With just a month left in the spectrum auction of 1800 mega hertz (MHz) and 900 MHz band, Associated Chambers of Commerce and Industry of India (Assocham) asked for clarifications from the Government pertaining to uniform spectrum usages charges (SUC).
Urging the Government to have uniform SUC, Assocham said that the telecom operators would be discouraged to bid for the auction if the current high SUC regime continues.
TV Ramachandran, Chairman, National Telecom Council of Assocham said, “We cannot overstate the importance of a successful spectrum auction but with the high SUC regime, operators would be discouraged to bid. We urge the Government to provide clarification on uniform SUC by December 28.”
SUC is levied annually by the Government as percentage of revenue earned by telecom companies from telecom services and it varies between 3 to 8 per cent in case of mobile operators. Trai had suggested that the annual SUC be set at a flat 3 per cent of company’s revenue for the spectrum they buy from auctions.
“We do not ask the Government to implement flat SUC right now but only want the Government take a decision on uniform SUC before the spectrum auction starts. This would help clear the situation of the operators who can then bid for spectrum accordingly,” Ramachandran added.
Ramachandran, who is also the Resident Director (Regulatory Affairs & Government Reforms), Vodafone India, further said, “The concerns of the Department of Telecommunication (DoT) that uniform charges may cause a loss of `2,500 crore to the Government exchequer over a period of 10 years, is incorrect.” He rather said that by not having uniform SUC impact other Government reforms like spectrum sharing, revised mergers and acquisitions as the operators will be discouraged to purchase spectrum if the SUC continues at the current escalated regime.
“If the Government believes that three per cent SUC will result in a loss, it can set the uniform SUC at a rate that will give the Government revenue neutrality,” he added.
Apart from SUC, Ramachandran also talked about the additional rural roll out obligations imposed on the operators along with universal service obligation (USO) of 5 per cent of operator’s adjusted gross revenue. Calling it a double whammy, he said, “If additional rollout obligations are being prescribed, there is no rationale to continue with a USO levy. Already there are over `28,221 crore lying un-utilised in the USO Fund.”
Stressing that the telecom industry is already under a debt of `25,000 crore, he said the operators should either be asked to pay USO fee or allow them to roll out services in rural areas. As per Ramachandran, “Imposing both would only have an adverse impact of the rural customer. The operators would try to recover the USO fee from the customers in one form or other.”
He also sought allocation of spectrum in contiguous blocks and said that fragmented spectrum would only result in wastage of the natural resource and asked the Government to allow operators to mutually rearrange their frequencies to efficiently utilize the spectrum.