In a bid to resolve the stalemate over spectrum charges, Chief Executive Officers of four telecom companies have written to the Prime Minister’s Office and the Finance Minister offering a compromise formula.
Chiefs of Airtel, Vodafone, Idea Cellular and Telenor, in a joint letter, said that if a flat spectrum charge was not feasible then the Government should collect the fee based on technology. For example, all operators offering 4G services using LTE technology should be allowed to pay one per cent of the revenue irrespective of the spectrum band they use for it.
This would ensure level playing field between broadband players such as Reliance Jio and other operators that may also start offering 4G or 3G services using spectrum in 900 MHz or 1800 MHz bands.
The CEOs said that the next round of auction would fail if the Government did not take a decision before January 23.
Under existing rules, telecom companies are required to pay between one per cent and eight per cent of the annual revenues depending on the quantum of spectrum they own. TRAI, however, has recommended collecting a uniform fee of three per cent.
Backing the TRAI’s proposal, the four CEOs said that if the existing slab-based charges continue, it will act as a deterrent for any operator to acquire more spectrum whether through auctions, mergers or spectrum sharing.
Two key issues The industry is hopeful that the DoT would correct the discrepancies in the current practice of levying spectrum usage charge and consider a flat spectrum usage charges as opposed to an escalating charge.
However, there are two major problems in changing the existing regime. The first is that such a move will impact Government revenues. An internal committee of the DoT has estimated that the Government could lose out Rs 250 crore every year if the usage charge is made flat.
The CEOs have dismissed this concern saying that if the existing regime is not changed then it could lead to larger losses on account of spectrum remaining unsold.
“167.50 MHz of spectrum in the 1800 MHz band remained unsold in November 2012 auctions. Even taking today’s reserve price, the loss to the Government exchequer on account of his unsold spectrum is around Rs 4,900 crore upfront and Rs 1,960 crore per year, a figure far higher than the annual loss on account of flat spectrum usage charge,” the letter stated. However, there is a second issue in the form of Reliance Jio, the only major player which has opposed the flat fee regime. That’s because Reliance had won broadband spectrum in the 2300 MHZ band and the Government had then fixed a charge of only one per cent.
Moving to a flat regime would mean Reliance would have to start paying three per cent. The company has termed this illegal because it goes against the rules announced at the time of buying spectrum three years ago.
Panel to meet on Dec 31 Therefore, CEOs of other companies have said that if the Government finds it difficult to bring all players under a flat fee then it should charge one per cent charge from all operators offering broadband services.
The Telecom Commission is scheduled to meet on December 31to take a decision on this issue.