Spectrum usage charge: Cabinet sends proposal back to regulator

The industry has been asking for a uniform spectrum usage charge across bands

The Cabinet on Wednesday decided to send back the issue of spectrum usage charge (SUC) to Telecom Regulatory Authority of India (Trai) for scrutiny.

SUC, one of the many levies  operators pay the government, has been a bone of contention. For some time, the industry has been asking for a uniform charge across bands, as it was difficult to calculate separate charges across bands with multiple operators offering data services on various bands. The SUC vary from five per cent to one per cent across bands.

The regulator had recommended an SUC at a uniform three per cent across the industry and gradually bringing it to one per cent. However, the attorney-general (A-G) was of the opinion that a flat rate for all past, present and future spectrum was not appropriate in legal terms.

Minister Ravi Shankar Prasad said: “For one specific issue, Trai has repeatedly recommended a particular slab. The A-G was consulted on the issue and he said a flat rate for past, present and future may not be very appropriate legally speaking. What the Cabinet has done today because that particular advice and the consequent decision of the Telecom Commission were not referred back to Trai that limited referral should be done.” He added that the department expected Trai to respond at the earliest on the referral. The GSM industry body, which represents operators, had supported the proposal of flat rate but Reliance Jio Infocomm had opposed the move.

In a presentation to joint secretary of the telecom J S Deepak on June 10, the Cellular Operators Association of India has sought a uniform SUC at three per cent of adjusted gross revenue for all bands and for existing and new spectrum. The industry body had argued that it would removes arbitrage. Currently, the SUC levy on the 2300-Mhz band was one per cent while it was higher for other bands. Having a single rate would eliminates complexity associated with revenue segregation across bands. It would also simplify SUC for trading, liberalisation, M&A and renewal of licences, COAI had argued.

The Telecom Commission had decided that for the spectrum acquired in upcoming auctions, a SUC of three per cent of adjusted gross revenue would be charged from mobile operators, whereas a weighted average formula would be applied for calculating the SUC on the total spectrum holding for all bands.

SUC was earlier linked to quantum of spectrum held by an operator and varied between 3-8 per cent of adjusted gross revenue.