Cellular firms to pay 30% less fees

While cellular operators pay 12 per cent of their revenue to the government as license fees every year, this is to be reduced to 8 per cent. For B category cities, the revenue-share license fee is to be cut from 10 per cent to 7; and for C category cities, the reduction will be from 8 to 6. The total revenue earned by the industry is expected to be around Rs 6,500 crore in the current year.

The announcement, ironically, may go against the cellular operators own interests. They have filed a case in the Supreme Court against the government’s decision to allow fixed line service providers (FSPs) to provide WiLL-based mobile telephony services.

The final hearings on the subject are to be heard on the 20th, 21st and 26th of this month. If the drastic cut in revenue-share license fees is announced before the Supreme Court hearing, it is expected that the FSP lobby will use this to argue that the cellular operators have just got a huge concession — and therefore, their objection to the WiLL-mobile phones is an exaggerated one.

Essentially, the cellular lobby has argued that the New Telecom Policy of 1999 does not envisage any service called ‘limited mobility’, which is what the WiLL-mobile services are being marketed as. The cellular operators are also arguing that while they have paid around Rs 9,000 crore to get 6.2 Mhz of spectrum frequency licenses, the WiLL-mobile firms are getting this free of charge. (Since there are 3 cellular operators per circle, this means each has paid Rs 3,000 crore for a 6.2 Mhz frequency, or Rs 500 crore per Mhz. Given that four WiLL firms have already got 5Mhz of frequency each, this means they’ve got Rs 10,000 crore of frequency for free). The cellular industry’s argument is that since the WiLL-mobile firms are not paying for their spectrum frequency licenses, and enjoy other more favourable terms, they can provide mobile services at a fraction of their cost.

What’s made matters even more complicated however, is that, despite a court case, the department of telecom has encouraged MTNL and BSNL to set up their WiLL-based mobile services as well, and these have all been marketed as the ‘poor man’s phone’. So any decision for or against allowing the use of WiLL-based mobile phones will have to take this into account as well.