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Thomas K. Thomas

New Delhi, May 13 The Department of Telecom is considering doing away with the existing variable licence fee structure for telecom operators and replacing it with a uniform rate for all types of services.

The move is aimed at removing the arbitrage available at present to integrated operators whereby they can load up maximum revenues on licences with lower licence fee.

At present operators pay between 6 per cent and 10 per cent of their annual revenue to the Government as licence fee, depending on the type of service. This allows operators with multiple licences to take advantage of the differential fees and show higher revenues under the licence with lower revenue share.

For example, Reliance Communication was found to be reporting all its non-voice revenues under the Internet Services licence where it does not have to pay any licence fee to the Government. Bharti had increased its long distance carriage charge from 25 paise a minute to around 60 paise. This means that if STD rates are at Rs 1.50 a minute, Bharti is passing on almost 45 per cent of the revenues on to its long distance arm compared to just 10 per cent earlier.

The DoT has had to order special audit of the operators’ accounts to check whether they were diverting revenues in this manner. The telecom regulator had also raised concerns with the revenue reporting being done by the operators. Some Members of Parliament had also written to the DoT and Central Vigilance Commission alleging that the national exchequer was losing out on revenue.

The DoT has now set up a four-member committee to decide on the rate at which the licence fee will be charged from the operators. The committee will also analyse the financial impact as a result of the change in the licence fee regime. The joint secretary of DoT will head the panel. The DoT has asked the committee to submit its report within one month. It is also considering to introduce uniform spectrum charges to make things simpler.

The DoT’s move is in line with the demands of the industry. Bharti Airtel had recently said that it was in favour of a uniform licence fee regime to remove the arbitrage. Analysts said that the issue of having different licence fee for various telecom services would get complicated further with operators launching new services based on technologies such as 3G and WiMax and therefore a uniform fee would be easy to implement.

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