RCom & TTSL may need to pay for extra spectrum

Written by Rishi Raj | New Delhi | Updated: Oct 8 2012, 09:23am hrs
Girl with mobile
Dual technology operators like Reliance Communications (RCom) and Tata Teleservices (TTSL) can breathe easier now that the attorney general has opined that the one-time charge for the spectrum incumbent operators hold be levied only on those who have spectrum beyond 6.2 MHz. However, the two firms may still not be able to claim additional 1.8 MHz spectrum to reach the threshold limit of 6.2 MHz without paying auction-determined rates.

If the AGs view is accepted by the empowered group of ministers (EGoM) at its meeting on Monday, only the top three GSM operators Bharti Airtel, Vodafone and Idea would be impacted immediately.

If one goes technically by the AGs opinion, the government is seen to be contractually bound to provide spectrum up to 6.2 MHz without any additional charge and, therefore, RCom and TTSL can lay claim to an additional 1.8 MHz without any additional payment. But this may not be the case.

At its last meeting on October 3 the EGoM, while considering all the options, had thought about how to tackle this problem. According to the minutes of the meeting, it was decided that the governments contract would be viewed only to the quantum of spectrum and not the price. This means that while the government may be contractually bound to provide spectrum up to 6.2 MHz to these two operators, it is free to decide at what price.

The EGoM had decided this while analysing the pros and cons of the proposal if the one-time levy was beyond 4.4 MHz. It was viewed that the move may lead to litigation by both, operators who have received spectrum up to 6.2 MHz and those who were yet to receive, without any further payment under the licence agreement. To tackle this, the EGoM had decided: The government position that the contract would at best apply to the quantum of spectrum and not the price of spectrum and that in any case, initial allotment of 4.4 MHz was not being charged for now, may enable the government to put up a robust legal defence against this claim. Moreover, this option would also insulate the government from claims by operators who had received only 4.4 MHz for the balance of this spectrum without any further payment.

Though the EGoM had viewed the option to levy a one-time charge beyond 4.4 MHz, it remains to be see whether it sticks to that or goes with the AGs view to charge beyond 6.2 MHz. This is because after analysing the three options it had sought the legal opinion of the AG before taking a final decision on which of the options should be recommended to the Cabinet for approval.

As reported by FE on Sunday, the AG has advised against levying a one-time charge prospectively on all mobile operators for the spectrum they hold. It has said that only operators holding spectrum beyond 6.2 MHz should be charged and that too not from the date of allocation, which was 2001 but from July 2008 when the finance minister and the telecom minister had met and decided to charge for excess spectrum.

The three options are: To charge all operators for all the spectrum they currently hold, charge beyond 4.4 MHz or beyond 6.2 MHz.

Quoting from past judgments of the Supreme Court, the AG has said that the concept of a level playing field is an esoteric concept and cannot be equated with public interest. Public interest and common good are constitutional mandates, level play field cannot be elevated to this level, the AG has opined.