Telecom dept may cut licence fee to 3%

Department of Telecom (DoT) is considering a proposal to reduce the licence fee and spectrum charges of telecom players from 6 per cent to 2-3 per cent in the Approach Paper of the Planning Commission's 11th Five Year Plan.

The proposal had earlier faced opposition from the finance ministry on account of revenue loss.

"We may propose reduction in licence fee to 2-3 per cent from the current 6 per cent to Planning Commission for its approach paper. We discussed it in the first meeting held for the purpose last week and another meeting is slated to be held on August 31 to discuss the same. Nothing has been finalised yet," a DoT official said.

The other issue that was discussed for the approach paper was setting a target of 650 million phone users by the end of the 11th Plan (2012). It was suggested by the department that a target of 650 million telephone subscribers, mostly led by mobiles, be set during the period.

The current telecom subscriber base in the country is 158.59 million. Out of this 47.3 million are fixed lines and 111.23 million are mobile phones. Planning Commission is currently in the process of preparing an approach paper where all ministerial growth targets, challenges and fund requirements are stated.

DoT's own target of 250 million phones by 2007-end was subsequently raised to 500 million by the end of 2010 by Telecom Minister Dayanidhi Maran.

The meeting was chaired by Telecom Secretary D S Mathur and defence ministry officials were also present.

While questions were also raised at the meeting about the lack of spectrum for current users, which would also prohibit growth as its is anticipated that most of the future telecom growth would come from mobiles.

According to sources, defence officials said they could only release some spectrum by the end of August.