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Fee waiver for new 3G players

business Updated: Jan 28, 2010 20:25 IST

In order to encourage new companies and ensure a level-playing field between the new and old telecom operators, the government has decided to waive off its one-year spectrum fee for standalone 3G service providers. Standalone telecom operators are those that do not currently operate mobile services.

This has been approved by the Telecom Commission — the highest policy-making body in the telecom sector — and will be incorporated on the notice inviting application (NIA) for the 3G spectrum auction.

This means that if a new operator like AT&T wins spectrum through auction, it will not have to pay spectrum fee for the first year of operation.

However, existing 2G operators like Bharti, Reliance, Tata, Vodafone and Idea will have to pay regular charges applicable to telecom service providers for use of spectrum.

Currently, service providers have to pay an annual charge to the government for use of spectrum. This depends on the quantum of spectrum used by an operator. For example, for up to 4.4 MHz of spectrum operators have to pay 2 per cent of annual gross revenue (AGR) as revenue. Up to 6.2 MHz of use they have to pay 3 per cent and for spectrum beyond 12.5 MHz it rises to 6 per cent of revenue.

According to a senior department of telecommunications (DoT) official, the defence ministry is proposing that the number of slots should be different in different circles depending on the availability of spectrum.

In eight circles, three slots of 3G spectrum are available, while some circles will get only two slots.

The process of auction was supposed to start in the first week of January. However, the government has not yet issued the NIA. Once the NIA is published, bidders would be given 15 days to prepare for the auction. This includes a mock auction exercise. Once the bidding process starts, the companies would be asked to submit bids within 30 days.