DoT against spectrum usage fee cut - Times of India ~ Electronic Gadgets

The author has posted comments on this article Pankaj Doval, TNN | Dec 16, 2013, 04.30AM IST

NEW DELHI: The Department of Telecom (DoT) has raised objections to reduction in spectrum usage charges (SUC), as recommended by regulator Trai, and has decided to approach the finance ministry on the matter in view of the revenue losses and other legal implications. Trai had recommended a uniform 3% SUC for all kinds of telecom licences, while also suggesting that it be capped at 5%.

DoT has estimated that even a 1% reduction in the highest slab rate of SUC - bringing it down to 5% as asked by Trai - will lead to a revenue loss of Rs 2,657 crore over 10 years beginning 2014-15, according to an internal note. This assumes that all licences continue with the present spectrum holding and companies maintain their current rate of growth.

Currently, SUC is charged between 3% and 8%, depending on the quantum of spectrum held by a telco. However, the effective top SUC that companies usually pay is 6% as the amount of spectrum that would attract an 8% charge is not available with individual operators.

DoT and inter-ministerial body Telecom Commission do not support lower SUC charges recommended by Trai in September. Revenue neutrality as well as possible legal implications are cited as reasons behind objection. They have said a "detailed roadmap" needs to be drawn up before any transition to a uniform SUC regime.

The legal issues could stem from the fact that the notice inviting applications (NIA) during the previous rounds of spectrum auction had a slab system for SUC and companies had put in their financial bids keeping that regime in mind.

DoT's decision may not go down well with the industry that has been seeking a reduction in charges, saying that the slab system penalizes any new spectrum acquisition. Companies like Vodafone have already raised their concern on the matter and have asked the government to reduce the charges at the earliest.

While the DoT and Telecom Commission remain cold to the proposal, Telecom Minister Kapil Sibal has been forthcoming on the suggestion, and has said that rates need to be brought down. "In the ultimate analysis, the regime has to be uniform. What is the incentive for a person who is already paying 6% in acquiring more spectrum? He has no incentive," Sibal had told TOI recently, adding that he is in favour of lower and uniform charges.

While bringing the charges to a uniform 3% rate has been welcomed by the debt-laden telcos, there is a flip side to the issue as well. Trai's recommendations had also said that SUC charges for Broadband Wir eless Access (BWA) providers - like Mukesh Ambani's Reliance Jio - be raised from the existing 1% to 3%.

This move will also create legal hurdles as companies had made a bid for BWA spectrum, keeping the 1% SUC charges in mind, DoT feels.

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