If there was any uncertainty over the legality of the licence of Mukesh Ambani’s Reliance Jio Infocomm to provide 4G services, it was ended on Friday with the Supreme Court dismissing a public interest litigation by the Centre for Public Interest Litigation. However, if the government chooses, Reliance Jio could have to eventually pay a higher spectrum usage charge from the current 1% of its adjusted gross revenue on its 2300 MHz band spectrum.
This is because while a bench comprising Chief Justice TS Thakur and justices AK Sikri and R Bhanumati dismissed the allegations by lawyer Prashant Bhushan regarding illegality of licence and loss to the exchequer, on the issue of raising the SUC and bringing it on a par with what operators pay for other bands of spectrum at around 5%, it left it to the government to take a call. “For the time being, we leave the matter to the government to take an appropriate decision in this behalf,” it said.
A government panel is working on how proper segregation of revenues booked through 2300 MHz spectrum is done vis-a-vis those booked under other bands. If it finds such segregation is not possible and there is scope for arbitrage, there’s every possibility the charge may be hiked, government sources said. Meanwhile, the government has decided to charge a flat 3% SUC on all bands of spectrum auctioned in future.
Specific to the charge that RJio was provided permission to provide voice services on a spectrum that was allocated for data and the migration fee at Rs 1,658 crore was not market-determined, the SC through a carefully argued logic said that the company had in fact paid more than was required. It also dismissed Bhushan’s charges that the government was robbed of an amount of Rs 40,000 crore and that it had arbitrarily allowed RJio to provide voice services.
Apart from reasoning that developments in the telecom sector are very rapid and, therefore, policymaking needs to keep pace, the apex court highlighted that the migration policy for internet service providers to unified licence had no irregularity. In 2010, when there were auctions for 3G and broadband wireless access (2300 MHz) spectrum, for the latter both ISPs and unified access service licence holders were allowed to bid. However, they were supposed to provide the services allowed under their licence conditions. Since RJio initially had an ISP licence, it could not provide voice services on its spectrum but only data. However, another operator, Bharti Airtel, which also acquired the same spectrum but under UAS licence, could provide both voice and data.
The government later came out with a unified licence under which upon payment of a specified licence fee operators could provide any service they wanted by buying the spectrum in auctions. It allowed ISP licensees to migrate to UL for Rs 15 crore, which RJio paid, after which it qualified to provide voice services as it had acquired the spectrum through auctions by paying Rs 12,848 crore. But the government charged it another Rs 1,658 crore for providing voice services as this was the price UAS licence holders had paid in the auction for licences in 2001. The government did it to bring parity amongst all operators. But the UAS licence holders who had paid the Rs 1,658 crore had got spectrum along with it up to 6.2 MHz, which was not the case with RJio as by then the policy had delinked licence from spectrum. Thus, the SC said that far from any irregularity or favour shown to RJio, the government in fact made it pay more than it should have.