January 2015

CAG FLAYS DoS


The Government Auditor Has Blamed DoS For Mismanagement In Planning Its Satellite Capacity & Partisan Policies For Transponder Leases.


The Controller and Auditor General of India (CAG) has said what has been apparent for years. The Department of Space (DoS) has failed to commercially address the huge market for Indian DTH transponders. The law requires that DTH platforms must compulsorily lease their transponders only from the Indian Government's ISRO. "Out of the total 76 Ku-band transponders used by Indian DTH operators (as of July 2013), only 19 transponders (25%) belonged to Indian satellites. The remaining 57 transponders (75%) were on foreign satellites, "the CAG has pointed out. Further, after years of being promised and not delivered additional satellite transponders, TataSky (who had declared it may sue ISRO) has decided to dump ISRO satellites and move to foreign birds. With this exit of TataSky, only 10% of Indian DTH transponders will be on ISRO satellites.


Only 10% of Indian DTH Transporders Are on ISRO Satellites.



TOO FEW INDIAN SATS

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, said the

CAG in its audit report. 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.


WASTED SAT CAPACITY

"In addition, the communication satellites GSAT 8 and GSAT 10, which were planned for DTH service, remained idle for 7 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.


GSAT-8 & GSAT-10 Remained Un-Utilised For 7 To 10 Months.


ORBITAL SLOTS


The CAG has pointed out that the failure to realise DTH satellites also resulted in a situation where foreign satellites had occupied 5 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," adds the CAG.


5 Orbital Slots Over India Are Occupied By Foreign Satellites.


TRANSPONDER LEASING

The allocation of satellite capacity for DTH service was to be done in accordance with the SATCOM policy, which stipulated that the INSAT Coordination Committee (ICC) chaired by DoS Secretary was to earmark a certain percentage of the INSAT transponders for non-government users and evolve a procedure for allocation of satellite capacity to them. Allocation of the satellite capacity was to be done by DoS in a transparent manner, which could be any equitable method such as auction, negotiation or first come-first served.


QUESTIONABLE PRACTICES

However, the CAG observed that an ICC was not convened for 7 years: between June 2004 and July 2011. Three satellites were launched & their capacity allocated to the DTH service providers directly by DoS without an ICC-approved procedure.


TATASKY: UNDUE FAVOUR?

In its report titled "Management of satellite capacity for DTH service by Department of Space", the CAG has observed that Tata Sky received certain benefits which were not offered to any other service providers.

As per CAG, Tata Sky was fifth in the order of preference for allocation of satellite capacity. However, it was granted precedence over Doordarshan DTH and allocated capacity on INSAT 4A, which was launched in December 2005. DD, which was first in the precedence list, was allocated capacity on INSAT 4B, which was launched later in January 2007.

DoS granted TataSky the exclusive first right of refusal for Ku-band transponders at 83 deg East. Similar exclusivity was not granted to any other DTH platform.

The CAG underscored the fact that the Tata Group chairman was one of the non-functional directors on the board of Antrix, raising the question of conflict of interest.


SUN DIRECT FAVOURED

The Department of Space (DoS) undercharged & reduced the price of Ku-band transponders for Sun Direct DTH. This led to a loss of Rs. 3.4 crore, according to the CAG.

Kalanithi Maran-promoted Sun Direct was also given an additional bonus free time by DoS, which resulted in a further unintended benefit of Rs. 3.56 crore to the DTH operator.

DoS entered into an agreement with Sun Direct for the lease of 4 transponders on INSAT-4B in February 2005. In February 2007 an additional 2.25 transponders were leased. However, Sun Direct was charged for only 6 transponders @ Rs. 4.75 crore per transponder against 6.25 transponders.



"Undercharging of transponders resulted in a loss of Rs. 2.94 crore between 15 January 2008 & 6 July 2010," CAG said in its report.

DoS further reduced the price of these transponders from January 2010 to Rs. 4.70 crore per transponder. DoS also provided free transponders for 1.5 months to Sun Direct, beyond the stipulated 3 free months.


SUMMARY

Most private sector customers will not agree with several of the CAG's objections on concessions provided by DoS to nurture and retain its private sector customers.

However, the CAG does correctly point to a complete failure by DoS to build and launch an adequate number of satellites or even purchase satellites to adequately address the huge Indian DTH market. This was despite adequate funds available with the DoS to fully capitalise this huge market opportunity. n