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Spectrum fee: telecom ministry overreaches, steps on TRAI’s toes

The department of telecommunications (DoT) has proposed a one-time spectrum charge on all operators for their remaining licence periods. Manoj Gairola reports. Sleight of hand?

india Updated: Jun 18, 2012 02:00 IST
Manoj Gairola
Manoj Gairola
Hindustan Times

There is a new twist to the spectrum tale. The department of telecommunications (DoT), in violation of telecom service licence conditions and accompanying contractual obligations, has proposed a one-time spectrum charge on all operators for their remaining licence periods.

Strangely, however, it is reluctant to charge a one-time fee, despite the Telecom Commission’s decision, on the excess spectrum that incumbent telecom operators got beyond contractual obligations. This is what the Comptroller and Auditor general (CAG) had said involved a revenue loss of Rs 30,000 crore in its November 2010 report on spectrum sale.

DoT has not sought recommendations from the Telecom Regulatory Authority of India (TRAI) before proposing a one-time spectrum fee on all the operators. As per Section 11 of the TRAI Act, the government has to seek the TRAI’s recommendations before making any changes to licence conditions.

In a legal opinion last year, Attorney General G E Vahanvati had also said that it was mandatory for the government to seek TRAI’s recommendations before making any changes in the licence conditions. “The legal opinion is with both the TRAI and DoT,” said a former DoT official familiar with the development.

According to initial estimates, the operators may have to pay over Rs 100,000 crore (going by TRAI’s reserve price of Rs 18,000 crore for 5 Mhz of 1800 MHz band) if the government imposes one-time spectrum charge. However, new operators will have to pay more as the term of their licence period is higher.

“This coupled with DoT’s reluctance to charge one-time fee for spectrum beyond 6.2 MHz will tilt the level playing field in favour of the old operators,” said an industry analyst. In May 2010, TRAI recommended that the government should charge for excess spectrum from Telcos. Then Telecom Commission decided that the operators should pay for the excess spectrum. However, instead of charging for excess spectrum, the DoT sent it for the Presidential reference.

“All natural resources are the assets of the people of India and the government has no executive authority to wither away the proceeds which can be gainfully employed for poverty alleviation and other social causes,” said BK Syngal, former CMD of VSNL.

First Published: Jun 17, 2012 22:33 IST