Given the history of allegations against telcos for misclassifying revenues to take advantage of lower fees on different kind of traffic, it is amazing that the government plans to worsen the mess instead of simplifying it—indeed, apart from the regulatory arbitrage, it will also lead to more litigation as the government or agencies like the CAG will charge telcos with misclassification of revenues. In the past, when the government had different charges for local calls, domestic calls and international calls, for instance, some telcos were accused of disguising their international calls as local ones. While much of this got fixed once the charges were standardised at 8% of revenues, the problem of the spectrum usage charge (SUC) remained. While the rates rose from 2% at the very first tranche of spectrum all the way up to 8% in the highest tranche, in 2013, the Trai had recommended the SUC be levied at a flat rate of 3%. The government, however, went in for a flat rate of 5% for spectrum that was bought in auctions and a weighted average formula was proposed for the spectrum that was assigned to operators.
If this wasn’t bad enough, it kept the rate at 1% for what was called BWA spectrum—this was originally done on grounds the spectrum could be used for only data services, but thanks to technology, even voice calls can be offered on this. In order to make the next round of spectrum auctions more attractive, the Telecom Commission has decided that the SUC on spectrum bought in the next auction will be levied at a 3% rate—the Cabinet will take a final call on this. While this will help lower costs for the new spectrum, surely the logic should have been applied to all spectrum that was bought in auctions? Apart from that, how is the government going to segregate the revenues got from using BWA and non-BWA, from using auctioned spectrum and non-auctioned spectrum and now, pre-2016 spectrum and post-2016 spectrum? Given the relatively low amount of spectrum that will probably be bought in the forthcoming auction relative to what the telcos already own, the difference in the SUC may not be too large, but it is large enough for disputes to arise. The reason why we’re at this pass, of course, is because while the government wants to lower charges to make auctions more attractive, it continues to regard the sector as a milch cow and so will not lower rates across the board.