Cabinet decision: DoT to finalise telecom spectrum usage rates

The Cabinet has asked the Department of Telecommunications (DoT) to finalise the revised structure of the spectrum usage charges (SUC) before it conducts the next round of auction in January, according to a recent communication.

Earlier, the Telecom Commission had stated it would take a decision on the proposed uniform SUC after consulting with the finance ministry. The government has said it would follow the existing rules of SUC for the upcoming auction, unless it manages to take a final decision on the issue before auction.

The Telecom Regulatory Authority of India (Trai) had recommended uniform SUC at three per cent for all operators. An internal committee of the DoT has opposed the proposal of uniform SUC.

Operators currently pay between one and eight per cent of their revenue as SUC depending on the quantum of spectrum they hold.

Companies like Reliance Jio, holding broadband wireless access (BWA) spectrum,  have repeatedly deliberated against the uniform SUC at three per cent, as it would increase SUC for BWA spectrum holders who now pay just one per cent of revenue.

The country’s second largest mobile carrier, Vodafone India, has recently said the slab-based spectrum usage charges may result in “stifle participation” in the coming auction.

On the other hand, the Cabinet has also said the DoT needs to finalise the reserve price of 800 MHz spectrum band expeditiously.

The Empowered Group of Ministers (EGoM) on telecom, headed by Finance Minister P Chidambaram, has decided that the DoT would make a fresh reference to Trai for its recommendation on the valuation and reserve price of 800MHz spectrum.

Trai had earlier stated that there was no need for auctioning 800MHz spectrum as there is not much demand, and the same should be taken to adopt an extended GSM band to extract maximum value. However, the ministerial bodies have decided that extended GSM band would not be feasible at the moment and 800MHz spectrum should be auctioned.

The DoT is expected to seek a frsh recommendation from Trai on valuation and pricing of 800MHz spectrum soon.