Spectrum usage charge: Govt caps mobile phone frequency rates at 5% of revenue

Jan 27 2014, 13:48 IST
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The government leaves unchanged annual spectrum fee of 1% of revenue for 4G spectrum holders. The government leaves unchanged annual spectrum fee of 1% of revenue for 4G spectrum holders.
SummaryAnnual spectrum fee of 1 per cent of revenue for 4G spectrum holders kept unchanged.

The Empowered Group of Ministers (EGoM) today approved a spectrum usage charge (SUC) of 5 per cent of the annual gross revenue on all the new airwaves acquired in auction.

Existing telecom operators will have to pay the weighted average of their existing SUC, and 5 per cent if they acquire new spectrum.

"For all new spectrum, which will be sold, it will be 5 per cent but it will be charged at weighted average. There is no protection of revenue. In this process if government losses some revenue, doesn't matter. Ultimately consumers have to be benefited," Telecom Minister Kapil Sibal told reporters here.

He added the decision will go to Cabinet for final approval.

The SUC for broadband wireless access (BWA) spectrum will continue to remain at 1 per cent as the government has not amended the existing contractual obligation.

However, they will have to pay a SUC of 5 per cent for the new airwaves they acquire. These companies have to report separately the revenue earned from BWA airwaves and new spectrum.

"Ultimately it is consumers who need to benefit. Big players (charges) will come down. It will not affect new players," Sibal said.

Government, at present, gets pan India average SUC of 4.8 per cent on airwaves allocated till date which has now been fixed at 5 per cent. Hence, there will be no adverse impact on existing revenue, official sources said.

The Telecom Commission has recommended three options to the EGoM headed by Finance Minister P. Chidambaram - a levy of 3 per cent with weighted average, 5 per cent with weighted average and continuation of the existing regime.

GSM firms such as Bharti Airtel, Vodafone and Idea Cellular have locked horns with Mukesh Ambani-led Reliance Jio Infocomm following the Trai's recommendation of a uniform SUC.

The charge is levied annually by the government as a percentage of revenue earned from telecom services.

It currently ranges from 3 to 8 per cent for mobile operators, while for firms with Broadband Wireless Access (BWA) spectrum such as those of Reliance Jio Infocomm Ltd and Tikona, the fee is 1 per cent.

"Rationalisation of issue, Nobody should be a loser," Sibal said, adding,"More investment is sector means more service and lower tariffs for consumers."

Major telecom operators including Airtel and Vodafone had written to the Department of Telecom to take a call on SUC before auction starts on February 3.

Govt cuts telecom spectrum fee for big carriers to spur bids



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