Telcos urge govt to reduce spectrum usage charge to 1% in a phased manner

They also asked for imposition of uniform spectrum usage charge of 3% initially

Telecom operators have urged the government to introduce uniform spectrum usage charge (SUC) at the rate of three per cent and bring this down to one per cent in a phased manner.

The Cellular Operators Association of India in a letter addressed to Department of Telecommunications Secretary J S Deepak, highlighted the difficulty in calculating revenues of the usage of a single technology (long-term evolution) on multiple spectrum bands.

“A uniform SUC will simplify the calculations and remove all arbitrages and ambiguities,” the letter stated.

There are different SUC  applicable for spectrum assigned at different points of time. The multiplicity of these rates leads to ambiguity while entering into transactions such as mergers & acquisitions, spectrum trading and sharing. A uniform rate will simplify calculations and remove arbitrage, the letter noted.

The Telecom Commission had in a recent meeting approved the Telecom Regulatory Authority of India (Trai)’s proposal to charge SUC at three per cent of adjusted gross revenue on spectrum that will be purchased in the next round of auction. This will be sent to the Cabinet for the final approval.

Trai’s proposal is for a uniform SUC of three per cent across the sector. Earlier, SUC was in the range of three to eight per cent and was brought down to a level of five per cent for future auctions in January 2014 by the United Progressive Alliance government. The existing telecom operators were asked to pay the weighted average of their existing SUC (on the old rate of three-eight per cent), and five per cent if they acquire new spectrum. The government had also asked all broadband wireless access (BWA) holders, including Aircel and Airtel, to continue paying one per cent on BWA, but they were asked to pay five per cent of adjusted gross revenue on all spectrum they would purchase in the future.

Welcoming the reduction in SUC from five per cent to three per cent, Vodafone’s India managing director and CEO Sunil Sood said, “The telecom sector is severely debt-laden (more than Rs 3 lakh crore at the last count and growing). This reduction in SUC charges from five per cent to three per cent will free cashflows, which can be invested in further enhancing network and customer experience.”

However, Trai’s recommendation faced stiff opposition from Reliance Jio, which holds pan-India broadband wireless access spectrum on which only one per cent SUC is imposed.

WAITING FOR THE RIGHT CALL

• Telcos demand an uniform SUC, which will simplify the calculations and remove all arbitrages and ambiguities
  

 

There are different spectrum usage charge  applicable for spectrum assigned at different points of time
 

Earlier, SUC was in the range of three to eight per cent and was brought down to a level of five per cent for future auctions in January 2014
 

Telecom Commission recently  approved Trai's proposal to charge SUC at three per cent of adjusted gross revenue on spectrum