The Hindu Business Line : TRAI wants administrative charges to be levied on 3G operators

Gets more expensive
Telecom cos say that this annual administrative charge will make 3G more expensive
The charge ensures that the Government gets a steady income from 3G services in the long term

Our Bureau

New Delhi, Dec. 10 The Telecom Regulatory Authority of India has proposed that an annual administrative charge should be collected from operators who win 3G spectrum. The regulator said that 3G operators should pay 2 per cent of the highest amount quoted during the auction process.

Reacting to the proposal, telecom operators said that the additional fee will be a burden on them. “This will make 3G spectrum more expensive. Operators will take this additional levy into consideration when they place their bids for 3G spectrum. If the Government is looking for higher revenues upfront from the 3G auction process then this will act as a dampener,” said an official from the Cellular Operators Association of India.

Besides the new fee, operators have to pay at least Rs 2,020 crore for acquiring pan Indian 3G spectrum, between 6 and 8 per cent of their annual revenues as licence fee and spectrum usage charge ranging between 3 and 8 per cent.

The administrative charge will, however, ensure that the Government gets a steady income from 3G services in the long term. The final decision on this issue will be taken by the Department of Telecom.

Explaining its decision TRAI said, “It is particularly justified because the spectrum allocated for 3G is not added to total spectrum for determination of the spectrum slab for charges. As we move towards auction as the means to allocate future spectrum, the slab system for determining the spectrum charges are not implementable, particularly when the market determined spectrum price is being realised.”

On the issue of spectrum usage charges, the regulator said that since the Government was increasing the charges for 2G services, the proposed one per cent spectrum fee for 3G services would get subsumed. Market watchers, however, said that the administrative charge based on the bid amount was better when compared with the earlier proposal of imposing one per cent charge on the income from 3G services.

“If the bid amount goes up to Rs 3,000 crore, the operator will have to pay a flat fee of Rs 60 crore every year. In comparison, if the levy was on the income generated then the outgo could be as high as Rs 250 crore given that annual revenues of large operators are nearly Rs 25,000 crore and growing,” said an analyst.