AG favours one-time extra spectrum charge with effect from 2008

The Attorney General of India has opined a one-time charge can be levied for spectrum allotted beyond 6.2 MHz retrospectively from July 2008 and not the date of allocation of additional spectrum.

The opinion is crucial as it would form the basis for the empowered group of ministers (EGoM) on telecom to take a decision on the contentious issue of a one-time spectrum charge for excess spectrum. If implemented, it is expected to give some relief to incumbent telcos, who would otherwise have had to fork out Rs 24,000 crore.

Incumbent operators had started getting additional spectrum beyond 6.2 MHz based on their subscriber base from 2001 onwards. They will get relief if they have to pay the one-time charge only from July 2008.

The Attorney General was responding to a crucial query sent by the EGoM on telecom headed by Finance Minister P Chidambaram.

The question put forward was whether a one-time charge could be levied for spectrum already allotted beyond 6.2 MHz in GSM and five MHz in CDMA from a retrospective date. And, if so, whether such a charge could be levied on all licencees from their respective dates of allotment of additional spectrum.

Justifying the logic of the July 2008 date, the Attorney General has said the first time that the issue of pricing excess spectrum was discussed was in January 2001 and a final decision was taken in July 2008.

He has contended the date of the decision on charging for such spectrum taken at a meeting among the finance minister, the communications minister and the Prime Minister some time in July 2008 would be the relevant date from which such charges should be levied. It is, he says, in consonance with the fact that from May 2008 it was made clear to all operators that such additional spectrum would be charged for.

The Attorney General has, however, answered in the negative to a query by the EGoM as to whether a one-time spectrum charge could also be levied prospectively on all licences from zero to 6.2 MHz in GSM and from zero to 2.5 MHz in CDMA. This was meant to ensure a level playing field among all operators.

The Attorney General has opined if there is no court direction for a level playing field it may not be required to be done at all, much less by altering contracts. Besides, none of the persons who would participate in the proposed auction have demanded a level playing field. Also, the justification that the government has powers to change the terms and conditions of a licence in the interest of security or public good has to be seen in a different context. The concept of level playing field cannot be equated with public interest, the Attorney General has said.

However, some GSM operators say the move is unfair on them and advantageous to CDMA operators who will not have to pay anything as they do not have any excess spectrum.