Telcos urge govt to reduce spectrum usage charges to 1% in phases

Telecom Commission, in a recent meeting gave a go-ahead to Trai's proposal to charge SUC at 3%

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

Cellular Operators Association of India (COAI) in a letter to Telecom Regulatory Authority of India (Trai) and the department of telecommunications (DoT) it.

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

The Telecom Commission, in a recent meeting, approved 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 final approval.

Trai has recommended a uniform SUC of three per cent across the sector. Earlier, SUC was in the range of three-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. Existing telecom operators were asked to pay the weighted average of their existing SUC (on old rate of three-eight per cent), and five per cent if they acquire new spectrum.

The government had then 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 will purchase in the future.

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

COAI letter said Reliance Jio has divergent views on the matter.

A spectrum usage charge in addition to the spectrum auction price as a percentage of the adjusted gross revenue (AGR) has to be paid by telecom players according to the rates notified by the government.