Bharti Airtel suggests new formula to calculate spectrum usage charges

Feb 01 2014, 18:24 IST
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Bharti Airtel currently pays 6% on 10Mhz of spectrum it holds in Delhi. Bharti Airtel currently pays 6% on 10Mhz of spectrum it holds in Delhi.
SummaryThis could bring down usage fee for the company on highest slab of spectrum in Delhi to 5% from 5.6%.

The weighted average method to calculate spectrum usage charges, as accepted by the Union Cabinet, has not found favour with all telcos. Bharti Airtel on Friday proposed that the weighted average formula should include 3G spectrum; this could bring down the usage fee for the company on the highest slab of spectrum in Delhi to 5% from 5.6%.

On Thursday, Vodafone India had urged the government to move to 1% flat spectrum usage charge for 4G (broadband) as well as 3G spectrum since high-speed data services offered on both these frequency bands are classified as mobile broadband.

Currently, standalone 3G spectrum attracts a 3% usage fee while SUC on 4G airwaves is at 1% of adjusted gross revenue.

Spectrum usage charge (SUC) is a percentage of an operatorís adjusted gross revenue payable to the government on an annual basis.

Bharti currently pays 6% on 10Mhz of spectrum it holds in Delhi. As per the Department of Telecomís (DoT) weighted average formula, which includes spectrum bought in November 2012 auction, spectrum bought in forthcoming auction and administratively allocated radiowaves, SUC would be 5.6% in Delhi. However, if Bharti's proposed formula is accepted, which includes 3G spectrum bought in 2010, the SUC for Delhi is likely to fall to 5%.

According to Bharti, "the decision taken by the Union Cabinet confirms that SUC is to be calculated based on weighted-average of the standalone SUC applicable for different types of spectrum (administrative and auctioned) and the issue of revenue segregation between 2G and 3G spectrum is no longer valid".

Therefore, the company said the weighted average method should be extended to 3G spectrum and all spectrum in 900, 1800 and 2100 MHz band should be collectively taken when calculating SUC.

During the 3G auction in 2010, DoT had prescribed 3% flat SUC for a standalone 3G operator. However, due to the challenges of revenue segregation between 2G and 3G, it was decided that SUC for 3G spectrum would be payable at the slab-wise rate applicable to 2G spectrum.

The Cabinet on Friday stated that it would be desirable to move towards a flat SUC regime and adoption of a weighted average would provide a path for such transition.

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