The Prime Minister's Office has issued a statement claiming that “no decision was taken by the Government to allocate space segment using S-Band Spectrum to Antrix or Devas.” The statement also claims that “hence, the question of revenue loss does not arise and any such reports are without basis in fact.”

The documented fact is that the agreement concluded on January 28, 2005 between Antrix Corporation Ltd. — the commercial arm of ISRO, which is under the Department of Space of the Government of India — and Devas Multimedia Private Ltd. says otherwise. Antrix represents that it has the right to make available to Devas, on a 24x7 basis for a lease period, “part of a space segment capacity” on two satellites for services in the S-band. The amount promised by Devas is vastly below the commercial worth of the transponders leased and there are clearly financial implications for annulling the agreement.

We publish below detailed extracts from the Antrix-Devas agreement. “Agreement for the Lease of Space Segment Capacity on ISRO/Antrix S-Band Spacecraft by Devas Multimedia Pvt. Ltd.”

The agreement, No. ANTX/203/DEVAS/2005, was entered into on January 28, 2005 between Antrix Corporation Limited , acting through and represented by the Executive Director, and Devas Multimedia Private Limited, an Indian company with its registered office at 102 Eden Park, 20 Vittal Mallya Road, Bangalore.

Recitals

The “Recitals” of the agreement cite the Indian Space Research Organisation (ISRO), under the Department of Space, Government of India, as a pioneer in the satellite industry with a portfolio of satellite products and services, international experience in satellite manufacturing and launch program management expertise, and satellite network expertise, and Antrix as a marketing arm of the Department of Space through which ISRO engages in commercial activities.

The agreement notes that “Devas is developing a platform capable of delivering multimedia and information services via satellite and terrestrial systems to mobile receivers, tailored to the needs of various market segments.”

Devas “has requested from Antrix space segment capacity for the purpose of offering a S-DMB service, a new digital multimedia and information service, including but not limited to audio and video content and information and interactive services, across India that will be delivered via satellite and terrestrial systems via fixed, portable, and mobile receivers including mobile phones, mobile video/audio receivers for vehicles etc. (“Devas Services”).”

Antrix commits

Antrix “has agreed to the request of Devas and has decided to make available to Devas, on a lease basis, part of a space segment capacity on Primary Satellite 1 (“PS1”) and an option to gain additional capacity on Primary Satellite 2 (“PS2”) to be manufactured for similar services without any immediate backup in the S-Band, for such purpose under appropriate terms and conditions.”

The agreement states that “Antrix and Devas understand and accept that they will collaborate to build, launch and operate satellite(s) and the Devas Services, and recognise that enabling the Devas Services and activities related thereto requires execution of interdependent technical and business activities.”

Article 2, titled ‘The Leased Capacity', states that under the agreement, Antrix shall lease to Devas five C x S transponders, each of 8.1 MHz capacity, and five S x C transponders, each of 2.7 MHz capacity, on the Primary Satellite 1 (PS1) with technical performance and other specifications defined, and/or any other available capacity as provided and/or mutually agreed to by the parties in writing. Devas and Antrix agree that the leased capacity shall be utilised in accordance with this agreement and its exhibits. Antrix agrees that the leased capacity shall be a non-preemptible service, except as specifically provided for in Article 7.

Period of lease

Under Article 3, titled ‘Period of Lease and Terms & Conditions', the leased capacity shall be made available by Antrix to Devas on a 24-hour, seven-day-per-week basis for the lease period, which shall be 12 years commencing as set forth below, and extended as provided below or as mutually agreed to in writing by the parties.

Antrix shall deliver the leased capacity to Devas from a fully operational and ready PS1 within 30 months, with a further grace period of six months, (that is, a total of 36 months, the “Delivery Period”) of the date of the first payment of an Upfront Capacity Reservation Fee as provided, inclusive of in-orbit testing and verification by Devas (“Delivery”).

Antrix agrees that to the best possible extent, it will lease to Devas Additional Satellite Capacity above and beyond PS2, and spares and frequencies associated to the Additional Satellite Capacity to enhance Devas Services features based upon mutually agreed terms and conditions of a lease arrangement which will be negotiated and signed by the parties at least three years prior to the actual requirement date of the fresh lease services, provided that Antrix shall obtain all necessary government and regulatory approvals relating to the orbital resources, frequency clearance, investment feasibility and funding for the satellite including but not limited to ITU (International Telecommunication Union) coordinated orbital slot, frequency allocation and related approvals for all matters covered in Article 3. Further, if Antrix cannot fulfill the needs of Devas for Additional Satellite Capacity, Devas may seek the support of Antrix to procure the services from a third-party on such terms which are mutually agreeable to parties. Antrix shall, either by itself or through ISRO, make best efforts to support Devas in this regard.

