Reliance Jio against uniform spectrum usage charge, all others in favour

All other telcos agree that a uniform spectrum usage charge will create a leveled playing field. Image source: IANS

All telecom companies except Reliance Jio Infocomm have favoured a uniform spectrum usage charge (SUC) but keeping it at proposed 4.5% will be an additional burden for the industry, Cellular Operators Association of India (COAI) said.

Citing a study by Deloitte, the COAI, representing players like Airtel, Vodafone, Idea Cellular, said reducing SUC by 1% can increase GDP by about Rs 1.76 lakh crore and reduce number of people below poverty line by 4.7%.

"It is submitted that except for one of the Telecom Service Providers, the entire industry strongly believes that a uniform fee would not only result in a level playing field but will also remove the ambiguities, arbitrages and their misuse," COAI Director General Rajan S Mathews said in a letter to Telecom Secretary J S Deepak.

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Reliance Jio is also a member of COAI but has a different view on the matter, it added.

Telecom operators provide mobile services using various spectrum bands -- 800 Mhz (2G,4G), 900 Mhz (2G,3G, 4G), 1800 Mhz (2G,4G), 2100 Mhz (3G), 2300 Mhz (4G) and 2500 Mhz (4G).

According to a source, technical committee at Department of Telecom has suggested to levy 4.5% uniform SUC on all operators as it is not possible to ensure their earning from any particular spectrum band for service like 4G.

The present level of SUC collection by government is around 4.69% of revenues earned by companies from mobile phone services.

Inter-ministerial panel Telecom Commission (TC) has decided to take legal opinion on the issue and discuss it along with the technical committee report in the next meeting.

Reduction in SUC by 1% can lead to increase in economy wide investments of about Rs 58,000 crore, tax revenues by Rs 28,000 crore, 3G penetration by 2.3 crore connections and mobile revenues next of tax by Rs 14,600 crore, COAI said citing the Deloitte report.

SUC was earlier linked to quantum of spectrum holding of an operator in the range of 3-8% of their adjusted gross revenue.

After evaluating the impact on the exchequer, the government in January 2014 decided to cap SUC at 5% on spectrum that were to be procured in future auction. The SUC collection was at 4.8% level that time.

Telecom operators at that time were asked to pay the weighted average of their existing SUC (on old rate of 3-8%), and 5% if they acquire new spectrum.

Telecom regulator Trai has recommended SUC at uniform rate of 3% across the industry and gradually bring it to 1%.

"As per the GSMA report, even at 1% AGR, tax neutrality will be achieved by 2017," COAI said.

Reliance Jio has contested this view as it pays only 1% SUC on its spectrum in 2,300 Mhz band and proposal to levy 3% fee would put extra burden on the company.

However, Bharti Airtel, also holding spectrum in 2,300 Mhz band, favours uniform levy, according to COAI submission.

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