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Tuesday, 28 January 2014 01:00
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EGoM loses the chance to fix spectrum regime, creates more arbitrage opportunities for telco

If India didn’t have a history of telecom operators reporting their revenues incorrectly, Trai may not have plumped in favour of a uniform spectrum usage charge (SUC). But given the history, this is what Trai did. And with some very recent precedent. In 2010, when the government wanted to charge a separate SUC for 3G and 2G spectrum, the telecom ministry said it was not really possible to keep tabs on the revenue streams from different spectrum bands. So the government simply upped the SUC on all revenues by 1 percentage points—if an operator paid a 2% SUC on its 2G revenue stream, this was hiked to 3% on the combined 2G and 3G revenues. Given this, it is difficult to see how the ministry will now segregate BWA spectrum revenues—the SUC on this remains the 1% it was earlier—from voice revenues.Right now, when there are few devices that can work on the voice and the BWA spectrums at the same time, segregating revenues may be less of a problem—the devices for voice and for BWA are distinct today. But when such devices are available, and they will be soon, then it is up to the operator to classify its revenues as data/internet or as voice—with such a large difference in SUC, regulatory arbitrage is very high and enforcing the system will mean the DoT will have to monitor CDR data on a 24x7 basis.

While the EGoM failed to do the right thing here, the saving grace is, by and large, it accepted Trai’s recommendation on a flat SUC which encourages firms to be more efficient with spectrum. But by keeping the rate high, at 5% plus, it has ensured the auction bid will be lower than they would have been with a lower SUC at the level Trai had proposed.


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