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Reliance Jio Infocomm has told the Government that any attempt to change the existing spectrum usage charges (SUC) for airwaves already allocated would be illegal.
The company said the proposal to introduce a flat fee instead of the current slab system will lead to windfall gains to the incumbent operators and losses to the Government.
Reliance Jio’s letter comes after the CEOs of four GSM companies wrote to the top functionaries of the Government seeking a flat usage charge.
3% Flat fee proposed At present, operators pay between one per cent and eight per cent of their annual revenues as spectrum charge depending on the quantum of airwaves they hold. TRAI had proposed to make it a flat fee of three per cent irrespective of the amount of spectrum.
GSM players backed TRAI’s proposal because they are collectively paying about Rs 5,000 crore as spectrum charge and this would come down significantly if TRAI's proposal is accepted by the Government.
Reliance Jio, on the other hand, will end up paying more because it is required to pay only one per cent of revenues under the existing policy. Reliance has told the Government that the existing fee structure cannot be changed. “There cannot be any valid justification of post facto change in previous terms of spectrum allocation which will only bring instability in the sector,’’ Reliance Jio said, adding that the existing GSM operators were trying to mislead the Government by pushing for changes that benefited them the most.
Reliance said the SUC rate for broadband spectrum was notified before the auction in 2010 as one per cent of annual revenues and there is no provision that permits the Government to modify the rates.
Annual cost “The bidders had factored this cost of annual SUC while bidding for broadband spectrum in 2010 and the bid amount was decided accordingly. Thus, the bid amounts paid for acquisition of BWA spectrum are naturally higher than it would have been had the bid documents provided for a higher spectrum usage charges of three per cent,” it said in a letter to DoT. “To now increase the SUC from one per cent to three per cent will be a violation and breach of the contract, will be illegal and cannot stand legal scrutiny,” the company added, indicating that it could move the courts if a higher spectrum charge is imposed on it. Reliance Jio had earlier taken legal opinion from lawyer Ramji Srnivasan who concurred with the company’s stand.
Attacking GSM players, Reliance Jio said that Cellular Operators Association of India has tried to make case for uniform SUC implementation by making numerous misleading statements. “The assumption that escalating SUC discourages purchase of spectrum and uniform SUC will encourage greater participation and make an operator advance the purchase of spectrum is without any logic. Every operator will bid for and obtain, from time to time, spectrum that is required for his business by bidding for the required quantity,” it said.
The Telecom Commission was scheduled to meet on Tuesday to take a view on the issue but sources said the meeting may be deferred.
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