The Hindu Business Line : TRAI objects to revenue break-up

New Delhi, Sept. 24 The Telecom Regulatory Authority of India (TRAI) has raised objections to the Government’s decision to allow operators to separate their revenues from 2G and 3G services respectively for the purpose of calculating the annual spectrum charges. TRAI has told the Department of Telecom (DoT) that such a separation is not possible.

“Both these services are capable of providing triple play services. Moreover, there will be many common control equipment for 2G and 3G and apportioning the cost to these two services will be a very complex and cumbersome exercise. There is also an apprehension that such bifurcation of revenues may lead to wrong booing of revenues by some of the service providers and lower spectrum charges,” the TRAI said in a note to DoT.

Operators currently pay a maximum of 4 per cent of their annual revenues depending on the quantum of the 2G spectrum they use. DoT has said that operators need to pay one per cent on revenues earned from offering 3G services as spectrum charges. This means that an operator like Bharti Airtel, instead of coughing up a total of 5 per cent of their combined revenues from both 2G and 3G services, will have to pay 1 per cent on revenues from 3G services and another 4 per cent on revenues from 2G services separately.

Given the average revenue per user at present is around Rs 300 per month, operators will have to pay a maximum of around Rs 3 per 3G subscriber each month to the Government under the new formula. If DoT had imposed the revenue on combined revenues, then operators would have had to pay Rs 15 even for the newly acquired 3G subscriber.

Huge savings

DoT’s decision will result in huge savings for the existing operators who win 3G spectrum. According to industry observers, it could encourage operators to rope in more subscribers for 3G services as they have to pay a lower spectrum fee compared to what they pay for 2G services.

DoT’s decision, however, is in line with its earlier stand to allow operators with dual technology to pay spectrum charges separately.

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