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Devising effective escalated spectrum usage charge system

Posted: 23 Dec 2013     Print Version  Bookmark and Share

Keywords:ASSOCHAM  spectrum usage charge  SUC  mergers and acquisitions 

The Associated Chambers of Commerce and Industry of India has strongly urged the government to implement uniform spectrum usage charge (SUC) before the upcoming auctions in the interest of all stakeholders such as consumers, economy, government and the industry. This is in light of the failure of the last two spectrum auctions on account of high reserve prices and an escalated SUC regime.

"None of the spectrum reforms being introduced by the government like spectrum sharing, spectrum trading, revised mergers and acquisitions (M&A) guidelines will take off until there is a uniform SUC regime as the operators will be discouraged to purchase spectrum if the SUC continues at the current escalated regime," said ASSOCHAM at a press conference jointly addressed by T.V. Ramachandran, chair, National Telecom Council of ASSOCHAM and resident director, Regulatory Affairs at Vodafone India along with D.S. Rawat, secretary general.

The Telecom Regulatory Authority of India (TRAI) has emphasized on the principle of uniformity in respect of spectrum usage charges, but has left the decision on the exact rate to the government, it added. "If the government believes that three per cent SUC will result in a loss, it can set the uniform SUC at a rate that will give the government revenue neutrality."

A 167.50MHz of spectrum in 1,800MHz band that remained unsold in the November 2012 auctions caused a loss to the government exchequer to the tune of Rs 1,744 crore per year (annual installment with repayment term for 20 years at 10 percent interest) as per today's reserve prices.

"This loss due to non-implementation of the uniform SUC is almost seven times than the Rs 250 crore annual loss estimated by the government on implementing the uniform SUC," highlighted ASSOCHAM. "A uniform SUC apart from bringing additional revenues to the government will also result in the most efficient and optimal utilization of spectrum."

The ASSOCHAM also pointed out that the government has not considered the issue of arbitrage that has been brought out by TRAI.

The present regime will encourage arbitrage, misreporting and diversion of revenues, it pointed out while adding that the government has also not considered the issue of non-level playing field, where different operators offering the same service are required to pay rates of SUC. "These are higher principles that have been enunciated under telecom policy and the Government must abide by the same."

Lauding the government's efforts regarding requirement to reach telecom and broadband services into the rural areas, the ASSOCHAM has suggested discontinuing the universal service obligation (USO) levy. "If additional rollout obligations are being prescribed, there is no rationale or justification to continue with a USO levy as already there are over Rs 28,221 crore (as of September 30, 2013) that are lying unutilised in the USO fund."

In this regard, the ASSOCHAM has also suggested that additional rollout obligations should be imposed in place of a USO levy. "This will result in the effective rollout by operators to meet the objectives of the Government, while avoid further unutilized funds being accumulated into the USO Fund."

The apex chamber has also suggested for spectrum allocation in contiguous blocks as presently, the spectrum allocations are fragmented leading to sub-optimal utilization of this precious resource. "The operators should be allowed to mutually rearrange their frequencies so as to achieve contiguous allocations as it is an important factor that would lead to more vigorous participation in the bidding."

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