India’s mobile operators are encouraging the government to impose a flat 3 per cent usage charge across all spectrum bands, regardless of how they were acquired, and want to see the fee gradually cut to 1 per cent to encourage investment.
India’s regulators earlier this week agreed to reduce the spectrum usage charge from 5 per cent to 3 per cent of gross revenues on spectrum acquired in the next round of auctions. The tax reduction was approved by the telecoms ministry but needs final approval by the Cabinet.
But the new rate will apply only to spectrum acquired in future auctions, with the existing 5 per cent fee remaining for airwaves purchased in the last two auctions.
The Cellular Operators Association of India (COAI) said, in a letter to the Telecom secretary and Telecom Regulatory Authority of India, the reduction is “an initial step in the right direction”, the Economic Times reported.
Under the current complex regulations, the 5 per cent rate applies only to spectrum acquired through auctions, while there is a weighted average method to calculate the charge where operators hold spectrum under the previous administered rate regime, ET said.
Holders of broadband wireless access (BWA) spectrum, such as Reliance Jio, pay only a 1 per cent usage fee.
COAI said there is “an urgent need to reduce the usage fee for all existing spectrum assigned to the operators to a low and uniform rate across bands and technologies”, ET reported.
The operators emphasised that multiple usage rates can lead to ambiguities when they merge or acquire rivals, trade or share spectrum, and airwaves are liberalised, so they want a uniform rate to simplify calculations.