This refers to “Stop picking winners” (February 1) by Sunil Jain and the Subodh Kumar recommendations that Jain speaks of. Since most GSM operators are holding more than 6.2 MHz, the average spectrum usage charges are 4 per cent of their adjusted revenues. If it is assumed that adjusted gross revenue (AGR) would grow at the rate of 15 per cent, total savings by all operators, except Reliance Communications and Tata Teleservices, would be around Rs 100 crore for the current financial year.
Among incumbent GSM operators, Bharti would get the greatest advantage in terms of savings in spectrum usage charges — up to Rs 450 crore per annum — followed by Vodafone and Idea with approximate savings of Rs 250 crore and Rs 200 crore, respectively. Reliance Communications and Tata Teleservices will have to pay additional Rs 120 crore for spectrum charges for 2008-09.
Thus, the Subodh Kumar recommendations are designed to favour operators holding higher quantum of spectrum, even beyond their contractual limits, and penalise the operators that have spectrum holdings within or below the contractual limit.
GSM and CDMA spectrum have separate eco-systems and cannot be combined for common use, and it is for this reason that DoT had rejected Trai’s recommendation that both spectrum be clubbed to levy heavy spectrum charges. The dual technology operators have separate GSM and CDMA networks and charging them higher spectrum fee despite higher investment in two separate networks would have seriously distorted the level playing field.
There are bound to be different market shares and revenues in case operators enter at different points of time. The incumbent operators have much higher average revenue per user and continue to dominate the market in terms of revenue. However, it has been universally admitted that the Indian consumer has benefited from entry of new operators even though they pay lesser spectrum usage charges. The presence of enough operators is essential to sustain competition in the market and protect consumer interest.
Therefore, the issue of higher payment of spectrum usage charges by incumbent GSM operators is irrelevant.
SC Khanna, Auspi
