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New formula likely on spectrum fee charges

Thomas K Thomas

The government is considering a review of its decision to charge 2-3 per cent revenue share annually as spectrum fees from telecom service providers. Instead, the government may adopt a new formula suggested by the industry, charging spectrum fees based on the frequency usage pattern of the service provider.

The government is also setting in motion the bi-annual review of the National Frequency Allocation Plan, to be implemented by the end of the year.

As per the new formula on spectrum fees, telecom service operators will have to pay according to the spectrum used. The formula links the total annual spectrum charges for an operator to the per capita GDP of the licensed area.

Thus, it envisages rates of Rs 1,000 per Mhz for service areas smaller than 1 km radius per annum.

For distances between 1-5 kms, the spectrum charge would be Rs 2,000, for 5-10 kms the charge would be Rs 5,000 per annum, Rs 10,000 per annum for distance between 10-50 kms per Mhz per annum, Rs 20,000 for distances between 50-100 kms, Rs 50,000 for distances between 100-200 kms, Rs 100,000 for distances of up to 500 kms and Rs 200,000 for distances beyond 500 km.

According to the current policy of the government, telecom service providers have to pay 2-3 per cent of their revenue per annum as spectrum charges irrespective of demographic conditions like user base and paying capacity of the circle they operate in.

The decisions were taken at the second meeting of the working group chaired by RN Agarwal, wireless advisor to the government.

Industry representatives including Bharat Bhatia, president of Core Group of Telecom Industries Association, TV Ramachandran of COAI, SC Khanna of ABTO, Amitabh Singhal of ISPAI and representatives from DoT, BSNL, Wireless Planning Commission and ministry of defence were also present.

The government has also agreed to the industry's demand to begin the process of reviewing NFAP 2000 and has asked CTIA to prepare the draft of the new NFAP. The Frequency Plan is revised every two years and the new plan is scheduled for implementation by the end of the year.

The government has also decided to expedite the process of allocation of additional spectrum for basic, cellular, trunking and Internet operators under the revised SACFA plan.

CTIA has also been asked by the government to assist the government in formulating the spectrum allocation plan for 3G services. 3G or third generation technology for mobile service providers is expected to be used by Indian operators in the next two to three years.

The Industry and the government is in the process of formulating the policy to be followed for a smooth transition from the existing GSM based mobile service to the new technology.

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