The Department of Telecommunications (DoT) is expected to approach the Cabinet shortly with a proposal to waive the spectrum usage charges for the defence department. The finance ministry has valued the spectrum lying with the defence at R1,14,000 crore.

Senior government officials told FE that DoT and the defence ministry have concurred on the need to clarify that the spectrum lying with the defence is free of cost. In return, the defence department will vacate some spectrum and this will be available in future for auctioning.

According to a senior finance ministry official, in the last meeting on the matter, the finance ministry pointed out that spectrum lying with defence should be accounted for and should be mentioned in the defence budget. The defence ministry, however, feels this would give undue powers to the ministry to cut down on the funds allocated to defence. However, based on the understanding that defence will vacate some spectrum in future, DoT has initiated talks to waive off the spectrum usage charges for defence.

This development is significant as government is facing difficulty in mobilising resources. A windfall bonanza similar to 3G spectrum can boost government resources in these tough times. A meeting is scheduled on November 28 on the issue of spectrum pricing.

The tussle between telecom and defence departments started when DoT dismissed the defence ministry’s demand for a waiver from spectrum charges, citing tat its usage in not for commercial purpose but for national security. The telecom department, on its part, said that other state units such as the police, paramilitary including BSF, CRPF and the ITBF and the intelligence bureau all pay spectrum usage charges, and therefore the armed forces should not be exempted.

As per the memorandum of understanding (MoU) signed between the defence and telecom ministry for vacation of spectrum in 2009, the defence ministry had agreed to vacate 25 MHz of 3G spectrum and 20 MHz of 2G in phases. In return, the DoT had committed to set up an exclusive defence band and defence interest zone for the armed forces. DoT had also given a Rs 938 crore waiver on spectrum usage charge for the armed forces earlier. This was one of the key demands of the defence ministry for vacating 3G airwaves so that this spectrum could be allotted to mobile phone firms for commercial telephony.

DoT was to also commission an optic fibre cable (OFC) network at a cost of Rs 10,000 crore, to be built by Bharat Sanchar Nigam Limited (BSNL), for the defence services. Also, the finance ministry was to waive the spectrum fee of around Rs 10,000 crore payable by the defence ministry.

The defence ministry, however, vacated only 15 MHz of 3G spectrum which was auctioned last year and the government earned huge revenues. It had also vacated 15 MHz of 2G spectrum, which has been allocated to new operators.

Under the agreement, the remaining spectrum ? 10 MHz spectrum in 3G (for two operators) and 5MHz in 2G ? is be vacated only after the OFC network is completed.

Recently, the defence ministry had refused to release more spectrum for civilian use as the finance and telecom ministries have not kept their end of the bargain.

After repeated communication send by defence ministry, telecom department and the Ministry of Finance have agreed to expeditiously take steps to ensure the fulfillment of their commitments and achieving of the milestone as agreed to under the MoU. A final call on the waiver to the defence will be taken by cabinet soon.