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Clamour for flat spectrum use rate

New Delhi, Dec. 20: Telecom operators today pressed for flat spectrum use charges as a necessary condition to participate in the upcoming auctions.

“The failure of the DoT (department of telecom) to clarify if they will be able to take a decision on the implementation of a flat spectrum use charge before the auction date will be near fatal to the success of the upcoming auctions,” Rajan S. Mathews, director-general of the Cellular Operators Association of India (COAI), said after a pre-bid conference today.

Current charges for spectrum use are calculated on the basis of slabs. When a company buys fresh spectrum, it moves to a higher slab.

The charges for slabs range from 3 per cent of all revenues to 8 per cent.

For example, an operator who holds 4.4MHz of spectrum and acquires 5MHz of 900MHz spectrum in the upcoming auction and chooses to use these airwaves for 3G will see its slab for payment to the government jump to 6 per cent from 3 per cent.

“This will act as a deterrent for any operator to acquire more spectrum, whether through auctions, mergers or spectrum trading/transfer,” the COAI said.

According to Mathews, the pricing formula “unique to India leads to anomalous results, creating a non-level playing field and penalising larger operators”.

DoT officials said they expected the government to provide clarifications to the industry by December 28.

“There will be a detrimental impact of the slab-based spectrum use charge policy on the auctions,” said T.V. Ramachandran, resident director, Vodafone India, at the conference.

Airtel and Vodafone also sought changes in the auction guidelines, which place them on a par with new entrants even as the former would be rebidding for spectrum with them.

Under the auction rules, participants need to buy a minimum 5MHz, both in the 900MHz and 1,800MHz bands. Operators said this would force them to buy “unnecessary” additional spectrum.

Telecom firms also questioned rules insisting a three-year lock-in from the date of sale of equity for promoters of existing operators and the ranking system of allocating contiguous spectrum.

The government plans to sell 2G spectrum through an auction, starting January 23. It expects to earn Rs 40,000 crore from the sale.

Meanwhile, the DoT has asked the telecom regulator to comply with the government’s directions under Section 25 of the Trai Act with regard to CDMA auction.

“The decision to auction spectrum in 800MHz (CDMA) band is a policy of the government in terms of Section 25 of the Trai Act 1997,” the DoT said in a letter

Section 25 says the regulator will “be bound by such directions on questions of policy as the central government may give in writing to it from time to time”.

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