Govt may not increase licence fees | india | Hindustan Times
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Govt may not increase licence fees

In a tussle within the Govt, the DoT is now holding out against a possible revision, reports Archana Khatri.

india Updated: Dec 16, 2007 22:19 IST
Archana Khatri
Archana Khatri
Hindustan Times

In a tussle within the government on how much to charge for new telecom licences, the Department of Telecommunications (DoT) is holding out against a possible revision.

Prime Minister Manmohan Singh had last week called for a fair, equitable spectrum policy that will not compromise on revenues either. The pricing of spectrum is still wide open, while there is talk of a rise in licence fees as well.

The Finance Ministry, never one to say no to revenues, is examining its options while more than 500 wannabes line up to offer licences, of which 46 have sought pan-India licences, each of which at current prices cost Rs. 1,650 crore.

Current indications are that the DoT is resisting any move to raise the licence fee further. DoT Secretary D.S. Mathur wrote to Finance Secretary Duvvuri Subbarao late last month, arguing against a call to raise licence fees for new entrants.

"The entry fee was finalized for UAS (universal access service) regime in 2003 based on the decision of the cabinet. It was decided to keep the entry fee for the UAS licence the same as the entry fee of the fourth cellular operator, which was based on the bidding process in 2001,” Mathur said in the letter, a copy of which is available with the Hindustan Times.

Mathur said that its move on licence fees was in line with that of the Telecom Regulatory Authority of India (TRAI), which had not recommended any hike in the charges in its recommendations made last August. It offered no explicit opinion of its own on the issue.

The prime minister is walking a tightrope to ensure an optimal mix of revenues, consumer interests and competition in the marketplace. “Various discussions are taking place to arrive at a fair value of spectrum for second generation(2G) telephony,” a senior DoT official said.

Bharti Airtel in a letter to the DoT secretary had recently offered double the amount of the pan-India fee of Rs 1,650 crore for additional 4.4 megahertz (MHz) for a pan-India spectrum allocation.

Worldwide, the practice is to auction spectrum, while in India, rural telephony and consumer interests are among reasons cited to price it down.