The Hindu Business Line : Raja wants spectrum charges reworked; operators to pay more?

New Delhi, Dec. 27 In a move that could spell further problems for mobile operators, the Communications Minister, Mr A. Raja, has asked the Department of Telecom to review the spectrum charges being paid by service providers.

Both the telecom regulator and the Telecom Engineering Centre have already recommended to the Government that spectrum charges should be enhanced. If the Government accepts these suggestions then it will be a double whammy for cellular operators as they are already reeling under DoT’s decision, on Wednesday, to enhance the number of subscriber required to be eligible for additional spectrum. DoT has been asked to give its recommendations within 15 days.

The Telecom Regulatory Authority of India had suggested that the annual spectrum charges, which is a percentage of the revenues earned by the operators, can be increased for more than 10 Mhz. Therefore, if an operator had 10 Mhz spectrum in a circle the operator should be asked to pay 5 per cent of its revenues instead of 4 per cent at present. Similarly, if the quantum of spectrum goes up to 12.5 Mhz, the charges also increase to 6 per cent of the revenues instead of 5 per cent at present.

TRAI had also suggested that the Government could start levying a one-time spectrum charge on all operators who want more than 10 Mhz. For example, an operator in Mumbai, Delhi or Category A service areas would have to pay Rs 16 crore as one-time spectrum charge for each Mhz allocated beyond 10 Mhz.

Higher spectrum charges could result in an increase in mobile tariffs warned cellular operators. The Cellular Operators Association of India has already rejected the suggestions made by TRAI and TEC. “Operators are already working on low margins. Despite offering the lowest tariffs in the world, the Indian telecom sector is the most heavily taxed and these charges, if revised upwards, will have implications on operator’s revenues which in turn could impact tariffs,” said a GSM operator.

However, for the Communications Ministry, this could be one of the ways to meet the objective of revenue generation for the Government especially in the wake of comments made by the Prime Minister that spectrum allocation policy should not lose sight of filling the coffers of the national exchequer.

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