Giving some relief to the telecom operators, the inter-ministerial panel Telecom Commission has cleared a proposal to use weighted average formula for calculating spectrum usage charge (SUC) based on the total spectrum holding, for all bands allocated to telecom operators. It has proposed a lower 3 per cent SUC from the operators’ adjusted gross revenue (AGR) for all bands. However, the proposal will be limited only to the upcoming auction and the government will decide later on user charges for auctions to be held in future.
The government had in January 2014 decided to cap the SUC at a flat 5 per cent for spectrum that was to be procured in future auctions. The Department of Telecom will move a Cabinet note for inter-ministerial consultations on spectrum auction in a week and place it before the Cabinet for a final decision. The move will result in lower spectrum user charges for companies while protecting the government’s revenues, and as a result, no one will be impacted. The annual SUC collection by government as of now goes up to Rs7,000 crore.
Following the new formula, operators will have to pay the weighted average of the current rates and 3 per cent for spectrum to be procured in future. The companies that do not procure spectrum in future auctions will continue to pay the existing rate. In order to prevent loss of revenue for the government, telecom operators will pay a minimum amount which they are paying as per 2015-16 rates.
The government is in the process of holding one of the biggest spectrum auctions in which airwaves worth at least Rs 5.66 crore will be put up for sale. The SUC has been one of most contentious issues of late. Reliance Jio has opposed levying of uniform SUC rates as suggested by Trai as it pays only 1 per cent on its spectrum in 2300 Mhz band (broadband wireless access)and the proposal to levy 3 per cent would put extra burden on the company.