DoT to reduce spectrum usage charge to 3% for July auction

8 Apr 2016

India’s Department of Telecommunications (DoT) has lowered the spectrum usage charge (SUC) from 5% to 3% of annual gross revenues for the country’s upcoming frequency auction, scheduled for July this year. According to the Economic Times, citing a senior telecoms official, DoT has approved the decrease in SUC in an effort to attract bids and ensure higher revenue from the auction. Further, the new levy could help cellcos to reduce debts and lower voice and data charges for consumers. The tender will see the government auctioning off more than 2,000MHz of spectrum across seven frequencies – including the 700MHz band which will be made available for the first time. Once approved by the Cabinet, telcos will continue to pay a weighted average of the new SUC and the older fee (3%-8%) for the total combination of frequencies they hold. The SUC on broadband wireless access (BWA) spectrum in the 2300MHz band remains at 1%.

As previously reported by TeleGeography’s CommsUpdate, in January 2016 the Telecom Regulatory Authority of India (TRAI) published its recommendations on reserve prices for frequencies in the 700MHz, 800MHz, 900MHz, 1800MHz, 2100MHz, 2300MHz and 2500MHz bands for the July spectrum auction, calling for the government to complete the spectrum harmonisation process in the 1800MHz band, and to carry out a similar re-assignment exercise in the 800MHz range before proceeding with the tender. Regarding the 700MHz band, the TRAI recommended using the APT700 band plan, with frequency division duplex (FDD)-based frequency arrangement. The entirety of the available spectrum (2×35MHz) should be put up for sale, the regulator noted, while it determined a reserve price of INR114.85 billion (USD1.69 billion) per MHz (paired) of pan-India spectrum, with per MHz prices per circle ranging from INR440 million (North East) to INR15.95 billion (Delhi). The auction is currently on track to be the country’s largest ever spectrum sale, with the potential to fetch INR5.36 trillion.