Key details of the agreement between Devas Multimedia and Antrix withheld by the Department of Space for several years have now emerged.

According to a note prepared for the Cabinet Committee on Security (CCS), the Department withheld from the Space Commission as well as the Government vital information that the two satellites, GSAT-6 and GSAT-6A, were being built for Devas.

“Though the GSAT-6 and GSAT-6A Satellites were being built by ISRO to meet the requirements of PS-1 and PS-2 specified in the Antrix-Devas Agreement,” the note says, “the proposals from Department for approval...did not reflect the conclusion of such an arrangement in January 2005 itself.”

While Antrix signed the agreement on January 28, 2005, it was not until July 2, 2010 — weeks after Business Line revealed the nature of the deal to build the two S-band satellites and lease capacity from them to Devas — that the Space Commission was briefed on the agreement.

The 19-page note, dated February 9 and marked secret, is from Department of Space Secretary, Dr K. Radhakrishnan. Approved by the Prime Minister on February 8, it goes for a decision to the CCS, which is scheduled to meet in the morning of February 17.

The proposal is that the CCS should decide that “taking note of the fact that government policies with regard to allocation of spectrum have undergone a change in the last few years and there has been an increased demand for allocation of spectrum for national needs, including for the needs of defence, paramilitary forces, railways and other public utility services as well as for societal needs, and having regard to the needs of the country's strategic requirements, the Government will not be able to provide orbit slot in S-band to Antrix for commercial activities, including for those which are the subject matter of existing contractual obligations for S band.”

Noting that the Antrix-Devas agreement “provides for leasing of 90 per cent of the space segment capacity by Antrix to Devas on two Geostationary Satellites...for 12 years on 24-hour, seven-day-per-week basis,” the document faults the deal on several grounds — technical, commercial, managerial, and financial.

However, it soft-pedals the story behind, and the findings of internal investigations relating to, why such a high value deal, with strategic and security implications, was kept secret.

During its July 2010 meeting, the Space Commission took note of the fact that the INSAT Coordination Committee (ICC) guidelines provide for leasing the INSAT capacity for non-government users on a ‘non-exclusive' basis, but in the Antrix-Devas contract, 90 per cent of the capacity was leased to a single party for the full lifespan of the satellite.

“Expressing specifically that the Commission [was] being apprised on the contractual agreement for the first time, and further that the proposals from Department for approval of GSAT-6 and GSAT-6A also did not reflect the conclusion of such an arrangement in January 2005 itself, [the] Commission discussed the various dimensions of the issue in detail,” the note reveals.

It adds that the Space Commission in its July 2010 meeting “deliberated on (i) the procedures followed in selecting Devas, (ii) foreign equity in Devas; (iii) upfront payment made by Devas to Antrix so far, (iv) extent of complementary ground based network required, and access to terrestrial spectrum by Devas for providing value-added services, (v) possibility of Devas moving towards 4G services in the process, and other related aspects.”

Contrary to claims made by Devas Multimedia, the note for the CCS points out that the company had plans to get into terrestrial broadband services in all major urban areas.

“Such a dispensation,” the note points out, “might not ensure a level playing field for the other service providers using terrestrial spectrum, especially considering the significant demand for terrestrial S-band spectrum and the current trends on its price.” Further indicting the agreement, the note states that Antrix would not have got enough revenues to compensate it for the cost of building and launching the satellite. Compared with a total cost of Rs 766 crore, Antrix would have got revenues of Rs 1,350 crore over a 12-year period.

The document reveals that the initial discussions with ISRO was done by a US based entity –Forge Advisors in 2003, which then set up Devas in India in 2004. The Department of Space constituted a one man committee in December 2009 of Dr B. N. Suresh, a former member of the Space Commission, to comprehensively look into the deal. On June 6, 2010, the committee made suggestions to revisit the agreement.