Assocham: Implement uniform spectrum usage charge before auction

The SUC, which is levied annually by government as percentage of revenue earned by telecom companies from telecom services, varies between 3 to 8 per cent in case of mobile operators.

December 19, 2013 06:02 pm | Updated November 16, 2021 09:54 pm IST - New Delhi:

In order to have a successful spectrum auction in January, the government should implement a flat spectrum usage charge as operators will be “discouraged” to buy airwaves if the levy continues at the current escalated regime, Assocham said on Thursday.

“We support the Trai’s recommendations and urge the government to announce the implementation of uniform SUC before the forthcoming auctions,” Assocham’s National Telecom Council Chairman TV Ramachandran told reporters here.

The SUC, which is levied annually by government as percentage of revenue earned by telecom companies from telecom services, varies between 3 to 8 per cent in case of mobile operators.

Trai had suggested that the annual SUC be set at a flat 3 per cent of companies’ revenue for the spectrum they buy from auctions.

“None of the spectrum reforms being introduced by the government like spectrum sharing, revised mergers and acquisitions 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,” he said.

Mr. Ramachandran, who is also the Resident Director of regulatory affairs at Vodafone India, said if no decision was taken on SUC before the auction, it might affect the process.

He said the concerns of the Department of Telecom (DoT) that uniform charges may cause a loss of Rs 2,500 crore to its exchequer over a period of 10 years are “incorrect“.

“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,” he added.

Mr. Ramachandran said the last two auctions failed on account of high reserve price and “escalated SUC regime“.

“167.50 MHz of spectrum in 1800MHz band remained unsold in November 2012 auctions. Even taking today’s reserve prices, the loss to the Government exchequer on account of this unsold spectrum is Rs 1,744 crore per year (annual instalment with repayment term for 20 years at 10 per cent interest),” he added.

Mr. Ramachandran also said that additional rural rollout obligations should be imposed in place of a USO levy.

“If additional rollout obligations are being prescribed, there is no rationale to continue with a USO levy. Already there are over Rs 28,221 crore (as on September 30, 2013) lying un—utilised in the USO Fund,” he said.

He also sought allocation of spectrum in contiguous blocks.

The Department of Telecom (DoT) is all set to start the auction process on Friday with a pre-bid conference. DoT has already issued a Notice Inviting Application (NIA), which say the auction will start from January 23.

The companies can seek clarifications on rules stated in the NIA by December 28 and the last date for submission of applications by interested companies is January 4, 2014.

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.