Uniform spectrum rate across bands may be reality soon

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New Delhi | Updated: May 1, 2016 7:59:00 AM

Telecom panel to seek AG’s opinion on hiking rates for 2300 MHz acquired in 2010

american tower corporationThe commission decided that it will study the report and send the matter to the attorney general for a final view whether the 1% charge on 2300 MHz can be raised. (Reuters)

The stage is set for a uniform spectrum usage charge (SUC) across spectrum bands with retrospective effect. What this means is that the 1% SUC on spectrum in 2300 MHz band acquired in 2010 auctions will also get raised to whatever uniform rate the government may decide in future.

The prospects for a uniform SUC brightened on Saturday when the telecom commission was informed that a government-appointed committee has found that it is not possible for the operators to segregate revenues across different bands. The commission decided that it will study the report and send the matter to the attorney general for a final view whether the 1% charge on 2300 MHz can be raised.

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Currently there are only two operators — Reliance Jio Infocomm and Bharti Airtel — which acquired 2300 MHz band spectrum in the 2010 auctions.

While Bharti Airtel, through the Cellular Operators’ Association of India, has already written to the government urging for a uniform SUC, expressing its inability to segregate revenues, Reliance Jio is holding the position that since the notice inviting applications for the auction had fixed SUC at 1% of the adjusted gross revenue, changing it would be illegal. However, with the majority of operators, as well as the government, expressing their inability to segregate revenues across different bands, it looks like there’s no other way but to make SUC uniform.

Sources said what that uniform rate will be will depend on government revenues, which should not go below than what it is currently. “The use of multiple bands such as 2300, 1800, 800 and 700 Mhz (post-auction) for provisioning of the same technology, i.e. LTE and with carrier aggregation becoming a reality, segregation of revenues basis spectrum bands becomes almost impossible,” COAI had written to telecom secretary JS Deepak on April 19.

Recently, the Supreme Court had left the matter of deciding a uniform SUC to the government via its order dated April 8.

The government has the powers to make the changes and even the Telecom Regulatory Authority of India had recommended for a uniform SUC in 2013, which it has reiterated in its latest recommendations made in January.

The issue of re-looking at a uniform SUC got rekindled when last month the telecom commission decided to charge a flat 3% rate of the operators’ adjusted gross revenue for all bands of spectrum acquired in forthcoming auctions sometime during June/July.

This, instead of making things easier, only complicated matters as the layers of SUC only got increased with more room for arbitrage.

An operator like Bharti Airtel has spectrum in 1800 and 2300 Mhz through which it provides 4G services. Its competitor, Reliance Jio, has spectrum in 1800, 800 and 2300 to offer 4G services. For providing the same service, while Bharti will pay an SUC at 5% for spectrum acquired in 1800 Mhz, it will have to pay it at 1% for 2300 Mhz. Jio will also pay 1% for 2300 Mhz and 5% for 800 and 1800 Mhz.

If they acquire spectrum in the same bands in the forthcoming auctions, they will have to pay SUC at 3%.

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