Govt rejects telcos’ proposal to drop spectrum trading fee

Telecom service providers (TSPs) may have to continue paying fee for trading of spectrum in future auctions as the government has ‘refused’ to accept their request to omit that part in the draft guidelines.

According to official sources, the government has expressed its unwillingness to accept the proposal by telecom companies and their industry bodies to do away with the fee which, according to the telcos, would have saved them some costs that could have been invested in licences instead.

Spectrum trading refers to the transfer of rights to use spectrum, and the words ‘seller’ and ‘buyer’ are used in the context of transferring the rights from one user to another. When a block of spectrum is traded, the associated rights and obligations of that spectrum block stand transferred from the seller to the buyer.

According to the draft guidelines on spectrum trading, there is a provision that the amount received from trading shall be part of the adjusted gross revenue (AGR) for the purpose of licence fee and spectrum usage charge (SUC). The telecom service providers are opposing this and have even written letters to the Finance Minister and Telecom Minister, saying that the amount received from spectrum trading should be excluded from AGR for the purpose of licence fee and SUC. However, their requests were rejected by the government in a meeting on Friday.

“The Department of Telecom (DoT), in a meeting held on Friday by the Minister Ravi Shankar Prasad with his senior officials, has refused to accept the requests of TSPs (telecom service providers) who have asked not to charge licence fee and spectrum usage charge on the amount received from trading of airwaves,” a government official told BusinessLine .

The official said the Minister refused to accept any issue related to trading of spectrum sent by the TSPs and their representatives, such as the Cellular Operators’ Association of India (COAI) and the Association of Unified Telecom Service Providers of India (AUSPI), saying the companies cannot look at ‘only their interests’.

The industry bodies do not think about end customers who are ‘kept far away’ in any such discussions, the official said.

However, when asked to comment on the government not accepting their requests on spectrum trading points, COAI said if such reports are true, then it is ‘disappointing’ for the industry.

“We are disappointed because this will only increase the burden on TSPs, as 30 per cent of their revenues go into taxes and fee (by the government).

“This will not help the industry as a whole,” said Rajan S Mathews, Director General, COAI.

He said imposing a licence fee and SUC on the amount received from trading would amount to double taxation, as the levies are being charged in addition to those paid on the usage of spectrum.

Spectrum trading will allow operators to trade unutilised spectrum, resulting in efficient use of scarce air waves, offering quality services to consumers.

The government last month had approved spectrum sharing norms but there was no decision on trading of air waves, a prerequisite for consolidation in the sector.

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