Article 4, titled ‘Charges', makes clear that the charges comprise an upfront capacity reservation fee and lease fees for 5 S x C and 5 C x S band transponders on each of PS1 and PS2, and other charges, fees and payments as provided.

Termination

Devas may terminate this agreement in the event Devas is unable to get and retain the regulatory approvals required to provide the Devas Services on or before the completion of the Pre Shipment Review of PS1. In the event of such termination, Devas shall forfeit the Upfront Capacity Reservation Fees made to Antrix and any service or other taxes paid by Devas and those outstanding to be paid to Antrix till such date. Upon such termination, neither party shall have any further obligation to the other party under this agreement.

Antrix may terminate this agreement in the event Antrix is unable to obtain the necessary frequency and orbital slot coordination required for operating PS1 on or before the completion of the Pre Shipment Review of the PS1. In the event of such termination, Antrix shall immediately reimburse Devas all the Upfront Capacity Reservation Fees and corresponding service taxes received by Antrix till that date. Upon such termination, neither party shall have any further obligation to the other party under this agreement nor be liable to pay any sum as compensation or damages (by whatever name called).

Antrix may terminate this agreement at any time if Devas is in the material breach of any provisions of this agreement and Devas has failed to cure and breach within three months after receiving notice from Antrix regarding such breach, or non- payment of the lease fees and other charges (such as spectrum monitoring charges) by Devas for a continued period of 12 months, or if such accumulated delays from recurrent non-payments exceed 60 months, whichever occurs earlier, or Upfront Capacity Reservation fees, already due.

In the event of two successive launch failures of PS1 by Antrix, Devas shall have the option, exercisable in its sole discretion, to either terminate this agreement, in which event Antrix agrees to immediately reimburse Devas all the Upfront Capacity Reservation Fees for PS1 received by Antrix till that date, and after that, neither party shall have any further obligation to the other party under this agreement, or forego the refund of the Upfront Capacity Reservation Fees and service taxes and request Antrix to launch a satellite within 24 months of the exercise of this option, based on mutually agreed-upon terms.

Under Article 8, titled “Vacation of Leased Capacity”, it has been provided that, upon termination of this agreement (in part or in full) either by Devas or by Antrix, or at the end of the lease period, the use of the leased capacity so terminated shall revert to Antrix unconditionally.

Article 10, titled “Board Participations”, provides that Devas shall offer Antrix the option to appoint a senior officer to the Board of Devas. The officer so appointed shall act as an observer and shall not have any voting rights.

In Article 12, on “Representations and Warranties”, Antrix has represented and warranted to Devas that it has the capacity and power to enter into and perform this agreement. Antrix, through ISRO/DoS, will be responsible for obtaining clearances from national and international agencies (WPC, ITU, etc.) for use of the orbital slot and frequency resources so as to ensure that the spacecraft is operated meeting its technical characteristics and provide the leased capacity as specified. Antrix through ISRO has the ability to make/build, manufacture, launch and operate the satellites, and provide the leased capacity as provided in this agreement. Antrix will fulfill its obligations under this agreement according to any applicable law. Antrix, through ISRO, has the ownership and right to use the intellectual property used in the manufacture and launch of the satellites and provision of leased capacity under this agreement. Antrix may offer another satellite to other parties, provided, in due recognition of Devas' seniority, it provides Devas with prior intimation in case it does not infringe upon any confidentiality agreements and does not affect any Devas schedules or deliverables.

Devas commitments

Devas has represented and warranted to Antrix that Devas has the capacity and power to enter into and perform this agreement in terms thereof; that Devas has the ability to design Digital Multimedia Receivers (DMR); that Devas has the ability to design Commercial Information Devices (CID); that Devas has the ownership and right to use the intellectual property used in the design of DMR and CID; that the fulfilment of Devas' obligations under this agreement by Devas will not violate any laws; that Devas shall assign, transfer and/or sub-let its rights and obligations in accordance with law and that Devas shall be solely responsible for securing and obtaining all licenses and approval (statutory or otherwise) for the delivery of Devas Services via satellite and terrestrial network.

