Cabinet nod for 3 percent spectrum fee, auction gets green signal


NEW DELHI: Decks have been cleared for a round of mega spectrum auction which has the potential to improve the quality of telecom services across the country, while promising the exchequer around Rs 5.6 lakh crore if all the airwaves are sold at the reserve price.
The Union Cabinet on Wednesday approved a minimum 3% spectrum usage charge (of adjusted gross revenues) that every mobile operator will need to pay to the exchequer. While the same charge will be applicable for the spectrum to be acquired in the upcoming round, the Cabinet also agreed with the suggestion of the inter-ministerial telecom commission for a weighted average formula if any operator possesses spectrum, which was acquired previously, whether through auctions or was assigned administratively.The move will bring a sense of semblance in the telecom industry as those holding spectrum in the 2,300 MHz band – which is charged at 1% – will need to use the weighted average formula and pay in proportion to their overall holdings across various frequencies.
Mukesh Ambani’s Reliance Jio and Sunil Mittal’s Bharti Airtel hold spectrum in the 2,300-MHz band. According to the weighted average formula, Airtel’s SUC payout will come down to nearly 3.8% from 4.9% it pays now, while for Reliance Jio, the SUC rate will go up marginally – from 2.88% to 3.05%. Other operators such as Vodafone and Idea cellular will continue to pay around 4.8% and 4.5% respectively.”We hope to come out with the notice inviting application (NIA) for the auction by next Monday, and we will be on track to hold the auction by September,” telecom secretary J S Deepak told TOI.Asked to comment on prospects of the sale, Deepak said, “We are confident of having a healthy round of auction once the bidding begins.”The government will sell 2,300 MHz of spectrum across seven frequencies and this is expected to provide the extra capacity to the choked networks. Call drop and slow broadband speed have emerged as major irritants for consumers and enhanced spectrum holdings are expected to improve the quality of services.The fixation of SUC was delaying start of the auctions process. The issue had been discussed by the Cabinet a few weeks back, but it had decided to send the matter back to regulator Trai for its suggestions. The issue was finally cleared by the inter-ministerial telecom commission on July 25 and its recommendations have now been accepted by the Cabinet.The fresh round of auction will see spectrum being sold in the 700 MHz band for the first time ever. This band is seen as one of the most-efficient for offering mobile services due to its good propagation characteristics and relatively lower investment requirement for support network.However, the telecom industry has said that the reserve price for 700 MHz band is very high as the government has fixed the pan-India per megahertz price at Rs 11,500 crore.The government raised Rs 1.1 lakh crore from the previous round of auction in 2015.

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