DoT mulls flat spectrum usage charge of 4.5%

Telecom panel to decide on today

The department of telecommunications (DoT) plans to lower the spectrum usage charge to a flat 4.5 per cent.

Telecom companies now pay three to eight per cent of their adjusted gross revenue to the government as spectrum usage charge. The charge depends on when spectrum was acquired and whether it was allotted administratively.

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The change, if implemented, will help Bharti Airtel, Vodafone and Idea Cellular, which pay a much higher rate.

The Telecom Commission  (TC) would meet on Saturday to decide on the charge and shifting away from a weighted average formula, people close to the development said.

The proposal will mean some revenue loss for the government but its estimate was not available.

The Cellular Operators’ Association of India (COAI) has been seeking a uniform charge. "It will not only bring simplification but also eliminate arbitrage. Varied rates cause ambiguity during mergers and in deals for spectrum sharing and trading," said Rajan S Mathews, director-general, COAI, in a letter to the DoT last week.

Reliance Jio has, however, opposed this demand of the COAI.

In its earlier meeting, the TC had agreed on a spectrum usage charge of three per cent of the adjusted gross revenue for air waves sold in the next round of auctions.

The charge was earlier linked to the spectrum holding of an operator. The government in January 2014 decided to cap the charge at five per cent for spectrum that was to be sold in auctions. Telecom companies were told to pay the weighted average of their usage charge on existing spectrum and five per cent on what they acquired new.

The Telecom Regulatory Authority of India has recommended a uniform rate of three per cent spectrum usage charge. This has been opposed by Reliance Jio, which holds nationwide broadband wireless access spectrum on which a one per cent charge is imposed.

The government has asked all holders to continue paying one per cent on their existing broadband wireless access spectrum but five per cent on new spectrum.

The Telecom Commission will on Saturday also decide on pricing of spectrum in various bands, including 700 MHz, as well as the timing of the next auction. The auction is expected to garner the government Rs 5.76 lakh crore revenue based on reserve prices recommended by the Trai.