After the licences, the revenue. While the Department of Telecommunications (DoT) is moving ahead with its plan to allocate licences to both new entrants and old players wanting to diversify into new areas, the accompanying spectrum is a more complex animal – and all indications are that it might become costlier in a cut-throat market, throwing up new questions on the frenetic industry.
The Telecom Commission is due to meet on Tuesday to consider a report that could result in increased spectrum charges. Indications are that the government is considering a fee equivalent to eight per cent of the annual gross revenue (AGR) of service providers for up to 5 Megahertz (MHz) of spectrum.
Operators now pay between 2 and 6 per cent of their AGR to get anything between 4.4 and 15 MHz.
The Telecom Regulatory Authority of India (TRAI) had recommended an increase in spectrum charges, and 8 per cent is the figure recommended by a committee on spectrum valution and pricing. Prime Minister Manmohan Singh also recently said that the government could not ignore revenue considerations in spectrum allocation.
While there has been a tug-of-war on how to price spectrum, with opinions ranging in the one extreme on auctions to another that pleads for cheap spectrum to boost connectivity, it is clear that the exchequer would not want to let go off revenue from a scarce resource that is used for commercial purposes by the likes of Bharti Airtel, Reliance and Vodafone.