TRAI asks DoT to refer Uniform license fee to regulator

Telecom regulator TRAI has urged the government to consult it before deciding on a uniform license fee for operators, saying it has implications on the Centre's revenue as well as of the service providers.

The Department of Telecom has decided that the existing variable licence fee structure for telecom operators should be replaced with a uniform one. An departmental note suggests a uniform licence fee of 8.5 per cent for all types of services.

In a letter to DoT on Friday, TRAI said the proposed change in the license fee would impact both government revenue and the operators' businesses which, in turn, will affect the subscribers.

TRAI said the views of all stakeholders must be taken into cosideration before arriving at the new figure.

A DoT official said minister A Raja would take a call if the matter is referred to TRAI. But the DoT feels the Telecom Commission, the policy-making wing of the DoT, should take the final call on this.

If the matter is referred to TRAI, then it is going to be a long haul as the DoT may insist on a time-bound response while TRAI would like to do it through the usual consultation and recommendation process.

The uniform licence fee is mooted to help avoid arbitrage over integrated operators allegedly loading up maximum revenues on licences with lower fee.

A change in the licence fee structure, an analyst said, would have an adverse impact on long-distance operators and Internet service providers who pay only six per cent of their annual revenues as licence fee.

It will also have a negative impact on mobile operators offering services in C Circle states such as Assam, Bihar and Orissa as they are paying only six per cent. An additional 2.5 percentage point outgo could weigh heavily on their toplines.

Mobile operators in metro regions and Circle A states will, however, gain since they currently pay a 10 per cent licence fee.

For the government, this will have a positive impact as it plugs the loophole in the current system where the operators were giving wrong financial reports.

At present, operators pay between 6 per cent and 10 per cent of their annual revenue to the government as licence fee, depending on the type of service. This allows operators with multiple licences to take advantage of the differential fees and show higher revenues under the licence with lower revenue share.

The government has recently ordered a third party audit into the accounts of all integrated telecom companies as some of these were found to be under reporting revenues in segments attracting revenue share.