DoT prefers current slab system to flat-rate plan

Thomas K. Thomas
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Cabinet to meet today to take a final decision

The Department of Telecom favours continuing with the existing slab system for collecting spectrum usage charges instead of the proposed flat rate.

Mobile operators currently pay between 3 and 8 per cent of their annual revenues as usage charges, depending on the extent of spectrum they hold.

The Telecom Regulatory Authority of India had proposed a flat rate of 3 per cent on grounds that the base price of Rs 18,000 crore for the upcoming auction was high.

Base price

This was later increased to 5 per cent by the Empowered Group of Ministers after it lowered the base price to between Rs 14,000 crore and Rs 15,000 crore.

But the draft note floated by the DoT for the Cabinet’s consideration makes no mention of the new, flat-rate option. “The existing slab rate is the preferred option,” the note seen by Business Line stated.

GSM-based mobile companies said that the move to continue with the slab system will disturb the level playing field with dual technology operators offering both CDMA and GSM spectrum. The Cellular Operators Association of India (COAI) said it supported the flat-rate system as it brings all operators on the same level, irrespective of the quantum of spectrum they own.

Their main grouse with the existing slab system is that while operators such as Airtel pay as much as 8 per cent of revenues as spectrum charges in some circles, dual technology players are paying a lower revenue share despite having more collective spectrum.

“The GSM industry, which is the victim of a discriminatory spectrum usage regime based on slab-based charges, has been raising this issue with the DoT and urging it to ensure a level playing field with the dual spectrum operators, who pay separate spectrum charges for 800 MHz and 1800 MHz and enjoy a lower fee,” the COAI said.

Cabinet decision

The Cabinet is expected to meet on Thursday to take a final decision on this issue. It will also decide on the reserve price to be fixed for the upcoming auction. The EGoM, headed by Home Minister P. Chidambaram, has proposed to fix the reserve price either at Rs 14,000 crore or Rs 15,000 crore for 5 Mhz of GSM spectrum in the 1800 Mhz band.

For CDMA spectrum in the 800 Mhz frequency band, the EGoM proposes to fix the price at 1.3 times higher than GSM spectrum.

(This article was published on August 1, 2012)
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