The Hindu Business Line : Ratan Tata favours entry fee, revenue share for 3G spectrum

MR Ratan Tata, Chairman, Tata Sons Ltd, has suggested that the Government could charge a licence fee for 3G (third generation) services and assign spectrum only to the operator who pays the highest revenue share, in addition to the entry fee.

In a letter to the Communications Minister, a copy of which is available with Business Line, Mr Tata said the licence fee could be around Rs 1,500 crore for an operator on an all-India basis.

"Being a scarce national resource, spectrum should not be allocated free to any telecom operator. India should, like other countries, charge an appropriate licence fee for 3G spectrum," he said.

In his letter, Mr Tata said the objective of an entry fee was to provide a disincentive for hoarding or inefficient use of spectrum. He said a minimum of 5+ 5 MHz of 3G spectrum should be offered on a non-discriminatory basis to all existing unified access licensees and cellular mobile service providers on an all-India basis.

"An all-India allocation would enable a smoother roll-out of 3G services by operators," he said.

Tata Teleservices Ltd, which offers CDMA-based (Code Division Multiple Access) mobile and fixed line services, is prepared to pay the one-time licence fee and would also be willing to share a percentage of the annual revenues with the Government.

Mr Tata said that, in case demand for spectrum exceeds supply, "the Government should assign spectrum to the operator who pays the highest revenue share, in addition to the entry fee of Rs 1,500 crore."

The Government should invite bids only from those who agree to pay the entry fee. Depending on its availability, spectrum could be assigned to other operators at the revenue share committed by the highest bidder.

Mr Tata also said the Government should ask all interested operators to apply for 3G spectrum within two weeks of announcing the spectrum policy, and the process of spectrum allotment must be completed within a specified time period, say, eight weeks.

Referring to newspaper reports that the Telecom Regulatory Authority of India was thinking of a roll-out obligation for all operators to prevent spectrum hoarding, Mr Tata said a roll-out obligation alone may not be enough to achieve this.

"Such obligations have not been highly effective in the past, and as spectrum is a scarce national resource, it should be everybody's endeavour to ensure that it is utilised in the most efficient manner," he said.

Asked whether an entry fee is a feasible idea, Mr T.V. Ramachandran, Director-General, Cellular Operators Association of India, a representative body of GSM mobile operators, said it would result in the failure of 3G services.

He said Europe had adopted a similar system, including an auction for spectrum, and this had resulted in telecom operators pumping in a lot of money for getting the spectrum, thus delaying the launch of the services and in the end making it expensive for users.

Mr Ramachandran said India was a price sensitive market and an entry fee would only push up prices for subscribers of these services.

He said at least 60 MHz of spectrum was available for launching 3G services and, at best, there were six operators who could roll out these services at a national level. Hence, there is no justification for levying an entry fee.

The Government could adopt the same revenue share formula, which is being followed by mobile services, for 3G services too.

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