DoT moves North Block on spectrum

Trai proposal for fee cut

The department of telecommunications (DoT) has sought the finance ministry's views on the Telecom Regulatory Authority of India's recommendations that the spectrum fee be reduced from 6 per cent of the adjusted gross revenue to 4 per cent.

The department has also asked for the ministry's opinion on the DoT-proposed imposition of a one-time fee for next generation mobile services. Tatas have proposed a Rs 1,500 crore entry fee on 3G spectrum

The move comes after Prime Minister Manmohan Singh sought comments from the finance ministry and the DoT on the issue after allegations of favouritism and hectic lobbying for extra spectrum for third generation services by operators.

The finance ministry and the DoT are expected to submit their proposals to the Prime Minister towards the end of the month.

Finance Minister P Chidambaram is expected to finalise his ministry's stance and a report to the DoT by the end of June.

According to sources, though the Tatas had argued in favour of a one-time entry fee of Rs 1,500 crore, both the finance ministry and the DoT were not in favour of this as they felt that the levy would hike telecom tariffs.

DoT officials said levying an entry fee might not be a legally sound move as existing telecom licences permitted all types of services and did not distinguish between second-generation and third-generation (2G and 3G) services. "There is also a clause that there cannot be an entry fee for a new service," said an official.

According to a finance ministry note, revenue-sharing was the best option, rather than imposing a one-time entry fee.

The wireless and planning coordination wing of the DoT has already discussed Trai's recommendations with cellular operators and their associations. Sources said the policy would be formulated by July-end.

The cellular operators' association of India (COAI), representing GSM players, had opposed any entry fee. But their CDMA counterpart, the association of unified service providers of India (AUSPI), had declined to comment on this aspect in their reply to the DoT.

Asked if the department is giving consideration to the proposal of Tata, sources said an operator has given a suggestion and it cannot be thrown away like that.

"It has to be analysed and considered from all aspects like the current licence conditions, the ground realities of spectrum availability and usage among others before taking any decision on to dismiss the proposal or to incorporate it," they said.

"All that could be said at this stage is that WPC is analysing it internally and is in consultation with the finance ministry".

Tata offers CDMA-based mobile telephony, while the other major player in the field is Reliance Infocomm.