DoT panel recommends uniform 8.5% licence fee

A committee set up by the Department of Telecommunications (DoT) has recommended a uniform fee of 8.5 per cent of annual gross revenue (AGR) for all licences — which include UASL, international long distance, national long distance and internet service providers, amongst others.

The move will provide relief to UASL licencees which offer mobile and other services, but would increase the burden of revenue they have to share for ISPs, ILD and NLD operators. Currently, while a UASL licencee pays between 6 to 10 per cent of AGR as licence fee to the government, depending on the circle, it is only 2-6 per cent for ILD, NLD operators.

The differential rates have allegedly encouraged many operators to shift their revenues on the ILD, NLD or ISP accounts and so pay the government less. With complaints being made, DoT had decided to audit the accounts of all leading telecom operators to check if they were using the differential to avoid paying more licence fee than they were supposed to.

The licence fee committee was constituted under a joint secretary in DoT. It said it had taken a holistic view of the entire licence regime, while also ensuring minimal impact on the contribution made to the general exchequer by DoT. The committee said it had looked into all the licences issues and was recommending 8.5 per cent of AGR to end the arbitrage available to operators due to differential rates of licence fee.

The problem came in the limelight when, on the basis of complaints made against Reliance Communications, the government decided on a special audit of the company’s books. It was alleged the company was diverting revenues earned from its mobile services to a subsidiary, to bring down the total amount it had to pay to the government as licence fee.

The Telecom Regulatory Authority of India (Trai) has also come into the picture and had asked DoT to examine Airtel’s books especially its revenues from long-distance telephony.

Trai had noted a shift in Airtel’s revenues to the long distance segment, which attracts only 6 per cent licence fee. The government has issued orders to probe the accounts of four of the leading operators.