Crucial conclave: EGoM to meet today on spectrum usage charge

The Empowered Group of Ministers on telecom has the tough task of striking a balance between the legal and technical issues when it decides on spectrum usage charges on Monday.

The dilemma has arisen because the Attorney General has backed a formula which entails separation of revenue for broadband services while a technical committee set up by the Department of Telecom had earlier said revenue separation was not practical.

In 2008, the DoT had taken a view against fixing a spectrum charge specifically for 3G airwaves. Instead it asked all 3G players to pay 1 per cent higher charge on the total revenue including those earned from 2G services.

Explaining its stand an internal DoT panel had then said, “Though it is technically possible to employ complex software tools and the call data record to distinguish traffic carried on spectrum meant for 3G services from traffic carried on spectrum meant for 2G services, this computation will be exponentially complex to verify and audit.

“Segregation of 2G and 3G revenues is thus ruled out on practical grounds.”

Now the DoT has come out with a contradicting formula for the next round of auction.

Under this formula, operators like Reliance Jio, which has 4G spectrum in 2300 MHZ, will continue to pay 1 per cent revenue share and if they win spectrum in other frequency bands in the upcoming auction then a higher rate will be applicable only for the freshly bought spectrum.

The Attorney General has ratified this formula on legal grounds.

But GSM industry representatives claim that this is against the DoT’s stand taken in the case of 2G and 3G revenue separation.

“When we had gone to the Government seeking revenue separation for 3G spectrum we were not allowed so how can it be permitted for 4G players,” asked a senior executive of a GSM company.

Currently operators pay between 3 and 8 per cent of their annual revenues as spectrum charges depending on the quantum of spectrum they hold.

The TRAI had proposed a flat 3 per cent charge irrespective of the spectrum quantity.

The Finance Ministry had come up with another formula based on weighted average of the existing slab system and the one proposed by TRAI.

The issue has divided the industry with the GSM players supporting TRAI’s proposal and Reliance Jio seeking status quo.