The Hindu Business Line : As urban market saturates — VSAT operators seek incentives from Govt for rural connectivity

FACED with a saturated market in urban India, the Very Small Aperture Terminal (VSAT) operators have proposed to roll out data services such as broadband and e-education services in rural areas to meet the Government's objectives of connecting rural India.

Towards this, operators, including Hughes Escorts, HCL Comnet and Essel Shyam, have sought incentives from the Government, including reduction in licence fee, support from the Universal Services Obligation (USO) fund and an "open sky" policy to enable linking with foreign satellites.

Mr D.P. Vaidya, President, VSAT Service Association of India (VSAI) told Business Line, "Unlike large unified operators, our focus is only offering data services. Therefore, we are equipped and willing to connect villages with satellite technology in order to meet the government's targets of connecting the villages with high-speed data services."

The VSAT technology is being used by banks, corporate houses, retail chains and telecom operators to connect remote locations using a satellite. There are about 52,000 VSATs primarily for closed user group applications. But with mobile and fixed line technologies dominating the urban market, VSAT operators are now looking at the rural segment to sustain their business.

Of the 11 companies, which were given licences to offer VSAT services only five survive. Companies such as RPG, HFCL and Punjab Wireless have either surrendered their licence or have been acquired by a larger operator. Though the five remaining companies are profit-making units, the VSAT industry is stagnating. "The input cost is extremely high for VSAT operators when compared with terrestrial operators. Of this, the licence fee and the cost of satellite is almost 55 per cent of the total making us incompetitive. We have urged the government to help us reduce the input cost which will enable us to create a market in rural India with low tariffs," said Mr Vaidya.

Even though the VSAT operators pay five per cent of their revenue towards USO fund, they are not allowed to use the fund for rural roll out. The other issue is that they have to compulsorily hire transponders from satellites owned by ISRO even when foreign satellites offer cheaper option.

VSAI has sought the concessions only for rolling out services in rural areas. Most operators have also taken the Internet Service Providers licence, which will enable them to tap villages for broadband services. According to VSAI, there are over 10 lakh villages, which is ready for data services such as e-education, e-medicine and e-governance. "VSAT is ideally suited for offering broadband and Internet services in rural sector. It offers broadcast facility and there is no bandwidth wastage. It also provides last mile and backbone on the same link. If input costs are reduced then VSAT operators can offer the cheapest broadband services to consumers,' said Wg Cdr G. Bhalla, Secretary General, VSAI.

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