Rationalise the SUC PDF Print E-mail
Monday, 11 April 2016 00:55
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That’s the big lesson from SC ruling in RJio case

The Supreme Court has done well to dismiss Prashant Bhushan’s public interest litigation against the government allowing RJio to offer voice services on its BWA spectrum even though the original license got by the firm was only for internet services. While Bhushan’s Centre for Public Interest Litigation (CPIL) had alleged a R40,000 crore benefit to RJio, as the court pointed out the case rested entirely on a draft CAG report—while the draft report had put the loss on account of auction bids at R22,842 crore, CPIL had put the loss at R40,000 crore after taking into account the fact that the spectrum usage charge (SUC) on BWA is 1% versus 5% for other telecom services. What CPIL did not keep in mind was that the CAG had lowered its estimate to R3,367 crore while reiterating a ‘significant loss of revenue’ on account of the SUC.

As this newspaper had argued when the PIL was filed, the SC has pointed out that the bid conditions were clear that the services a telco could offer—voice and data or just data—were to be based on the license the operator held. When RJio bid, the only license available was an internet one—with 500 applications pending for a voice services license when the auction took place, even if it wanted, RJio could not have bought a voice/data one. When, in 2013, the government said a universal licence—to offer any service—could be bought for R15 crore, RJio opted for it. Indeed, RJio should logically have been asked to pay just R15 crore, but the government still charged it R1,673 crore since that is what voice/data licenses cost in 2002—it has to be kept in mind the R1,673 crore licence came with 6.2 MHz of spectrum bundled with it for free. Also, as the SC pointed out, the same BWA licence was open for bidding for everyone else, with the same terms, so no case can be made for RJio having been favoured.

It is on the SUC that CPIL was on firm ground though the SC has ‘for the time being’ left the matter to the government. It is irrational to charge BWA a lower SUC fee—if the original reason for doing so was that it would be used in rural areas, this is no longer true. Also, since it is not possible to segregate BWA and other traffic, it will encourage misclassification of revenues—indeed, while the original plan was to levy a 1% SUC for 3G, this was dropped on grounds that segregation from 2G was not possible. Given a committee has been set up on this and the report is to be finalised soon, the SC has kept out of it. Even in the unlikely event the committee says segregation is possible, a level playing field demands the same SUC for all players.


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