Exploring Satellite Business In India

Pradman Kaul, global president of Hughes Network Systems, was in India recently and spoke at length to BW Businessworld about the possibility of investing $500 million in India for a high-throughput communications satellite that has the potential to significantly enhance and improve India's broadband coverage.

You're in India to discuss the possibility of launching a high-through-put broadband satellite for India. How's been your engagement with the govt and authorities been? What's the proposal and how do you see the talks progressing?
We were one of the first MNCs to come into India post-liberalization and like elsewhere in the world, are market leaders in the satellite broadband domain. We have been talking to the Indian government and have told them what we are doing across the world (launching these high throughput broadband satellites) and providing capabilities that are no longer just limited to the developed world but now also in the emerging markets. Just about 3-4 months ago we launched a major system in Brazil, just like the one we are proposing for India. Brazil, like India is an emerging market, it's a very large country with varied topography and also a widely dispersed population of both rich and poor people.

So what exactly are you proposing?
We have a proven model that works and are also seeing significant demand for this kind of capability from across the world. We are very keen to replicate this in India as well. And so what we're proposing and have been proposing for a few years is that the first high-throughput satellite along with ground infrastructure would cost somewhere around $500 million and this is part of our proposal to the FIPB and the government.
We've said that we will invest this money in the India market because we believe in it. So we are not asking the government to make any investments at their end. We are also telling them that we'll provide this capability along with the investments. We think there is a huge demand in India and this is consistent with Prime Minister Modi's Digital India Mission which intends to reduce India's digital divide and ensure that every Indian has access to high speed broadband internet. To bridge this divide, satellites have an important role to play. Terrestrial technologies such as fiber and wireless, etc. will have a role but satellites will also have an important role and you look at all the different applications that the government has pointed out in the digital India programs.

India is already leveraging satellite technology for various purposes and industrial function, so from a technical standpoint what's new in here?
I think to be optimum you have got to provide technology which is more advanced than what is available in India today - the idea is to offer Indian consumers the speeds and capacity of what a subscriber in Brazil, in US or in Europe gets. To meet the needs of enterprises and to bridge the digital divide, you pretty much need technologies that are more advanced than what is available in India today. The satellite we are proposing will be able to offer all this and more!

You are already offering the latest in satellite technology services to countries like Brazil and Peru? What led to the delay in India and why is India lagging in this?
India is lagging because we did not get the necessary approvals from the government. We submitted our proposals many years ago and have continued engaging with the government on this since.

What are your expectations from the govt on the policy front?
We are obviously trying to understand and talk to the government with regards to the existing policy which has been around for over 10 years and permits private companies in India with FDI to set up this infrastructure. It obviously requires permission from the regulatory authorities which is what we are trying to work on but have not succeeded with so far. The second aspect is with regards to the current focus of the government to promote FDI. If you recall last year there was a big announcement with regards the revision of the FDI policy for several sectors including for the private satellite sector. The satellite sector until then was allowed to have 74% FDI for companies operating satellites. That has now been enhanced to 100% and the idea was obviously to promote the investment and promote the players to come into this area. So while the intention is there this has not translated into real ground reality. This is the part that we are sort of trying to work with the government on.

The govt has been aggressively pushing its plans for Digital India. Did you find any breakthrough in your engagement post the Digital India announcement?
I think in general the government has reached a stage where they understand what we are talking about. They understand our interest but I don't think we've have got through the final hurdles which is why we have to keep hammering away.

So how long will it take, now?
I wish I knew. It should have been a no-brainer because it is consistent with the goals of what the government wants to provide. It's consistent with wanting investments into the country and it's a complete no-risk approach for the government. We are not asking the government to put up any money.

I also think part of the problem is and the way you understand this industry. There are various elements to this. There is manufacturing. Some will make the satellites. Then there are those like us who specialize in operating satellites. In most of the developed countries the roles of manufacturing and operation have separated. NASA does not lease transponders to television operators. They are more concerned about deep space exploration. Here in India all of this is concentrated in one body and obviously it's kind of very closely held together. In India that separation hasn't happened. It's all kind of concentrated within ISRO.