EGoM studying proposals for spectrum usage fee increase

21 Jan 2010

Indian mobile network operators may face higher charges for the use of wireless spectrum under proposals from the Ministry of Communications and Information Technology, the Economic Times reports. It is understood that an empowered group of ministers (EGoM), headed by finance minister Pranab Mukherjee, is examining plans put forward by the communications ministry to increase spectrum usage charges by up to 2%. Such a move could see all operators combined having to find an extra INR20 billion (USD433.78 million) per year to cover the increased levies. While the Telecom Regulatory Authority of India (TRAI) had previously recommended that the state increase the fee by just 1%, and then only for operators that held spectrum in excess of 6.2MHz, the EGoM is believed to have endorsed the Department of Telecommunication’s (DoT’s) call for the higher usage charges, irrespective of how much spectrum an operator holds.

At present all 2G operators pay between 2% and 6% of their annual gross revenue (AGR) as a usage charge, dependent on how much spectrum they hold. Under the proposals spectrum usage charges for operators holding up to 8.2MHz of GSM spectrum or 5MHz of CDMA spectrum will rise by 1%, and for frequencies in excess of those limits the charge will rise by 2%.

Any decision to boost 2G spectrum charges will also potentially have a knock-on effect on the long-delayed 3G auction process; while the government has already decided that existing operators including Bharti Airtel, Vodafone Essar and Idea Cellular will have to pay an additional 1% of annual revenues if they are successful in bidding for 3G spectrum, increases in 2G spectrum charges would mean that for operators offering both 2G and 3G services usage charges will rise to between 4% and 9% of AGR. Any new operators entering the Indian wireless sector and only offering third-generation services meanwhile will face a 3% annual levy as a spectrum usage charge.

India,

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