Costly calls

New Delhi, Nov. 9: The government is keen on increasing the minimum reserve price for a pan-India licence to offer third generation (3G) mobile services.

Discussions are also on to hike the annual spectrum fee for 3G players.

The Telecom Commission, the apex decision making body of the department of telecommunications (DoT), is slated to meet on November 11 before taking a final call on the pricing policy

Earlier, the finance ministry had suggested that the reserve price for a pan-India 3G licence be raised to Rs 2,500 crore from Rs 2,020 crore as “the market value of spectrum is much higher than what the DoT has put in the auction”.

After initially ignoring the suggestion, the DoT is in favour of a rethink of the issue.

This followed criticisms that it had given second-generation (2G) telecom licences to several players without an auction, causing significant losses to the government.

Earlier this year, the government had issued licences to nine new companies for Rs 1,651 crore each to launch mobile services. These companies included Loop Telecom, Swan, Unitech, Datacom, Shyam Telecom and STel.

Recently, Swan offloaded a 45 per cent stake in the telecom venture to the UAE’s Etisalat for $900 million, while Unitech divested up to 60 per cent stake to Norway’s Telenor for $1.1 billion.

Critics said the government could have garnered over Rs 50,000 crore had these licences been auctioned.

In addition to higher licence fees, the DoT is exploring the option of raising the fee for the use of spectrum.

A DoT committee has suggested that standalone 3G operators might have to pay 3 per cent of their annual revenues as a fee for spectrum use.

Operators having less than 6.2 megahertz (MHz) of 2G and 3G spectrum combined may be asked to pay 4 per cent of their revenues, while those with more than 6.2MHz may have to shell out 5 per cent of their annual revenues.

Better option

The panel, set up to look into the issue of separating revenues earned from 2G and 3G services, has said that since differential pricing was not possible, it would be easier to charge a higher fee for spectrum use from 3G operators.

The DoT had recently directed that operators would need to pay 1 per cent of their gross revenues from 3G services as a spectrum fee compared with 4-6 per cent charged for 2G services. However, this required separating revenues earned from 2G and 3G services — a process which DoT has been unable to formulate.

Currently, telecom operators pay different spectrum use charges, from 2 per cent to 10 per cent, depending on the amount of spectrum they hold and the technology — GSM or CDMA — they use to deploy voice and data services.