Under Article 14, relating to “Operational Arrangements”, Devas shall develop frequency and transmission plans for the use of the leased capacity on the satellites and the same shall be made available to Antrix for prior review and approval. For those particular transponders where there is potential for adjacent transponder interference between INSAT series of spacecraft and PS1, Devas and Antrix shall develop mutually agreeable technical operating parameters for operation in the said transponders. However, such parameters shall have no effect on Devas Services as set forth. In case of demands from other entities for similar services, Antrix shall take reasonable steps to accommodate such request without disrupting or putting limitations of Devas Services.

In the event of Antrix operating a co-located satellite next to Devas' leased capacity on PS1 and if applicable PS2, Devas and Antrix shall develop mutually agreeable technical operating constraints for all co-frequency transponders that have the potential for interference. Transmission and frequency plans developed for co-frequency transponders shall be exchanged and coordinated in the manner described.

Inter-system coordination

Antrix shall be responsible for inter-system coordination as per ITU Radio Regulations to obtain all clearances so as to use the orbital slot and frequency resources for Devas Services. All coordination efforts by Antrix referred to in this Article shall be performed at no additional costs to Devas. Devas shall provide assistance to Antrix in connection with the inter-system coordination efforts. Antrix shall make the best efforts, with the help of Devas, to coordinate the types of services required by Devas.

ISRO shall remain the registered owner of the orbital location on which the leased capacity is being made available to Devas.

Interference to other satellite systems with which Antrix or ISRO or associated entities are in the process of coordinating arrangements shall be kept at any acceptable level by utilising operating parameters within the limits prescribed and agreed to by Antrix and Devas, and shall remain in conformity with such arrangements without affecting Devas Services.

Antrix agrees that the PS1 spacecraft will be located at the 83 deg. E orbital location during the term of the lease. The spacecraft location may be changed to a different location with the written concurrence of Devas. Antrix believes that the proposed use of the leased capacity by Devas will not present any coordination problems.

In the event similar services are supported by Antrix or ISRO (through other satellites leased to commercial or government entitles), Devas Services will be ensured to be protected for inter-system interference.

Devas shall establish formal procedures for systems discipline, operations, access approval, maintenance and control of earth station access to space segment capacity. These procedures are considered expedient and necessary to ensure that Devas, its users, customers, contractors, lessees, agents and assignees derive the use of satellite resources covered by this agreement, to prevent interference to other users of the system. The Earth Station Standards (ESS) and Satellite System Operation guide (SSOG) modules for the spacecraft shall be prepared by Devas based on the spacecraft technical data provided by Antrix and shall be made available to Antrix for review and comment and the same shall become a part of this agreement after its finalisation.

Devas shall implement appropriate operational procedures required for the compliance with the technical and operational conditions specified in this agreement.

Each earth station, which shall utilise the leased capacity, shall satisfactorily complete or have completed earth station testing to verify compliance with the performance characteristics as defined above; and be operated and maintained in accordance with the applicable provisions as defined in the documents referred in paragraph (b) above.

Article 15, titled “Use of Leased Capacity”, says Devas shall ensure that the use of the leased capacity is strictly in accordance with the letter and spirit of this agreement, and in accordance with laws.

Article 16, titled “Assessment of Technical Performance of the Leased Capacity”, sets down that both parties hereby agree to conduct in-orbit tests from INSAT-Master Control Facility, Hassan, India to verify and accept the in-orbit performance specifications and deviations, if any, of the leased capacity, as per procedures to be jointly agreed upon. These procedures shall be generated within 12 months following the execution of this agreement and these shall become a part of this agreement. These tests shall be conducted within 60 days following the positioning of the PS1 spacecraft in its designated orbital slot. Such tests may also be conducted periodically afterwards to assess the in-orbit performance specifications of the leased capacity as and when considered to be necessary by both parties.

Sub-licensing

Antrix may sub-license, assign or sell any or all of its rights under this agreement without any approval from Devas provided Antrix provides Devas with at least 60 days prior notice of the same and provided further that Antrix undertakes and shall cause its assignee to undertake that the terms of this agreement and all related agreements are enforceable in terms thereof and will continue to be upheld in accordance with the laws and regulations of India. Devas may sub-license, assign or sell any and all of its rights under this agreement without any approval from Antrix provided Devas provides Antrix with at least 60 days prior notice of the same and provided further that Devas undertakes and shall cause its assignee to undertake that the terms of the agreement and all related agreements are enforceable in terms thereof and will continue to be upheld in accordance with the laws and regulations of India.

(The full text of the Antrix-Devas agreement is available here)

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