Monday, Oct 20, 2014

Telecom panel leaves decision on SUC to EGoM

ENS Economic Bureau | New Delhi | Posted: January 26, 2014 12:48 am

With Attorney General Goolam E Vahanvati of the opinion that the government cannot raise spectrum usage charge on BWA spectrum holders from 1 per cent of their adjusted gross revenue to 3 per cent, the Telecom Commission on Saturday left the decision to the empowered group of ministers (EGoM), which is slated to meet on Monday.

The Telecom Commission forwarded all it options as well as the AG’s opinion to the EGoM for a final decision.

“No decision was taken today. All the options would be placed before the EGoM on Monday and they will take a final call,” said MF Farooqui, chairman, telecom commission, who is also secretary, department of telecom (DoT).

Farooqui added that a key parameter for deciding the new spectrum usage charge (SUC) would be maintaining the government’s annual earnings from the SUC. In fiscal 2012-13, the government earned a total of Rs 5,689.88 crore from spectrum levy, an increase of about 10.5 per cent from the previous fiscal.

The issue of rationalising SUC is crucial before the spectrum auctions of 900 Mhz and 1,800 Mhz, which commences from February 3.

The Telecom Regulatory Authority of India (Trai) had recommended that SUC for all auctioned spectrum be made uniform at 3 per cent, while in cases of a mix between auctioned and administratively allotted spectrum, it be kept at 5 per cent. Since GSM operators currently pay an escalating SUC ranging between 3-8 per cent, they supported the recommendation. However, Reliance Jio, which won pan-India spectrum in 2.3 Ghz in 2010 auctions for BWA services, opposed the move, as the SUC was then fixed at 1 per cent for BWA services. The company raised the issue of violating contractual obligations.

Facing a tough situation, the Telecom Commission, which last met on January 7 on the issue, drew up three options to deal with BWA operators and sought a legal view on it from the AG.

The options were: SUC for spectrum acquired for BWA in 2010 auctions be raised to 3 per cent; this be kept at 1 per cent and be reported separately; and SUC for standalone BWA be kept at 1 per cent, but if combined with spectrum bought in fresh auctions then the charge be the weighted average of acquired spectrum at 3 per cent and BWA at 1 per cent.

Vahanvati has ruled out the first and third options and said only the second option is legally feasible.

This made the job of the Telecom Commission difficult on Saturday. Theoretically, it could have agreed with the AG’s view and suggested that for BWA spectrum 1 per cent would be applicable and be reported separately, and if BWA operators acquire fresh spectrum in auctions, they  would pay 3 per cent along with GSM operators.

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