Did the Antrix-Devas agreement on S-band spectrum go as far as it did because many individuals in the know chose not to intervene?

Quite apart from the fashion in which valuable S-band spectrum was allocated to a single private company for an extended period of time, the Antrix-Devas agreement and the way in which it was sought to be implemented were highly questionable in other ways too.

The deal was finally annulled following the exposé by The Hindu and its sister publication, Business Line, in February last year.

Much of the upfront cost for the two satellites required to operationalise the agreement and their launch were to be borne by the public exchequer. The issue of making good any satellite malfunctions or launch failures would also have arisen. Whether, and to what extent, higher authorities such as the Space Commission and even the Union Cabinet were informed of the deal and its implications is murky and unclear.

The agreement was signed on January 28, 2005 between Antrix Corporation Ltd., the marketing wing of the Indian Space Research Organisation (ISRO), and Devas Multimedia Pvt. Ltd. based in Bangalore.

The agreement laid down that Antrix would provide satellite capacity to enable Devas to launch ‘satellite digital multimedia broadcast' (S-DMB) services that would be delivered to fixed, portable and mobile receivers, including mobile phones and vehicle-borne devices.

As a result of this deal, ISRO was committed to build, launch and operate two custom-built communication satellites, which came to be called GSAT-6 (also known as Insat 4E) and GSAT-6A. The agreement specified that 90 per cent of the capacity on these two satellites would be leased to Devas “on a 24-hour, seven-day-per-week basis” for 12 years, with a provision to extend the lease by another 12 years.

These were not ordinary communication satellites of the sort that ISRO had built and launched before. They involved high-powered spot beams in the S-band requiring a large 6.5 metre antenna (that could be unfurled in space) that was specially developed for these satellites and which ISRO has never flown before.

Satellite issues

ISRO communication satellites have had their share of problems that led to partial and, in the case of the Insat 2D launched in 1997, total loss of onboard capacity. As recently as July 2010, a problem with the Insat-4B's power supply system led to half its communications capacity being shut down.

With what are essentially developmental satellites like the GSAT-6 and the GSAT-6A that have not been flown before, the risk of problems arising are greater. Such concerns are particularly high in the case of the large antenna that could be unfurled in space. If it failed to open out properly, the entire satellite would be rendered useless. In addition, the Geosynchronous Satellite Launch Vehicle (GSLV), on which the satellites were to be launched, has also not settled down to provide reliable service.

Yet, the Devas contract has stringent penalty clauses for when the satellites must become operational, the quality of service to be provided and tough norms for declaring “a Total Satellite Failure.” In the latter event, a replacement satellite has to be provided within a specified time span at no extra cost to Devas.

Experience elsewhere in the world indicates that mobile satellite services in the S- and L-band frequencies have often proved financially unviable. Regulatory authorities in the U.S. and elsewhere are therefore permitting some part of the satellite frequencies to be used for lucrative terrestrial communications. If regulatory authorities in India were to permit similar flexibility, the S-band frequencies that the deal had allotted to Devas would have become a highly valuable resource.

In fact, a note prepared for the Cabinet Committee on Security in February 2011 by the Department of Space, the parent body of ISRO and Antrix, pointed out that the company had plans to get into terrestrial broadband services. Such a dispensation “might not ensure a level playing field for the other service providers using terrestrial spectrum, especially considering the significant demand for S-band spectrum,” it noted.

CAG estimate

A preliminary estimate prepared by the Comptroller and Auditor General last year had suggested that the spectrum allotted to Devas could have been worth as much as Rs.2 lakh crore. According to ISRO, the amount payable by Devas over a 12-year period was just $300 million (about Rs.1,500 crore at the current exchange rate).

While Rs.766 crore of public money would be spent on building and launching the two satellites, Antrix's revenues from Devas would come to only Rs.1,350 crore over a 12-year period. The note to the Cabinet Committee on Security admitted that this would have not been sufficient compensation for all the costs incurred by ISRO.

There is also the question of how this particular company was chosen for the deal. The line taken by ISRO has been this was the only company that came forward with a viable plan for the sort of satellite-based multimedia applications that were envisaged. However, no open competitive process seems to have been even attempted in making such a choice.

Considering that Devas is headed by a person who once held a senior position in the space programme, the onus on the Department of Space, ISRO and Antrix to make sure the deal was in public interest and not tainted by any whiff of cronyism was all the greater.

Given all these factors, the Department of Space ought to have ensured that both the Space Commission and the Union Cabinet were formally informed and fully briefed on the Antrix-Devas deal and all its implications when seeking approval to build the two satellites required.

The Space Commission was established by the government four decades back to formulate the country's space policies and oversee implementation of space programmes. All important programmes and projects have to be cleared by the Commission, and it also has delegated powers to clear financial expenditure on projects up to a certain amount.

Headed by the Secretary for the Department of Space (who is also chairman of ISRO), this powerful body has top officials from the Central Government among its members. Currently this includes the Minister of State in the Prime Minister's Office, the National Security Adviser, the Principal Secretary to the Prime Minister, the Cabinet Secretary, a Secretary in the Department of Expenditure, a Secretary in the Finance Ministry who is the Member (Finance), and the Principal Scientific Adviser to the Government.

After the Space Commission gave its clearance, the Union Cabinet approved the building of GSAT-6 in December 2005. Four years later, the Space Commission, under its delegated powers, gave the go-ahead for the follow-on GSAT-6A.

The proposals from the Department of Space seeking approval for the GSAT-6 and GSAT-6A “did not make any reference to their utilisation for the Antrix-Devas agreement,” according to the background note issued by ISRO last February. Only at its July 2010 meeting, when it recommended annulling the contract, was the Space Commission “apprised on this contractual agreement for the first time.”

However, in a recent interview with The Hindu, G. Madhavan Nair, who was chairman of ISRO and Antrix when the deal was signed and approval for the two satellites taken, has said that several people in the government, including from the Prime Minister's Office, were aware of the details of the deal at every stage.

Besides, there are persons who are members of both the Space Commission and the Antrix's board of directors. One such individual is the Member (Finance). Another is the Director of the ISRO Satellite Centre that is responsible for building the satellites. So it is difficult to see how the Space Commission could have been entirely in the dark about the deal with Devas.

The Insat-2E lease

All of this is in stark contrast with the approach taken by the Department of Space in leasing capacity on the Insat-2E. Half the capacity on this satellite, launched in April 1999 and now nearing the end of its life, was leased out to Intelsat. (Intelsat, which since been privatised, was then an international consortium operating satellites in which India too had a stake.)

In the case of this satellite, some customisation had to be done, including its transponder characteristics and beam shape, to meet user requirements. As ISRO had just begun building communication satellites, the deal was seen as a way to gain credibility and thereby access to the international market for building satellites.

In the case of the Insat-2E, the Department of Space made sure that the Space Commission and the Union Cabinet were formally informed about the Intelsat deal and why it was being carried out.

With the Insat-2E, the annual reports of the Department of Space, which are documents presented to Parliament each year at the time of the Union Budget, clearly indicated the capacity that would be leased out to Intelsat. When it came to the GSAT-6, however, the annual reports of the Department of Space are silent about the satellite capacity that had been allotted to Devas.

While individual accountability can and should be fixed, it is obvious that there was a system-wide malfunction. The question is how many individuals up and down the government and Space hierarchy knew what was happening but chose not to intervene.

gopalraj@thehindu.co.in

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