Cabinet refers one-time spectrum fee decision to EGoM

The Union Cabinet today referred the proposal to charge a one-time spectrum fee on existing telecom operators for the remaining period of their licences to an empowered group of ministers (EGoM).

The move comes after several Cabinet members raised differences over the contentious issue. The Department of Telecommunications (DoT) has proposed a change in licence conditions of existing telecom operators to levy a one-time auction-determined price for all spectrum they currently hold and convert it into a liberalised regime.

However, the finance ministry, with an endorsement from Prime Minister Manmohan Singh, has communicated to DoT it preferred to give operators the right to use spectrum up to 4.4 MHz or 6.2 MHz at an administered price (the Rs 1,650 crore which they paid for a pan-India licence) within a non-liberalised regime.

Under a non-liberalised regime, the operators who own 1,800 MHz of spectrum would be able to offer only 2G services as they do now. However, in a liberalised regime, they could use the spectrum to give any service — 2G, 3G or 4G.

The Planning Commission has also raised objection to the DoT that all incumbent operators should pay prospectively for all the spectrum to bring a "level-playing field" with new operators.

With the cabinet referring the issue to the EGoM, the ministerial panel now has to take a call on the issue. The government, however, is yet to announce a new head for the EGoM on spectrum after Union Agriculture Minister Sharad Pawar recused himself from the post yesterday.

Earlier, former finance minister Pranab Mukherjee was heading the panel. Sources said Defence Minister A K Antony might take up the top spot. The EGoM also has to decide on the contentious issue of a base price for 2G auction.

DoT had in a draft cabinet note proposed telecom operators be given an option to pay for all the spectrum they use prospectively from a prescribed date (to be determined) at the 2G auction-determined price. In the cabinet discussion, it was felt that the matter should be referred to the attorney general by the EGoM after a presidential reference.

In simple terms, a telco which has been operating services for 17 years will have to pay either on a pro rata basis for three years (as the licence is for 20 years) and then take its chance in acquiring spectrum at the prevailing price for another 20 years. Or, the company could pay the price for a full period of 20 years.

The draft note also offered three other options, which include asking operators to pay prospectively for spectrum held by them beyond the initially granted 4.4 MHz. The third option is to charge them beyond the contracted 6.2 MHz, again prospectively. The last option is not to charge incumbent operators at all as the market-determined 2G spectrum price is for the new operators.

Kochi metro rail project approved
The cabinet also approved a proposal to build metro rail at Kochi in Kerala. The Rs 5,181-crore project will be built on the same model as other metro rail systems in Delhi, Bangalore, Kolkata and Chennai.

Kochi Metro will cover 26 km between Alwaye and Petta on a fully elevated track. Detailed Project Report for the metro system was prepared by Delhi Metro Rail Corporation. “The project will be implemented through the existing state level Special Purpose vehicle named Kochi Metro Rail Ltd which shall be converted into a joint ownership SPV of the Government of India and the Kerala government,” an official statement read.

The overall cost of the project at Rs 5,181 crore includes Rs 1,507 crore equity contribution by the centre and the state government, Rs 2,170 crore external debt by Japan International Cooperation Agency (JICA) and Rs 672 crore subordinate debt for land cost by the Kerala government.