DoT committee gives nod to one-off excess spectrum charges

26 Apr 2011

A Department of Telecommunications (DoT) committee has reportedly accepted a recommendation for imposing a one-off charge on those operators holding spectrum beyond their contracted amounts, according to the Business Standard. The initial proposal was made by the Telecom Regulatory Authority of India (TRAI), and if the decision is ratified by the apex decision making body, the Telecom Commission, operators including Bharti Airtel, Vodafone Essar, Idea Cellular, Bharat Sanchar Nigam Ltd (BSNL), Uninor, Tata Teleservices and Reliance Communications (RCOM) may face a combined total charge of as much as INR247 billion (USD5.5 billion).

In its initial recommendation the TRAI argued that new operators should pay commercial rates for any spectrum held in excess of the 4.2MHz that is issued as part of their concession, while the proposals said that older operators should pay extra for spectrum beyond 6.2MHz. In an earlier recommendation the TRAI had called for the price paid for excess spectrum to be directly proportional to the rates in line with the government’s May 2010 3G spectrum auction, but it has since said that 2G spectrum up to 6.2MHz should be priced at 53% of the 3G auction price, with companies to be charged 136% of the 3G price for spectrum in excess of 6.2MHz.

Operators have, however, criticised the proposals, claiming that they are unfair on those older operators that have invested significant sums in rolling out second-generation networks while also shelling out for 3G spectrum. The recommendations, certain operators argue, run contrary to the state’s position that 3G spectrum is more efficient than 2G frequencies, with the regulator’s view branded illogical, as it purportedly assumes that spectrum beyond 6.2MHz in 2G is more efficient that 3G and therefore the operators should pay more.