Cabinet approves spectrum usage charge of 3%

Setting the stage for India’s biggest ever spectrum sale, the Union Cabinet has approved a spectrum usage charge (SUC) of 3 percent of adjusted gross revenue (AGR), excluding revenues from wire-line services. Now Department of Telecommunications (DoT) can issue the Notice Inviting Applications marking the beginning of the auction process. Traditionally, the auctions begin within 45-50 days of the notice being issued.

The Cabinet has also cleared the proposal on using the weighted average method to compute the charge in addition to introducing proposal for a 3 per cent floor rate for the weighted average calculation, which was approved by the inter-ministerial Telecom Commission on July 25. The weighted average of SUC rates across all spectrum assigned to an operator in all access spectrum bands, including broadband wireless access (BWA) spectrum obtained in the 2010 auction, shall be applied for charging SUC, subject to minimum 3 per cent of AGR, and excluding revenues from wire-line services. However, the uniform SUC rate has been a highly contentious issue with the industry due to differences in the fee for the 2300 MHz band (1 per cent) and other bands.

The Cabinet, on June 22, had cleared the proposal for auction in various bands, but wanted more clarifications on the issue of SUC therefore it has asked Telecom Regulatory Authority of India (TRAI) and the Department of Telecom (DoT) to have a fresh look. And finally the Telecom Commission on July 25 recommended 3 percent annual usage charge for the spectrum to be sold in the upcoming auction while fixing the same as the minimum rate even for existing airwaves with all operators.

The auctions, scheduled for September, will see spectrum auctioned in all the major bands, including 700MHz, 800MHz, 900MHz, 1800MHz, 2100MHz, 2300MHz and 2500MHz. This time there will be a total of 2,142 MHz put up for auction in these bands. Besides, the auction is expected to generate over Rs 5.60 lakh crore for the Centre and allow operators to accumulate more spectrums.