (ISRO), and a private Bangalore-based company, Devas Multimedia, was intended to introduce novel satellite-based services to the country. These “satellite digital multimedia broadcast” services would be delivered to fixed, portable and mobile receivers.

The agreement was, however, heavily loaded against Antrix and ISRO. Much of the upfront costs as well as the risks of building, launching and operating two specially designed satellites fell on them. Another important consequence of the deal was that it allocated a considerable swath of S-band spectrum to Devas for 12 years, with the possibility of extending the lease by another 12 years. (For more details, see “Delhi, we have a problem,” The Hindu, January 31, 2012.)

The Hindu exposé

The Hindu group brought this agreement into the public domain in an expose in February last year. Later that month, the Union government annulled the deal. It also appointed a high powered Review Committee consisting of B.K. Chaturvedi, a member of the Planning Commission and former Cabinet Secretary, and Roddam Narasimha, a distinguished academic and member of the Space Commission for many years, to examine the technical, commercial, procedural and financial aspects of the agreement.

After this committee submitted its report in March 2011, the government set up a five-member high-level team headed by Pratyush Sinha, former Central Vigilance Commissioner, to identify “acts of omission and commission” by officials.

Parts of the two reports were released earlier this month. The entire report of the Chaturvedi-Narasimha committee, barring the annexures that appear to contain various internal documents, has been made public. But in the case of the Sinha committee report, only the chapter, “Conclusions and Recommendations,” has been released.

The Antrix-Devas agreement required ISRO to provide two custom-built satellites, with 90 per cent of the capacity on the satellites being leased to Devas. The satellites came to be called GSAT-6 (also known as Insat-4E) and GSAT-6A. ISRO would, as the report of the Chaturvedi-Narasimha committee noted, have to invest about Rs.800 crore on the two satellites and their launch.

In May 2005, four months after the agreement with Devas was signed, the Department of Space (DoS) approached the Space Commission, a body that helps formulate the country's space policy and oversees the space programme, with its GSAT-6 proposal.

The budgetary support of Rs.269 crore sought for GSAT-6, however, did not include the launch cost. Moreover, on the subject of the satellite's utilisation, the Commission was merely told that a significant portion of the spacecraft's capacity would be committed for lease to a service provider on appropriate commercial terms and that the DoS had already been approached by a service provider who had undertaken to lease the capacity over the life period of the satellite, according to the report of the Chaturvedi-Narasimha committee.

“There was no mention in the background note [to the Space Commission] that [an] agreement had already been signed with Devas, which envisaged earmarking 90 per cent of the capacity for them,” the report observed.

Nor was the DoS more forthcoming when, after getting the Commission's nod, the GSAT-6 project went for the Union Cabinet's approval.

The report quotes part of the note sent to the Cabinet in November 2005: “ISRO is already in receipt of several firm expressions of interest by service providers for utilisation of this satellite capacity on commercial terms. Part of the capacity will also be utilised by ISRO for experimentation and demonstration of new satellite based mobile communication techniques and technologies.”

The report pointed out that “the impression given to both the Space Commission and the Cabinet was as if there was no agreement yet and Antrix/DOS had been approached by several potential customers.” The GSAT-6 proposal was cleared by the Cabinet in December 2005.

Nor did matters improve when the Rs.147-crore proposal for the second satellite, GSAT-6A, was placed before the Space Commission in October 2009. The proposal included neither insurance nor launch cost. “It was, hence, below the financial ceiling of Rs.150 crore above which Cabinet approval [is] required,” the report noted. Once again, there was no mention of any agreement signed with any service provider. This proposal too got the go-ahead.

The deal had allocated about 60 MHz of S-band spectrum to Devas. This, the Chaturvedi-Narasimha committee remarked, seemed “disproportionately large,” considering that 20-25 MHz of spectrum in this band had reportedly been used for similar services in the U.S., Korea and Japan. Moreover, “this left very little spectrum with ISRO for any strategic or societal use in future or other multimedia mobile service operations.”

The allocation of spectrum was carried out without clearance from the Insat Coordination Committee (ICC), an inter-departmental body established in 1978. Under the Satellite Communications Policy approved by the government, the ICC was a key institution in allowing the use of Insat capacity by non-government users.

No ICC clearance

But the ICC had not met since 2004. The proposal for utilising GSAT-6 and GSAT-6A for the Antrix-Devas project was never placed before the ICC. As a result, none of the aspects of the agreement could be considered by it, noted the Chaturvedi-Narasimha committee. “Earmarking of GSAT capacity for the Antrix-Devas project was thus a clear violation of government policy,” the report said. Besides, utilisation of a large part of the S-band spectrum by one private user also went against the “non-exclusive” policy for the Insat system.

The Chaturvedi-Narasimha committee also criticised the way the Space Commission and the Cabinet were left uninformed about the spectrum allocation. When placing the proposal for GSAT-6 before the Space Commission in May 2005, “it was important that a mention be made that the bulk of the S-band spectrum available with DoS” was being committed. No such mention was made even when the proposal for GSAT-6A came before the Commission in October 2009. “This left the Commission completely in the dark.” The question of spectrum allocation and its implications were not analysed at all. “Absence of full facts clearly weakened the decision-making process in [the] Space Commission and the Cabinet.”

The committee, however, took the view that “concerns on short-selling of spectrum or selling it cheaply are not substantiated and have no basis.” The space spectrum and terrestrial spectrum had to be considered and priced differently, it observed. Besides, for operationalising its full service, Devas was required to obtain other licences for the terrestrial segment of its business. The terrestrial segment would be subject to government procedures for allocation and associated charges.

But this does not take into account the possibility of spectrum allotted for the space segment being subsequently diverted partly or wholly for providing terrestrial services. Nor is this a purely hypothetical possibility. The U.S. Federal Communications Commission (FCC) has, for instance, been showing increasing leniency in allowing such a switch. Last year, it issued a waiver that allowed the company, LightSquared, to use its satellite spectrum for 4G terrestrial wireless broadband services. (However, that waiver was recently revoked over concerns that such a terrestrial network would interfere with GPS signals.)

In such a situation, the S-band spectrum allotted to Devas could easily have become very valuable, given the explosion of mobile services in the country and, indeed, around the world. The potential value of this spectrum would also explain why a group like Deutsche Telekom Asia was willing to a pay a huge premium to acquire shares in Devas.

The Sinha committee, in its report, concluded that “there have been not only serious administrative and procedural lapses but also suggestion of collusive behaviour on the part of certain individuals.” Based on the reports of the two inquiry committees, the government barred four former space officials, including the then ISRO chairman, G. Madhavan Nair, from holding any government post.

But the fallout from the deal could seriously impact the space programme itself. Its structure involving the Space Commission, the Department of Space and ISRO was put in place with the intention of minimising bureaucratic hassles that tie down other government bodies. Now, there is a danger of increasing bureaucratisation that can delay and impede the country's space efforts.

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