 "Spectrum usage charge governed by NIA, not by licence conditions: Reliance Jio")
A move to levy uniform flat fee will “seriously disturb the level playing field” between incumbent operators and new entrants and will drive out the new entrants out of the market, the Mukesh Ambani-led company said in a letter to MF Farooqui, secretary, Department of Telecommunications (DoT), dated 8 January, reiterating its stand opposing introduction of a flat SUC.
Arguing against the incumbent GSM operators and their association Cellular Operators Association of India (COAI), Reliance Jio has stated, that the submission by COAI that on migration of internet service providers (ISP) with BWA spectrum to Unified License, SUC of these operators can also be changed, is “totally incorrect, misplaced and contrary to the provisions” of the NIA of the BWA spectrum auction and Unified License.
“The present escalating SUC regime is essential for recovering fee for the spectrum which was allocated administratively beyond contractual obligations and without any upfront consideration and there cannot be any valid technical or economic justification for the demand for parity with BWA SUC across all spectrum bands,” Reliance Jio said, adding that there was no basis for demand for altering SUC on account of license migration.
“We urge DOT to affirm its own stated position on spectrum usage charge in terms of binding conditions of NIA which will answer in unequivocal terms any unreasonable demands made by COAI and its members,” said Reliance Jio which is yet to start commercial operations.
With just BWA spectrum, Relience Jio would require paying just 1 per cent of adjusted gross revenue (AGR) as SUC when it starts commercial operations. Other operators pay between 1-8 per cent of AGR as SUC depending on their spectrum holding. The Telecom Regulatory Authority of India (Trai) had, in September 2012, suggested adoption of a flat SUC at 3 per cent of ARG, which was later opposed by an internal DoT committee. The Trai recommendation, however, was welcomed by all incumbent GSM operators like Bharti Airtel, Vodafone India, Idea Cellular and Uninor.
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Last month, the company had said that any attempt at changing the SUC regime for the spectrum already allocated is illegal, as it extends undue benefit to the incumbent operators.
Reliance Jio has sent a copy of the letter to Kapil Sibal, minister, communications and information technology; Sindhushree Khullar, secretary, Planning Commission; Arvind Mayaram, secretary, department of economic affairs; Saurabh Chandra, secretary, department of industrial policy and promotion; and other members of the Telecom Commission.
On Tuesday, Telecom Commission, which is the highest decision making authority within DoT, has deferred its decision on SUC saying that the issue would require more discussions. However, it would positively take a final call before the auction.
“The incumbent GSM operators want to enjoy all the benefits of additional spectrum without paying a single penny to the exchequer. They want to retain the spectrum in excess of what is permitted by their licenses and they neither want to pay the one time spectrum charge, nor they want to pay escalating spectrum usage charge for the excess spectrum held by them,” Reliance Jio noted in its letter.
The absurdity of the demands for flat SUC made by few incumbent operators and their association is evident, where they want to hold the precious spectrum for which they are not entitled and also do not want to pay charges for the same, said the company. “It is therefore imperative for the Government to take a firm stand on this matter and if these operators are not willing to pay higher slab based spectrum usage charge for the spectrum allocated to them administratively; such excess spectrum should be withdrawn from these operators,” it stated.
Reliance Jio further said that the capex and resultant opex required for network infrastructure in 2300 MHz spectrum band, in which it has 20Mhz of airwaves across all 22 telecom zones in India, is about 2-3 times more as compared to the other lower bands. “Given these spectrum characteristics across different bands, there cannot be any valid justification for levy of uniform SUC, as demanded by these operators, irrespective of spectral efficiencies,” it added.