Telecom Commission roots for 3 pc SUC from next auction

In what could be good news to mobile operators, the inter-ministerial panel Telecom Commission today backed lowering of spectrum usage charge to 3 per cent of their annual revenue.
The panel also decided that the payout for carriers in any case will be not be lower than what they are currently paying at the existing rate to prevent loss of revenue to the government.
"For future auction, the Telecom Commission stood by its earlier recommendation to levy 3 per cent SUC," an official source said.
The Telecom Regulatory Authority of India (Trai) has recommended SUC at a uniform rate of 3 per cent across the industry and gradually bringing it to 1 per cent.

Before 2010, there was only 2G spectrum and hence, calculation of revenue was easy. But the process became complex after new frequencies were allocated to companies for services like 3G and 4G.
A technical panel of the Department of Telecom has said it is difficult to segregate revenue of companies holding airwaves in multiple bands.

The SUC has been one of most contentious issues of late. Reliance Jio has opposed levying of uniform SUC rates as suggested by Trai as it pays only 1 per cent on its spectrum in 2300 Mhz band (broadband wireless access)and the proposal to levy 3 per cent would put extra burden on the company.

The government in January 2014 decided to cap SUC at a flat 5 per cent for spectrum that was to be procured in future auctions.
At that point, telecom operators were asked to pay the weighted average of their existing SUC (on the old rate of 3-8 per cent) based on the quantum of spectrum they hold and 5 per cent if they acquire new spectrum.
For BWA spectrum holders like Reliance Jio, Airtel and Aircel, the same method was put in place, considering 1 per cent SUC on airwaves held by them in 2300 Mhz band.
With the new formula, operators will have to pay the weighted average of the current rates and 3 per cent for spectrum to be procured in future.

The companies that do not procure spectrum in future auctions will continue to pay the existing rate.