DoT may reject Trai views on uniform spectrum fee

Ministry says slab-based SUC regime cannot be changed as the contract and binding between Government and telcos cannot be altered

The Department of Telecommunications (DoT) is likely to reject the recommendations of the Telecom Regulatory Authority of India (Trai) on introducing a uniform spectrum usage charge (SUC) of three per cent for all telecom service providers.

According to a recent discussion of the DoT, the ministry has said the slab-based SUC regime cannot be changed as the terms of the notice inviting applications (NIA), contracts and bindings between the government and telecom service providers, cannot be changed by the government.

There is no provision of change in rates in the NIA for broadband wireless access (BWA) spectrum auction, it stated. DoT added bidders had finalised the auction price based on the SUC rates prescribed in the NIA of BWA spectrum auction.

Post facto increase in SUC rate after three years is a violation of contract, it noted.

At present, SUC varies from 3-8 per cent depending on spectrum holding. Incumbent operators like Airtel, Vodafone, Idea, BSNL and MTNL, who have more spectrum with them, pay spectrum usage charges of up to 8 per cent. Reliance Jio had opposed the move saying that it would have to pay more as its spectrum usage charge for broadband wireless access spectrum currently is pegged at one per cent of revenue.

 

Earlier, the Telecom Commission, which is the highest decision making authority in DoT, had said that the regulator’s suggestion on adoption of a uniform SUC rate of three% might not be implemented immediately, as legal implications needed to be examined. It had asked TRAI to refer to the notice inviting applications. The DoT committee had noted that a uniform SUC could not be implemented, as revenue from auctioned and non-auctioned spectrum could not be separated.

 

Claiming it did not see any “valid grounds to reconsider” its recommendations on SUC, TRAI had, last week, said: “The ease of administering a flawed system surely cannot be a justification for continuing with the flawed system.” The regulator had also added that its primary aim in this regard was to enable a gradual transition from a slab-rate system to a uniform SUC regime over time. 

 

Noting that DoT’s comments appeared to be influenced by a selective reading of the recommendations, TRAI said its holistic view of the SUC regime had not been fully absorbed. The transition to a uniform rate would not only simplify the levy structure but also enable the policy initiatives on merger & acquisitions and sharing & trading of spectrum to be implemented without inherent disincentives, TRAI had said. The regulator added: “If DoT is of the view that a uniform SUC rate should be one%, the authority will not have any objection.”

 

DoT, in its recent discussion, has said that voice was allowed earlier for BWA spectrum holders, but the ISP licence holders were not permitted to provide voice services. With Unified Licencing, the Government has permitted the migration of ISP licencees to unified licencing regime with additional fees. And delinking of spectrum with licences does not override the provisions of NIA, it added.

 

According to the NIA of BWA spectrum auction in 2010, it was noted that BWA spectrum holders will be allowed to provide voice services and the SUC was fixed at one%, DoT said, pointing out that the NIA was prepared after deliberation with the regulator on the issue.