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Devas hits back at detractors

Embattled satellite music firm Devas Multimedia today came out strongly against allegations of misappropriation of spectrum levelled by some media outlets.

In media briefings in the capital, Devas’ founder and president, Ramachandran Viswanathan blamed corporate rivals and other vested interests for the controversy. He also denied that his firm had got a ‘sweetheart’ deal from ISRO.

“We are paying more than $300 million over the 12 years for 70 MHz — the expected life of the satellites. On a per year basis, we will be paying $25 million per year or $12.5 million per year for a single transponder of 35 MHz. This is ten times the rate at which satellite spectrum is sold by Antrix to other players,” he said.

Indeed, if the numbers are correct, they are a significant premium to current satellite lease rates. Viswanathan, an old hand at satellite systems, said the premium is being paid considering that the new satellites will be of very high power and new technology.

He suspected rivalry between mobile and satellite industry for the entire controversy, pointing out that some operators were keen to keep the spectrum out of Devas’ hands. He said the firm has invested $170 in building radio reception sets for its planned music service and has been waiting for the satellite for two years.

Full interview:

It is alleged that you got the spectrum allotted on the sly by your chairman Chandrasekhar when he was with ISRO..

The current chairman of the company, MG Chandrasekhar was not with the company in 2003-2005, when we negotiated and inked the agreement with ISRO.
Mr Chandrasekhar joined in 2006, a year and a half after the agreement was signed with ISRO.

Why did you hire him?

In India, if you want to build a satellite service, you need people with experience. And the only people with experience in Space technology in India are people who, at one time or the other, worked with ISRO.

Did you pick him directly from the ISRO?

Mr Chandrasekhar was not with ISRO when we were negotiating with ISRO. In fact, he had resigned from ISRO seven years before we inked the deal with ISRO [in 2005.] After he resigned, and before he joined us, he had spent significant time in senior posts in two other private companies, one of which was WorldSpace and another was a US remote sensing company.

So who all started the firm?

I was the founder.. I, and some others, had developed a similar system in WorldSpace [in the US]. We then went on to XM Satellite Radio, which is a large public company in the US and successfully deployed and launched that. The chairman of that company, Gary Parsons, is now a board member of Devas.

I was one of the very senior executives at WorldSpace, one of the early team-members who have shaped the entire company.

In 2002-03, after completing the WorldSpace project, I brought together a team of 4 to 5 people for this project and started approaching ISRO, based on all the technology we had developed in WorldSpace and others.

ISRO was at a stage when there was no DTH, no other advanced satellite applications and they were looking to build the next generation satellite applications.

By the way, we were not the only ones to approach ISRO for building similar systems, as is being reported. Two other big industrial groups in India had also inked MoUs with ISRO, but later lost interest and terminated the MoU’s before we started negotiations. So we were given the opportunity only third, after the first two walked away.

Our edge was that we had several hundred patents, awarded and pending, in the field of satellite communications among our members. So the agreement was that ISRO should develop and launch a hi-power satellite and we will do the technology development, devices [for receiving the music] etc.. So we signed an agreement with the Antrix board, which includes chairman ISRO; additional secretary Department of Space [DoS]; Member [Finance], DoS and independent members like Ratan Tata, Parmeshwar Godrej etc..

It is alleged that there was no bidding before it was alloted to you?

Satellite transponders in the country are allotted according to the SatCom policy of the country. It is an open window process [where interested parties submit applications and wait their turn for capacity allocation.] That is how the DTH capacity leases [to Sun, Tata Sky etc.] and VSAT capacity leases have all been allotted — through the same process. None of these deals were taken to the Cabinet for a nod.

Second allegation — your contract was at a throwaway price?

Of all the deals that Antrix has today, the Devas deal is the most lucrative on a per-spectrum basis. We paid a big premium to account for ISRO’s R&D costs.

Who or what do you think is behind the controversy? Who would be benefited from the annulment of your contract? Is this controversy the result of a fight between the long-time fight between mobile operators and satellite operators over spectrum?

India has already lost a lot of satellite spectrum, such as 1.4 GHz, after it failed to put up satellites and use them. They were re-allocated to international firms by the ITU [International Telecommunications Union] based on their use it or lose it policy.

So, under the ITU rules, India has just 190 MHz of spectrum alloted to India by ITU in S Band which has a total of 2,000 MHz in all. Out of this 190 MHz, the mobile operators managed to take 40 MHz as part of the broadband spectrum auction. So only 150 MHz is left for satellite out of which 80 has already been set apart by the government for its own communication. It is the remaining 70 MHz that was alloted to us.

Government is now saying it is thinking of cancelling your contract. What do you have to say?

Spectrum in India is allocated according to what is called the National Frequency Allocation Plan which states what frequency will be used by which service. According to that, 150 MHz of the 2.5 GHz S Band, which we have been allocated in, is to be used for Satellite communication, broadcasting etc.. It is very clearly provided for Satellite use.

In addition, we have a letter from Antrix in 2006 which clearly states that it has got all the requisite approvals to bring the contract into force. The approvals were given by the government in february 2006.

Without this, we would not have invested the money or raised funds from companies like Deutsche Telekom etc.. You cannot now say that you did not give authorization.

How much have you invested?

The contracted capacity was supposed to be delivered in December 2008 and we have built everything on that plan. We have built the terminals [radio sets], the ground systems. We have built the entire system on the ground. We have been waiting for for two years for the satellites. We have invested nearly $170 million including $150 million in making equipment and we have no option now except to get the spectrum.

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