FinMin asks for more time to examine SUC issue

Telecom Commission meeting to decide on charges deferred.

A crucial meeting of the Telecom Commission to decide on how much telecom service companies should pay annually spectrum usage charge (SUC) had to be postponed as the finance ministry has asked for more time.

The meeting scheduled on December 31 was put back just a day before it was to meet. The commission which is a secretary-level body will have to decide which rates will be applied for the spectrum usage charge or SUC. Government sources said they were caught by surprise when the finance ministry asked for more time to send in its observations. A finance ministry source said the delay was due to the absence of finance minister P Chidambaram for two days.

No fresh date has,however,been set for the meeting. The decision of the commission will be sent up to the empowered group of ministers led by Chidambaram.

The SUC rates currently vary between 1 and 8 per cent for different telecom firms and are the stumbling block for the auction of airwaves.

The department of telecommunications (DoT) has proposed as many as six alternatives to the commission for resolving the differences. Almost all of them differ from the recommendations of the Telecom Regulatory Authority of India (Trai) which has suggested a flat 3 per cent rate for all spectrum bought through auctions.

SUC is calculated on the adjusted gross revenue earned by a telecom company.

The alternatives,instead of a single offer,happened despite a lengthy meeting taken by telecom minister Kapil Sibal on the issue with his officials from different departments.

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All the alternatives accept that since some of the spectrum was given to the companies on administrative prices instead of having been decided through auctions,the government has little right to reduce them now and cause loss to the exchequer. Based on the current budget estimate of Rs 6,974 crore,the telecom department has estimated an aggregate loss of about Rs 4,000 crore from the new rates.

The finance ministry which had supported the recommendations of Trai on this issue wants to examine all the objections raised before the meeting of the secretaries panel. It is expected to argue that if a decision is not taken to reduce the rates the auctions will see a tepid response for 1800 mhz and which will correspondingly reduce the income of the government on a far larger scale.

Depending on the decision taken by the commission and the subsequent clearance by the ministerial group the process for the auction will begin. Because of the delays at this stage the telecom department has already once postponed the date for the auction of 900 and 1800 Mhz bands to February 3. The dates for the companies to submit their expressions of interest have also got stretched to the middle of this month.