Given the multiplicity of spectrum usage charges (SUC) based on how much spectrum is held, moving to a flat rate was always critical—right now, a 3% rate is charged for spectrum holdings of up to 4.4 MHz and this goes up to 6% at 10.2 MHz
Given the multiplicity of spectrum usage charges (SUC) based on how much spectrum is held, moving to a flat rate was always critical—right now, a 3% rate is charged for spectrum holdings of up to 4.4 MHz and this goes up to 6% at 10.2 MHz; the rate is 5% if the spectrum was bought in the March 2015 auction and 3% for spectrum bought in the 2016 auction! Worse, those who bought BWA spectrum—RJio and Bharti Airtel—in 2010 were asked to pay just a 1% SUC. It was also unfair since telcos who bid for the 3G spectrum in 2010 had to pay the higher 2G rate as the government felt it would be difficult to segregate 2G and 3G calls—while this also holds true for BWA calls, the SUC was never made the same as for 2G calls. Whenever an attempt was made in the recent past to fix this anomaly, it was pointed out that the tender documents for 2010 ruled out any change and the Attorney General had also opined the same way.
This is a bogus argument since clause 5.5 of the tender document in 2010 allows SUC to be paid ‘as per rules notified by the Government from time to time’. This power was also retained in the Unified License under which telcos operate. Indeed, it is this power that the government has used to come up with a weighted average formula for SUC—this uses the SUC for different quantities of spectrum or for that bought under different auction rules. Had the 2010 agreement been as inviolable as the Attorney General had opined, how could a weighted average formula be used? This logic has been further strengthened by Monday’s decision by the Telecom Commission (TC) that reiterates its weighted average formula subject to a minimum or floor SUC of 3%. Take the case of RJio which has BWA spectrum and assume it did not have any other spectrum. Under the 2010 rule, it would have to pay just a 1% SUC. Under Monday’s decision, however, it has to pay a minimum of 3%, which makes it clear the 2010 rule is not inviolable. In any case, AG is just the government’s lawyer and courts are free to disregard his opinion as they do for other lawyers—in the S Tel case where the AG opined that the telco’s 3G bid did not have to be refunded when the license was cancelled, this was struck down by the TDSAT. A flat SUC ensures there is no discrimination between different types of technology, different purchase dates and even different amounts of spectrum held—there is no reason why an RJio should pay a 3% rate while a Bharti Airtel should pay 3.5%, an Idea 4.1% and a Vodafone 4.5%.