CAG hauls up DoS on DTH satellite capacity management

MUMBAI: The Comptroller and Auditor General (CAG) of India has laid its report 'management of satellite capacity for DTH service by Department of Space' on the table of  Parliament. And the report has severely criticised the entire process of satellite capacity management right from planning of satellite capacity, to allocation and leasing of transponders.


The CAG audit was to evaluate whether planning and realisation of satellite capacity for DTH service was done with a view to give economic, efficient and effective service, whether allocation of satellite space was transparent, fair and equitable and whether transponder lease agreements safeguarded the financial interest of the government.


Failures of DoS


The DoS has been lagging in its launch of satellites leading to losses of revenue as well as trust. Out of the nine satellites with 218 Ku band transponders, planned during the 11th five year plan, only three were realised with 48 transponders. This was only 22 per cent of the target.

The audit report states that despite having sufficient funds, DoS did not consider procured launches for its ready satellites or acquire satellites in orbit and position it under the orbital slot coordinated by India. Technical problems with transponders and satellites committed for DTH also hampered the DoS and hence it was forced to use these capacities as a replacement for satellites being decommissioned.  Because it could not  fulfill the needs of the DTH operators, they migrated to foreign satellite systems. Of the 76 transponders which DTH operators were using only 19 of these were on Indian satellites in July 2013. That number fell to seven when, in July 2013, Tata Sky surrendered its 12 transponders and migrated to a foreign satellite. The DTH service providers later did not prefer to return to INSAT due to trust deficit. Crowding of foreign satellites would affect the INSAT system and result in non availability of the strategically important slots for India. This clearly has lead to  loss of opportunities for revenue generation and strategic interests.


GSAT8 which was initially intended for DTH use ended up being allocated for non DTH use after a three year delay.  GSAT9 and GSAT15 were not launched citing non availability of launch vehicle GSLV. The audit saw that two other satellites were launched through procured launches. Rs 250 crore and Rs 345.36 crore were spent for launching GSAT 8 and GSAT 10.


CAG also stated that the prices of transponders from foreign satellites were increased by 5 to 33 per cent over one to six year period, while INSAT users paid the same charge for over six to 10 years. When the DoS did decide to raise prices by 15 per cent, it was never carried out.


The report gives the following recommendations:

1.    DoS and ICC may frame a transparent policy for allocation of satellite capacity for DTH services and all future satellite capacity allocations may be made based on the same.

2.    DOS may consider creating Ku band satellite capacity for DTH services commensurate with the demand in the sector and requirement for national and strategic applications.

3.    DoS may clearly define short term and long term strategy for allocation of Ku band satellite capacity to DTH service providers on domestic and foreign satellites to ensure continuity to the existing users as well as to bring those DTH service providers using foreign satellites back to INSAT/GSAT system.

4.    DOS may incorporate price revision clause in long term transponder lease agreements and revise the transponder prices in time to avoid extending undue benefit to the service providers.

The CAAG report has also stated that the DoS also botched up on the INSAT coordination committee (ICC), which was set up to allocate satellite capacity. The ICC went into cold storage after June 2004, and was revived only in May 2011. In the seven years in between, the DoS directly allocated satellite capacity to DTH providers, which was not as per Satcom policy. The procedure for allocation of satellite transponders was not framed by the ICC; DoS thus committed capacity to operators without an ICC approved procedure. Even the Ministry of information and broadcasting which is responsible for broadcasting in India and is a member of the ICC was kept out of the decision making process as the ICC never met for seven years.


Then DoS gave precedence to Tata Sky - though it was fifth in queue - and allotted capacity to it on INSAT 4A over Doordarshan, CAG has stated in its report. DoS said that DD had been given space on NSS-6 prior to allocation of INSAT 4A to Tata Sky and the state broadcaster could migrate only  after the end of its contract period. But it did not state if it first made the offer for INSAT 4A capacity to DD, which the latter turned down. This is significant in the context that DoS granted exclusive rights to Tata Sky.

