DoT, telcos yet to find uniform ground on spectrum charge regime

Sindhu Bhattacharya December 21, 2014 01:29:16 IST
DoT, telcos yet to find uniform ground on spectrum charge regime

New Delhi: The furore over any changes in the current spectrum usage charge regime, which has seen powerful telcos at opposite sides of the fence, is keeping the Department of Telecom (DoT) fully occupied. With multiple options and myriad stakeholder opinions to consider, the DoT has already postponed the much-awaited spectrum auctions by 11 days. Unless the SUC issue is decided one way or the other, the auctions may not succeed.

DoT telcos yet to find uniform ground on spectrum charge regime

Spectrum doldrums. Reuters

Though it has clearly stated that a proposal to make SUC uniform for all spectrum acquired through auctions should be revnue neutral, an internal committee of DoT has offered as many as six options for bringing SUC at a uniform rate for all telcos from this year. Many of these options speak of scenarios where revenue to the government will be hit for some years. This committee has placed these options before the Telecom Commission, which is expected to meet later this week to take a final call on SUC.

Why is SUC tying the department in knots? Well, in three years, revenue generated from SUC has almost doubled, from Rs 3435.41 crore in FY11 to Rs 6,794 crore in FY13 (as per revised estimates). It is therefore a key contributor to the government's coffers. From the telco's point of view, SUC calculation is already a matter of debate because of their contention that the DoT has arbitrarily altered some items which telcos need to include while calculating AGR. This issue is already sub-judice.

At present, SUC is charged on the basis of how much spectrum a telecom company holds and ranges from 3-8 percent. The proposal by sector regulator Trai is to make it a uniform 3 percent for all spectrum bought through auctions and raise the SUC for BWA 4G spectrum from the present 1 percent to 3 percent. SUC is calculated on adjusted gross revenue of telecom companies, and is paid over and above the money telcos pay the government to purchase spectrum.

While the government wants any tweaking in the SUC rates to remain revenue neutral, telcos which hold spectrum that gets charged at the highest slab rate obviously want the lower, 3 percent rate to become valid. Reliance Jio Infocomm, the only pan-India BWA 4G spectrum holder has strongly opposed any move to levy the higher, 3 percent charge (it is at present liable to pay only 1 percent of AGR).

In a note prepared for the TC meeting, the internal committee of DoT has noted that excluding the two PSUs MTNL and BSNL, as many as 264 telecom companies hold only the minimum 4.4 mhz spectrum and therefore automatically fall in the 3 percent SC slab. Only 17 telcos have to pay SUC at 5 percent since their spectrum holding is up to 8.2 mhz. The committee has also said that only 13 telcos are currently being charged at 6 percent.

These holdings are relevant to 900 mhz and 1800 mhz spectrum bands since all spectrum holders in the 800 mhz or CDMA band are charged at lowest slab rate of 3 percent (no one holds more than 5mhz).

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