The Telegraph
Sunday , January 26 , 2014
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Spectrum fee on EGoM call list

New Delhi, Jan. 25: The Telecom Commission today recommended three options, including a flat rate for spectrum use charge (SUC), to the empowered group of ministers (EGoM) on telecom, which is likely to meet on Monday.

The first option, as also recommended by Trai, is to charge a flat fee of 3 per cent on all spectrum, currently held as well as those to be bought in the future.

The second option is to continue to charge a differential fee of 3-5 per cent for airwaves now held by operators and 5 per cent for new spectrum.

The third option is to charge 3 per cent for new spectrum, while continuing with differential pricing for existing spectrum.

Officials said the EGoM was likely to accept either the first option of a flat rate as it would be the easiest to implement or the third option of 3 per cent for new spectrum.

A flat rate will mean better realisation in the long run and lesser cost in implementation. However, the move could be read as a concession for telecom firms, who had threatened to boycott the upcoming 2G spectrum auctions if the differences over spectrum use charge were not resolved.

Besides being complicated, the choice of the third option could see protests from GSM or CDMA operators.

The attorney-general has ruled that the government should continue with a 1 per cent fee for broadband wireless access (BWA) spectrum to avoid legal problems.

So, while one set of telecom players will continue to pay lower charges, others will have to adopt a complicated and higher fee structure, officials said.

The attorney-general’s comments came in response to a note sent earlier this month by the wireless wing of the telecom department.

The note suggested three alternatives for broadband wireless access (BWA) auctioned in 2010 and used for high-speed mobile telephony and Net connectivity.

The first option suggests raising the SUC charge for BWA spectrum, currently at 1 per cent, to 3 per cent, similar to that of 2G spectrum.

The second option says BWA spectrum sold through the auction in 2010 can continue to attract an SUC of 1 per cent and will be “reported separately”.

This spectrum will not be doubled up with any fresh spectrum bought by a telecom company for calculating the use charges.

The last option suggests the spectrum fee should remain at 1 per cent but its calculation should be done along with the fresh airwaves bought.

However, a change in 2G spectrum use charge is certain after the telecom firms warned that they might have to pull out of the auctions if the current norms were continued.

Under the current rules, when an operator buys spectrum, it moves to a higher spectrum use slab.

The spectrum use fee is charged on the revenue earned by a telecom company, and ranges from 3-8 per cent depending on the amount of spectrum used.

“Everyone is waiting for clarity on spectrum use charge. We can take a call only when clarity is there,” Bharti Group deputy managing director Akhil Gupta had said earlier this month even as his firm had announced it was joining the auctions.

Eight operators, including Vodafone, Bharti Airtel and Reliance Jio Infocomm, have applied for the spectrum auction slated for February 3.