Decision on one-time spectrum fee deferred

EGoM to wait for Supreme Court decision on Presidential reference

The Empowered Group of Ministers (EGoM) on telecom, headed by Home Minister P Chidambaram, on Tuesday deferred a decision on whether to levy a one-time spectrum charge on existing licensees till the outcome of the Presidential reference (PR) on the sector, being decided by the Supreme Court.

The Department of Telecommunications (DoT) had wanted existing telecom operators (whose licences weren’t cancelled in this year’s landmark SC order, of February) to pay a one-time, auction-determined, price for the airwaves they currently hold, to create parity between the new entrants and the incumbents.

“All the issues were placed before the EGoM, and the EGoM decided that we will wait for the outcome of the Reference and then decide on these issues,” Telecom Minister Kapil Sibal told reporters here, after an hour’s meeting.

 

BANDWIDTH CHARGE

• Under one-time spectrum fee, DoT wants existing telecom operators (whose licences have not been cancelled) to pay one-time auction-determined price for airwaves they currently hold, to create a level playing field between new entrants and incumbents 
• The Union Cabinet on July 3 had referred the matter of one stime spectrum fee to EGoM. 
• Earlier, DoT had made four proposals to the Cabinet: First, levy one-time fee on all airwaves held by existing telecom companies. Second, impose a fee on airwaves held beyond the start-up spectrum of 4.4 MHz. Third, levy a fee on airwaves held beyond the contracted spectrum of 6.2 Mhz. Fourth, levy no fee at all.

The PR was filed in April by the government, with the stated aim of understanding the impact of the apex court's judgment that cancelled 122 licences. It sought a clarification on various issues, including whether licences issued before 2008 had to be cancelled, since these were not auctioned.

Officials say the government wants to wait for the PR outcome, as it would throw some light on how the spectrum with existing operators should be treated. The SC order of February had cancelled 122 telecom licences belonging to eight service providers, including all permits of Uninor, Loop Telecom, Etisalat DB, Videocon, STel, Sistema Shyam, Idea Cellular and others.

Sibal added the EGoM would now move a comprehensive note to the cabinet, with the rest of the decisions taken in earlier meetings. On July 20, the ministerial panel had suggested a 20 per cent lower base or bid start price for the auction compared to the minimum of Rs 18,000 crore recommended by sector regulator Trai, at Rs 14,000 crore or Rs 15,000 crore.

It had also decided to recommend a minimum price of airwaves, a spectrum usage charge (an annual fee) and a staggered payment option to the cabinet for a final decision.

Along with the options on pricing, the ministerial group had also suggested options for spectrum usage charge — a flat five per cent of revenue or retaining the status quo of three to eight per cent, depending on the amount of spectrum held.

For the CDMA 800 MHz band, the EGoM had suggested the reserve price be 1.3 times of the GSM reserve price, sources told NDTV Profit.

On July3, the cabinet had referred the matter of a one- time spectrum fee to the EGoM, to get its view. Earlier, DoT had made four proposals — levy a one-time fee on all airwaves held by existing telecom companies; impose a fee on airwaves held beyond the start-up spectrum of 4.4 MHz; levy a fee on airwaves held beyond the contracted spectrum of 6.2 MHz; or levy no fee at all.