Tata Sky's transponders on INSAT 4A were functioning with reduced power and it voiced concerns about the health of the satellite and urged the government to launch GSAT 10 to avoid adverse impact on its business.

GSAT10 was launched only in 2012 and in 2013, Tata Sky declined to shift satellites citing that this won't give it the additional space it now needed and moved on to its MPEG-4 conversion technique.

Tata Sky had been committed exclusive first right of refusal by DoS for using Ku band transponders, which was not done with other DTH providers, the CAG has stated. "This created a difficult situation for DoS in allocating its Ku band transponders in the slot to any other DTH service provider or usage. Consequently, DoS did not allocate Ku band transponders of GSAT 10 to any other user fearing litigation from Tata Sky," reads the report. It also adds that this location was "advantageous to Tata Sky, since the communication satellites occupying this slot could uniformly access the length and breadth of the country".

Thereby, the 12 Ku band transponders remained idle, which could have ideally generated more than Rs 82.80 crore a year. While DoS stated that GSAT 10 was just spare capacity the CAG says it does not accept this answer. "Spare capacity of Ku band on GSAT 10 was not a planned option, but a fall back option since Tata Sky was given exclusive first right of refusal on INSAT 4A. Pending Tata Sky's decision, the 12 transponders could not be utilised otherwise, with the implied pecuniary loss to the public exchequer. Audit further observed that allocation of satellite capacity being the responsibility of ICC, the decision to keep satellite capacity as spare was taken without the specific approval of ICC," it states.

When the audit pointed the preferential allocation to DoS, the latter held a meeting with the DTH operator which agreed to relinquish its right. However, no formal amendment was effected as of March 2014. "The fact, however, remained that DoS did not give exclusive right of first refusal to any other DTH service provider, indicating that DOS gave a preferential treatment to Tata Sky over other DTH service providers,

" states the report.

The following are mentioned as the special terms and conditions of the agreement with Tata Sky:

- Commitment for satellite capacity was open ended, with provision for additional transponder capacity whereas in other agreements the satellite capacity was committed for the period of lease only.

-Credits were provided in the case of interruption in service for more than 30 minutes to 24 hours at slab rates, whereas in the other agreements the credits were provided for interruption of more than one hour on proportionate basis.

-There was a provision for inspection of customer's earth station by DoS at the request of Tata Sky, where as this facility was not extended to the other DTH service providers.

-Tata Sky was allowed to assign any of its rights or delegate any of its obligations to its affiliates upon reasonable prior written notice to DoS, whereas this was not extended to the other DTH service providers.

-Chairman of Tata group was one of the non-functional directors in the board of directors of Antrix. Although there might be no direct impact on the decision making process within Antrix, allocation of Ku band transponders of INSAT 4A on exclusive basis to Tata Sky does raise the question of conflict of interest.


Tata Sky MD & CEO Harit Nagpal sent out a response to indiantelevision.com on the CAG report.  Said he: "While the SATCOM policy allowed DTH platforms, both Indian and foreign satellites, it stated that proposals envisaging use of Indian satellites would receive preferential treatment. Tata Sky is  the only Platform that stayed with DOS, while others migrated to foreign satellites.  While we continue to wait for allocation of incremental capacity, we have invested over Rs 500 Cr to migrate to new compression standards to ensure carriage of channels for our customers, despite a shortage of transponders."

DoS agreed to lease 6.25 transponder units in INSAT 4B satellite at Rs 4.75 crore per transponder. However, the report found that DoS actually charged Sun Direct only for six transponders leading to a loss of Rs 46.92 lakh. It also allowed a bonus free access for 1.5 months after the permitted three months, leading to a loss of Rs 3.56 crore.

In the case of Prasar Bharati, the DoS allocated an additional transponder to PB but did not enter into a firm agreement or MoU. PB then informed that due to this, it did not use the added space, thus leading to a loss of Rs 5.9 crore for lease, that wasn't collected by DoS.


Click here for the full report

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