The Department of Telecom has proposed a compromise formula to collect spectrum usage charge from broadband players. If the formula is accepted then Reliance Jio will end up paying close to 2 per cent of its annual revenues compared to 1 per cent now.
The proposed formula is derived from taking the weighted average of the spectrum charge paid by broadband players in the 2300 Mhz band and the fee paid for spectrum in other frequency bands.
A technical committee of the DoT had earlier said that an audit mechanism must be set up to ensure that 4G operators such as Reliance Jio correctly segregate revenues earned from broadband spectrum (2300 MHz) and other frequency bands. The committee said the process to separate revenue between spectrum bands could be a complex task requiring constant audit and monitoring by the Government.
RJio had, however, said it had a fool proof mechanism to separate revenues.
Broadband operators such as RJio have been allowed to pay a lower spectrum usage charge of 1 per cent of the annual revenue earned from services offered on the 2300 MHz band compared to an average of 5 per cent for other spectrum bands. The DoT panel is worried that a player may load up higher revenues on the 2300 MHz band to take advantage of the lower spectrum usage charge.
Taking a middle path, the DoT has now proposed the weighted average model, which would do away with the need to segregate revenues.
However, a similar proposal was earlier rejected by the Telecom Commission, the apex decision making body of the telecom department. At that time it was rejected on grounds that any change in spectrum charge for broadband players would go against the rules specified at the time of auction held in 2010. It is unclear how the new proposal will find acceptance.