Cabinet approves 3 pc SUC for upcoming spectrum auctions

Setting the stage for the country's biggest ever spectrum sale, the Cabinet today approved 3 per cent annual usage charge for the spectrum to be procured in the upcoming auction.
"The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the rates for Spectrum Usage Charge or SUC for various bands of spectrum for which auction is going to be conducted shortly. With this, the path is clear for issuance of the Notice Inviting Application for the auctions by the Telecom Department," an official statement said.
The government expects to raise at least Rs 64,000 crore from the auction of about 2,300 Mhz of spectrum and Rs 98,995 crore from various levies and services in the telecom sector in this financial year.

As per the decision, spectrum to be sold in the bands of 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz will attract SUC at the rate of 3 per cent of the Adjusted Gross Revenue.
The SUC for telecom operators holding BWA airwaves (2300 Mhz band) in 2010 auction alongwith other set of spectrum will be calculated on the basis of weighted average.
"The weighted average of SUC rates across all spectrum assigned to an operator (whether assigned administratively or through auction or through trading) in all access spectrum bands, including BWA spectrum obtained in 2010 auction, shall be applied for charging SUC, subject to a minimum of 3 per cent of AGR excluding revenue from wireline services," an official release said.

Sources said that bidding for Rs 5.66 lakh crore mega- spectrum auction will start in 45-50 days.

The uniform SUC rate has been a highly contentious issue of late with the industry due to difference in the fee for 2300 MHz band (1 per cent) and other bands.
Reliance Jio, which bagged airwaves in 2300 Mhz band in 2010 auction, has opposed levying of uniform SUC rate, as suggested by Trai, as it pays only 1 per cent fee on the BWA spectrum as per the norms fixed for sale at that time.
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The Cabinet has also fixed SUC paid by telecom operators in 2015-16 as floor amount to be paid by them. This means telecom operators will not pay less than the amount they have paid in last fiscal even if new formula lowers liability on them.

However, if revenue of a company from telecom services declines from the floor amount of SUC shall be reduced proportionately.
"The amount of SUC payable by the operators during 2015- 16 at weighted average derived after taking into consideration the spectrum acquired in the coming auction and excluding the spectrum in 2300 MHz and 2500 MHz band acquired or allocated prior to 2015-16, shall be treated as the floor amount of the SUC to be paid by the operators," the statement said.
Reacting to the decision, industry body COAI Director General RS Mathews said, "We are pleased that the SUC rate for upcoming spectrum auction has been pegged at 3 per cent. However, we are disappointed that weighted average has been retained. Government should have accepted Trai's recommendation to bring SUC to 1 per cent as it would have resolved all legal hurdles."

He said that revenue maximisation should not be government's priority but the objective should be providing affordable connectivity to the people of India.