Telecom panel for minimum 3 per cent spectrum usage charge

Had earlier cleared plan to use weighted average formula for calculating SUC

By: ENS Economic Bureau | Amitabh Sinha & Geeta Guptanew Delhi | Published: July 26, 2016 1:13 am
trai, spectrum, spectrum usage charges, spectrum charges, suc, spectrum usage, trai spectrum usage charges, trai spectrum, trai spectrum usage charges, spectrum usage charges india, elecom regulatory authority of india, latest new With this move the Telecom Commission overlooked the recommendations put forth by the Trai, which, on July 12, maintained its view of having a flat SUC regime.

The inter-ministerial Telecom Commission on Monday reiterated its stand on using the weighted average method to compute the spectrum usage charge (SUC) in addition to introducing proposal for a 3 per cent floor rate for the weighted average calculation, a senior government official said.

In its previous meeting on June 7, the panel had cleared a proposal to use weighted average formula for calculating SUC based on the total spectrum holding, for all bands allocated to telecom operators. For the auctions proposed to be held later this year, the SUC will be imposed at 3 per cent of a company’s adjusted gross revenue (AGR).

Despite the SUC in percentage terms coming down for most operators that bought spectrum in the 2300 MHz band in 2010 auctions, in revenue terms they will have to pay a minimum floor price so that the exchequer’s income is not hurt, the government official said after the Telecom Commission meeting. This minimum price will be the latest charges paid by the firm.

With this move, the Telecom Commission overlooked the recommendations put forth by the Telecom Regulatory Authority of India (Trai), which, on July 12, maintained its view of having a flat SUC regime, and mooted a separate formula for computation of the charges according to the weighted average method, different

than the one considered by the Telecom Commission.

The Trai had reconsidered its original proposal after the Union Cabinet, on June 22, had referenced back the SUC issue to the sectoral regulator for its opinion. The Trai had recommended that the DoT should also include several alternate factors such as last market-determined price and technical efficiency of spectrum bands to arrive at the weighted average for computing the SUC. The telecom watchdog said that if the spectrum quantity in a band was the only weightage for calculating weighted average formula, it may lead to certain shortcomings.

However, the official said that the Telecom Commission stuck to its own stand of the weighted average calculation, according to which if the mobile companies do not buy any more spectrum they would pay the following SUC — Bharti Airtel would be charged at 3.74 per cent of AGR, Reliance Jio 3.05 per cent of AGR, Aircel would have 2.83 per cent of AGR, but with the floor rate kicking in, it would pay 3.00 per cent.

Vodafone India and Idea Cellular would pay SUCs at approximately 4.8 per cent and 4.5 per cent, respectively, of their adjusted gross revenues, the official added.

He also said that the DoT would now send the proposal to the Cabinet for its meeting next week, and the notice inviting applications for the upcoming spectrum auctions would be issued shortly thereafter. Traditionally, the auctions begin within 45-50 days of the notice being issued. The official said that the spectrum auction timeline would remain unaffected despite the back and forth of views on SUC.

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