RJio offers ‘foolproof’ system to segregate 4G revenues

Reliance Jio has told the Department of Telecom that it was prepared to offer a ‘foolproof’ mechanism to separate revenues from 4G services on different spectrum bands.

RJio has said that it will give a quarterly report giving details of revenues earned from 2300 MHz and 1800 MHz bands separately.

The company said that unlike legacy telecom networks, latest 4G systems allow it to give real time flow of charging information with clear identification of spectrum used for each transaction. RJio has offered to demonstrate its capabilities to DoT to assure that there was no scope of revenue leakage.

“The revenue segregation mechanism implemented by RJIL is simple, foolproof, free from tampering by the operator and captures the detailed usage and charging information along with spectrum-wise demarcation for each service,” the company said in a letter to DoT. A technical committee of the Department of Telecom 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.

The committee has also listed at least eight instances where revenues earned by operators cannot be segregated at all.

They include revenue from value-added services, unused vouchers and bundled/combo tariff plans.

Even where income earned on different spectrum bands can be separated, DoT will have to put in place a tamper-proof mechanism to ensure that the operators are not taking advantage of the arbitrage, the report said.

The report has huge ramifications for operators such as Reliance Jio, which has a mix of spectrum in the 2300 MHz and 1800 MHz bands. Reliance Jio and Bharti Airtel have argued that it was possible to separate all revenue earned from the 2300 MHz band and other frequency bands.

This is important because 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.

For example, if RJio offers 4G services using both 2300 MHz and the 1800 MHz bands, the DoT would want to know the exact income the company earned for each band. RJio has said since it knew that it had to segregate revenues it has deployed technology that enables it to do so. DoT had not allowed a similar plea from 3G operators in 2010 because the network then was not intelligent enough to make distinction between various spectrum bands.

Though the panel has not disallowed RJio’s case, it said that to make this separation reliable and tamper proof, DoT should come out with a clear set of guidelines specifying what needs to be done at the network level.

But the worry for RJio could be on those services where the panel has ruled out revenue separation.

Value-added services, for example, are touted to be one of the biggest revenue earners for 4G companies.

It has suggested that DoT could charge a higher revenue share on such services. RJio has, however, countered this saying that it can separate revenues even in the case of bundled tariffs.

The panel’s report will be now be considered by DoT, which will make its own set of proposals to the Telecom Commission for a final view on the matter.