DoT committee nods one-time fee on telcos

A department of telecommunications (DoT) committee has accepted the recommendation for imposing a one-time fee on telecom companies for spectrum that they hold beyond the contracted amount.

The recommendation was made by the Telecom Regulatory Authority of India (Trai).

The move, if cleared by the full Telecom Commission, will force older operators such as Bharti Airtel, Vodafone Essar, Idea Cellular and BSNL, as well as new ones such as Uninor, Loop Telecom, Tata Teleservices and Reliance Communications, to pay a total of Rs 24,700 crore (Rs 247 billion).

A senior DoT official confirmed the committee had endorsed the Trai's view. "The committee has accepted the recommendations. They will be placed before the full Telecom Commision."

Trai had said the new operators should pay commercial rates for spectrum beyond 4.2 MHz that they got with the licences. It said the older operators should pay extra for spectrum beyond 6.2 MHz.

Trai had earlier said the price should be directly propotional to what was discovered in 3G auctions last year.

However, its latest recommendations said 2G spectrum up to 6.2 MHz be priced at 53 per cent of the 3G auction price. It said companies be charged 136 per cent of the 3G price for spectrum beyond 6.2 MHz.

Based on these calcuations, the older operators will have to pay Rs 17,700 crore (Rs 177 billion) for spectrum beyond 6.2 MHz.

The worst-hit will be public sector BSNL, which will have to pay Rs 7,000 crore (Rs 70 billion). The state-owned company has got spectrum beyond 10 MHz in most circles. Trai said the charges would be applicable from April 1, 2010.

The new operators together will have to pay over Rs 7,000 crore when they seek spectrum beyond 4.4 MHz.

The recommendations have, however, come under fire from telecom companies, who say they are unfair on older operators, who have invested huge amounts in building 2G networks as well as in buying 3G spectrum.

They say the recommendations run against the government's position that 3G spectrum is more efficient that 2G.

The regulator's view seems illogical as it assumes that spectrum beyond 6.2 MHz in 2G is more efficient that 3G and therefore the operators should pay more, they say.

Communications Minister Kapil Sibal had earlier this year said the government would delink spectrum from licences.

But it was not anounced whether spectrum would be auctioned or given on the basis of the Trai's recommendations.