What is One-Time Spectrum Charge?

In 1994, the government gave up its monopoly over the country’s airwaves. The move opened the airspace for private players and the government started making money out of thin air, literally. 

About two decades later, a big chunk of the country’s population came to know more about these spectrum allocations through a massive scam. Some even believe that BJP rode to power while riding high on the anti-Congress sentiments generated due to the alleged scam in allocation of second-generation spectrum licenses.

It was alleged that the spectrum sale didn’t take place under a transparent auction system, and on the basis of market price. The then minister for communication and information technology, A Raja, spent 15 months in Tihar jail over it. And in February 2012, the Supreme Court axed the 122 licences granted to telecom players, declaring airwaves as public goods best utilised through an auction. About five years later, a Delhi court acquitted all the accused in the case citing lack of evidence.

But, with its image dented due to the allegations, the government had in 2012 -- after the apex court verdict -- decided to levy a one-time spectrum charge on the telecom operators for holding excess spectrum between July 2008 and January 2013. Earlier, the operators used to get additional tranches of spectrum after they reached a certain subscriber base in a circle.

After the cancellation of 2G spectrum licences, the Department of Telecommunications sent notices to telecom operators, demanding charges for the spectrum allocated under administrative pricing. The one-time dues stood at around Rs 40,000 crore.

It had two components. First, a retrospective demand from 1st July 2008 to 31st December 2012 for spectrum held beyond 6.2 MHz. And, secondly, a prospective demand from 1st January 2013 to the expiry of spectrum beyond 4.4 MHz.

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In July 2019, the Telecom Disputes Settlement and Appellate Tribunal set aside the retrospective demand. The government appealed against this order in the Supreme Court, which ordered a status quo regarding the demands.

But, in October last year, the government indicated that it may withdraw the case. The beneficiaries of such a move would be Bharti Airtel and Vodafone Idea since Reliance Jio is not a legacy operator.

Coming close to the heels of bailing out of Vodafone Idea, this step could be seen as a continuation of telecom reforms. For its part, the telecom sector, which has been passing through financial hardships, will be waiting for a conclusion to this matter with bated breath.  

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