Already under attack for distributing spectrum at throwaway price to new operators, the government may invite another barrage of criticism as the Department of Telecommunications (DoT) is likely to propose a nominal fee for radio frequency allegedly hoarded by existing GSM service providers beyond 6.2 Mhz.
According to sources, the DoT is likely to recommend a one-time charge of about Rs 250 crore per MHz of spectrum beyond the contracted 6.2 MHz along with additional 1 per cent annual usage charge.
This is in sharp contrast to DoT’s original proposal to charge fixed amount every year for spectrum held beyond 6.2 MHz along with substantial increase in annual spectrum usage charge as percentage of Adjusted Gross Revenue (AGR).
Sources said if this proposal of the DoT is implemented this may result in huge revenue loss ranging between Rs 6,000 crore to Rs 10,000 crore every year.
The DoT is in discussion with the finance ministry on finalising the formula for pricing the additional spectrum beyond 6.2 MHz and the same may be announced next month.
Samajwadi Party General Secretary Amar Singh has also written to Prime Minister Manmohan Singh in this regard.
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One of the new operators, who are being alloted start-up 4.4 MHz spectrum in a piecemeal manner, has questioned the DoT’s proposal to entertain existing operators’ demand outside the contractual obligation.
The finance ministry had earlier raised objections to Communications and IT Minister A Raja’s decision to give pan-India spectrum to new players at a price of Rs 1,651 crore that was determined seven years ago in 2001.
Moreover, finance ministry’s hopes of garnering Rs 40,000 crore from auction of spectrum for 3G services are likely to be dashed with the DoT sources saying that operators may not bid beyond the reserve price of Rs 2,200 crore.
It has also been pointed out that the agreement (between President of India and GSM mobile operators) was for 6.2 MHz of spectrum only when they bid/signed the licence and nothing else and legally the government should seek back the excess frequency held by the existing GSM players.
Contrary to it, most of the GSM spectrum has been cornered by the existing players leaving no scope for new players to expand their operations.
The DoT has constituted a committee to recommend the methodology to be followed for allocation of spectrum as well as pricing it.
Last week, Raja had said that new pricing formula for spectrum beyond 6.2 MHz would be unveiled by the end next month after due consultation with the finance ministry.