Bandwidth providers' licence fee cut

Telecom Infrastructure firms to pay to 6% of gross revenue as Licence fee

National telecom infrastructure providers will now have to pay lower licence fees following the government's move to slash it to 6 per cent of their gross revenues from the existing 15 per cent.

A media release issued by the Department of Telecom (DoT) today said the licence fee for infrastructure providers in Category II had been cut from 15 per cent of their adjusted gross revenue (AGR) to 6 per cent.

Among the major telecom infrastructure providers, there are at present six licencees, which have been clubbed in Category II. These comprise the three public sector players Gas Authority of India Limited, Power Grid Corporation and Railtel Corporation of India Limited, besides private sector players Hughes Escorts Communications, Spectranet and Tata Power.

Category I comprises smaller players that get bank guarantee and licence fee waivers.

The DoT's move is in line with n the recommendations of the Telecom Regulatory Authority of India (TRAI).

"This reduction in the licence fees will enable infrastructure providers in Category-II to effectively utilise their existing infrastructure as well as to cause further augmentation and offer competitive prices," the release said.

All national long distance and international long distance service operators need to purchase bandwidth from infrastructure service providers to carry calls beyond their circles.

The government had earlier reduced the bank guarantee for infrastructure providers from Rs 100 crore to Rs 5 crore to bring down the cost structure of this industry. 

It had also recently reviewed licence fees, performance bank guarantees and other cost-related items with the objective of reducing the overall cost of the service providers.

Minister for Communications and Information Technology Dayanidhi Maran had also announced a 50 per cent reduction in performance bank guarantees for national long-distance operators.

Industry experts expect this rebate in the licence fees to translate into a cut in bandwidth prices. This, in turn, may be passed on to subscribers and result in a reduction in tariffs for all sorts of telecommunication services.