Telecom Commission imposes 3% spectrum fee for next auction

Bharti Airtel, Aircel and Reliance Jio Infocomm are the three companies that won spectrum in the 2300 MHz band in the 2010 auctions, while the telecom department had decided to impose a 1 per cent SUC.

By: ENS Economic Bureau | New Delhi | Published: June 8, 2016 2:28:27 am
Telecom, DoT, Spectrum Usage, TRAI, DoT, reduction in spectrum usage charges, Spectrum Usage charge, news, India news, Economy, Policy News, Policy News in India, Tech news 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.

Inter-ministerial decision making body Telecom Commission on Tuesday cleared a proposal to use weighted average formula for calculating spectrum usage charge (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.

Despite the SUC charges in percentage terms would come 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, a senior government official said after the Telecom Commission meeting. The floor price will be the latest charges paid by the company

Bharti Airtel, Aircel and Reliance Jio Infocomm are the three companies that won spectrum in the 2300 MHz band in the 2010 auctions, while the telecom department had decided to impose a 1 per cent SUC. Now, the three companies will have to pay on the new weighted average formula on the total spectrum they hold across bands and across service areas. Accordingly, Bharti’s SUC which stands at 4.9 per cent will come down to 3.74 per cent, Reliance Jio will pay 2.88 per cent instead of 5 per cent; while Aircel’s SUC will also reduce from 3.24 per cent to 2.83 per cent.

In pure payment terms, the Department of Telecommunications had received about Rs 7,000 crore as revenue from spectrum usage charges from operators the official, and that amount has been kept as “revenue neutral,” this official said.

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The decision assumes significance after the telecom department sought the view of Attorney General of India for clubbing spectrum sold for broadband wireless access services in 2010 to avoid arbitrage in imposing spectrum usage charges in future. The Telecom Commission had last month deferred taking a call on the proposal of having a uniform spectrum usage charge, and sought opinions from the Attorney General of India and a technical committee for arriving at a final decision.

As against the DoT view of 4.5 per cent, the Telecom Regulatory Authority of India (Trai) has suggested that the SUC be kept uniform at 3 per cent of AGR.

The country’s highest law officer had reportedly said that the Department of Telecommunications cannot increase the SUC charges of 1 per cent of AGR, on 2300 MHz bandwidth auctioned in 2010 auctions, but can club it with other spectrum bands to arrive at a weighted average formula.

Telecom operators represented by the Cellular Operators Association of India had sought a uniform rate of SUC to avoid any arbitrage by Reliance Jio Infocomm, which is a beneficiary of lower SUC as it bought BWA spectrum in 2010. Reliance Jio, a member of COAI, was not party to the suggestion.

Calling it a win-win situation, the government official said that while on one hand, the decision does results in lower SUC for companies, while protecting the government’s revenues.

“As a result of this (decision), no one is impacted,” the official added, clarifying that the department has assured it gets its revenue share while at the same time bringing in clarity for the operators.

Cabinet note for 2016 auctions next week

New Delhi: The telecom department will circulate a Cabinet note on the proposed 2016 spectrum auctions to seek views from various ministries. Centre plans to auction 2,100 MHz of spectrum across 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2300 MHz.  ENS

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