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Airtel asks DoT to decide on spectrum usage charge before auction

Airtel asks DoT to decide on spectrum usage charge before auction

By Press Trust of India | Updated: 23 January 2014 09:29 IST

Telecom major Bharti Airtel has asked the Department of Telecom (DoT) to decide on spectrum usage charges before the auction starts on February 3.

"We once again request the government to decide this critical issue of SUC well before the start of auctions to enable operators to taken an informed decision," Airtel said in a letter to Telecom Secretary MF Farooqui on January 21.

The company said interested operators have already submitted applications on January 15 and spectrum usage charge (SUC) is an important component of the overall valuation of spectrum.

The spectrum usage charge (SUC), a bone of contention between leading GSM players and Mukesh Ambani-led Reliance Jio Infocomm, is levied annually as a percentage of revenue earned by telecom companies. It varies from 3-8 percent.

The Telecom Regulatory Authority of India's (TRAI) has suggested a uniform fee 3 to 5 percent from April 1 across telecom services for the success of the next round of spectrum auction.

(Also see: TRAI reiterates spectrum auction proposal to cut base price by 60 percent)

GSM industry body Cellular Operators Association of India (COAI) is demanding that the government implement TRAI's suggestion.

On the other hand, Reliance Jio and Videocon Telecom are opposing any change in existing SUC regime, specially airwaves that have been already allocated.

(Also see: Reliance Jio Infocomm opposes change to spectrum usage charge for BWA)

If TRAI's recommendations are accepted, then it will burden firms holding broadband wireless access spectrum, including Reliance Jio that at present pays 1 percent spectrum usage charge.

The applicants include Reliance Jio Infocomm, Vodafone, Airtel, Aircel, Tata Teleservices, Idea Cellular, Telewings (Uninor) and Reliance Communications.

The Finance Ministry has suggested that mobile operators winning in the auction should be charged only 3 percent of their revenue as annual fee for radiowaves they hold.

(Also see: Mobile auction winners should be charged 3 percent of revenue: Finance Ministry)

For BWA players, the Department of Economic Affairs (DEA) suggested continuation of 1 percent, but charge them weighted average of 3 percent and 1 percent if they buy spectrum in upcoming auction.

The DEA has suggested some other options as well which include charge of 3 percent on spectrum won in auction. For BWA players, DEA has suggested continuation of 1 percent, but charge them weighted average of 3 percent and 1 percent if they buy spectrum in upcoming auction.

For those who don't buy any spectrum in the due auction, DEA has suggested charging them as per existing rate slab.

The option suggested by DEA will be discussed at the Telecom Commission meeting scheduled for January 25.

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Further reading: Airtel, Department of Telecom, DoT, GSM, Reliance Jio, TRAI, Telecom Regulatory Authority of India, spectrum SUC, spectrum usage charge, telecom

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