India’s Telecom Commission has set the minimum spectrum usage charges at 3 percent of revenue. "The commission has stuck to its previous recommendation but it has introduced one more element, which is maintaining a floor rate for SUC at 3 percent", a senior official at India’s Department of Telecom (DoT) told ET. India’s Cabinet is expected to approve or not the Telecom Commission's proposals next week. The next round of spectrum auction, which has been delayed over the SUC issue, can take place 45 days after the Cabinet approves the Commission’s decision.
Under the previous formula proposed by the Telecom Commission, Reliance Jio had an SUC outgo of 2.88 percent of revenue. However, under the new formula, Reliance Jio will have to pay 3.05 percent, according to the unnamed DoT source. This fee will be the weighted average for Jio while the operator will continue to pay 1 percent SUC on the spectrum it won in 2010 auction.
Aircel, which earlier had to pay 2.83 percent SUC, will now have to pay 3 percent, while Reliance Jio will have to pay an additional 0.5 percent as it is sharing spectrum of Reliance Communications.
Airtel, Vodafone and Idea, which currently pay a higher SUC, wanted a flat revenue share rate across all airwave bands and operators. However, this has not been approved by the DoT, following the opinion of the Attorney General that the user charge on the Broadband Wireless Airwaves (BWA) could not be increased above 1 percent.
"The telecom industry is disappointed with the commission's decision to continue with a weighted average methodology for calculating the SUCs. We believe that the dangers highlighted by the Trai (Telecom Regulatory Authority of India) of revenue arbitrage are still prevalent and we hoped the government would switch over to a flat rate SUC instead of a weighted SUC, which is different for each operator," said Rajan Mathews, director general of Cellular Operators Association of India (COAI), the industry body that represents GSM operators.
