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Paving the way for the spectrum auction process to begin, the Union Cabinet on Wednesday approved a spectrum usage charge (SUC) of 3 per cent of adjusted gross revenue (AGR), excluding revenues from wire-line services.
“This will facilitate moving to a simple, transparent and flat ad-valorem SUC regime, in accordance with the law, and avoid creative accounting to bypass revenues,” said a government statement.
The auctions, scheduled for September, will see spectrum auctioned in all the major bands, including 700MHz, 800MHz, 900MHz, 1800MHz, 2100MHz, 2300MHz and 2500MHz. This time there will be a total of 2,142 MHz put up for auction in these bands.
The Cabinet, on June 22, had cleared the proposal for auction in various bands, but wanted more clarifications on the issue of SUC as the Telecom Regulatory Authority of India (TRAI) and the Department of Telecom (DoT) had differences on the issue. It had asked TRAI and the DoT to have a “fresh look”.
After due diligence, the Telecom Commission had on July 25 recommended a 3 per cent annual usage charge for the spectrum to be sold in the upcoming auction while fixing the same as the minimum rate even for existing airwaves with all operators.
Weighted average formula As per the decision, the weighted average of SUC rates across all spectrum assigned to an operator in all access spectrum bands, including broadband wireless access (BWA) spectrum obtained in the 2010 auction, shall be applied for charging SUC, subject to minimum 3 per cent of AGR, and excluding revenues from wire-line services.
The uniform SUC rate has been a highly contentious issue with the industry due to differences in the fee for the 2300 MHz band (1 per cent) and other bands.
Reliance Jio, which bagged airwaves in the 2300 MHz band in the 2010 auction, has opposed the levy of a uniform SUC rateas it pays only a 1 per cent fee on the BWA spectrum as per the norms at that time.
However, it acquired some spectrum later, on which higher SUC is being charged and the company is required to pay it as per the weighted average formula.
The auction is expected to generate over ₹5.60 lakh crore for the Centre and, at the same time, will allow operators to accumulate more spectrum, a critical ingredient in their plans to offer bandwidth-guzzling services such as video-on-demand and live television.
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