Govt may still go ahead with nominal entry fee

Move aims to settle differences between FinMin and telecom department.

Even as the Department of Telecommunication's (DoT) August 10 draft report has recommended against an entry fee for 3G services, the government may still go in "for a nominal entry fee" in order to settle the tussle between the finance ministry and the DoT.

In exchange for the "nominal entry fee", the finance ministry would accept DoT's proposal for a revenue share of 3 per cent for 5 MHz, 5 per cent for 10 MHz, 7 per cent for 15 MHz and 9 per cent for 20 Mhz.

Ministry officials, however, declined to specify as to what amount the nominal entry fee would translate into. Ratan Tata had proposed that service providers pay a one-time entry fee of Rs 1,500 crores for 3G spectrum. "The entry fee, if applicable could be about a fifth of the Tatas' offer," hinted an official.

The DoT, which had earlier said that imposing an entry fee would drive up tariffs, now shared the view that a nominal fee would prevent operators from hoarding spectrum.

According to sources, both ministries were yet to reach a consensus on the reduction of the service tax regime by half as proposed by the DoT.

However, the finance ministry was unlikely to concede to the demand on the ground that entry fee for 3G spectrum was only nominal and cannot equal the revenues that could have been roped in had the same been auctioned, sources added.

The current draft report was being reworked to add additional details such as entry fee for 3G.

The new report would also seek to deal with other controversial issues like the subscriber-based allocation for spectrum and whether the 2Ghz band should be meant for CDMA services or not, ministry sources said.

This comes in the wake of CDMA operators approaching Prime Minister Manmohan Singh, demanding that spectrum be allocated only on those bands where equipment and handsets were availbale for multiple vendors.

The operators had also demanded that they be treated at par with GSM players and spectrum allocation be equal to both technologies, and not be tied to customer base.

DoT may also add a clause to the draft, offering major concessions in service tax, spectrum charges and revenue share, for services in areas with "extremely low tele-density".

INDIA CALLING!

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• FinMin will accept DoT's proposal for a 3% revenue share for 5 MHz, 5% for 10 MHz, 7% for 15 MHz and 9% for 20 Mhz, in exchange for a nominal entry fee
• Entry fee, if applicable, will be about a fifth of the Tatas' offer of a one-time entry fee of Rs 1,500 crores for 3G spectrum
• Both ministries are yet to reach a consensus on the reduction of the service tax regime by half as proposed by the DoT