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Ministers approve fee hike for radio spectrum

Ministers approve fee hike for radio spectrum
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First Published: Tue, Sep 08 2009. 11 19 PM IST
Updated: Tue, Sep 08 2009. 11 19 PM IST
New Delhi: An empowered group of ministers (eGoM) has approved the Telecom Commission’s proposal to increase fees for using radio spectrum when the government auctions air waves that would enable so-called third-generation, or 3G, mobile phone services.
The ministerial group’s decision was taken in a 27 August meeting chaired by finance minister Pranab Mukherjee and attended by home minister P. Chidambaram, defence minister A.K. Anthony and farm minister Sharad Pawar, among others, said a department of telecom (DoT) official who didn’t want to be named.
The decision was made on the same day as eGoM decided to auction 3G spectrum in the next three months targeting to raise Rs25,000 crore.
The commission, which oversees telecommunications policy, on 11 November proposed that new telecom service providers that win 3G spectrum, but do not have any 2G, or second-generation, spectrum, would pay 3% of their adjusted gross revenue (AGR) as spectrum usage charge.
3G mobile services allow for greater capacity and high-end mobile data services including video streaming.
AGR refers to the total revenue of telecom operators less the revenue that does not accrue directly to them.
Existing telecom service providers that bid successfully for 3G spectrum would pay an additional 1% of their AGR as spectrum usage charge, the commission had said.
The hike is likely to earn the government an additional Rs1,000 crore in the first year of the launch of 3G services, analysts estimated.
Varadarajan Sridhar, research fellow at telecom solutions provider Sasken Communication Technologies Ltd, said that the raised fees would be “favourable to those new operators who have just got 2G spectrum and win 3G spectrum as well”.
“Assuming that one incumbent operator and one new operator gets 3G spectrum, there is a definite disparity among them in the spectrum usage charges that they will pay,” Sridhar said.
“In case of a new operator who wins 3G spectrum in the auction after bidding a minimum of Rs3,500 crore, he pays 3% without having any 2G spectrum. An incumbent operator, who has already been allotted 2G spectrum, pays 1% more. The new operator has to offer voice and data within that 5MHz of 3G spectrum while the incumbent can just offer more data as most of the voice is already on the 2G spectrum,” he said.
The department of telecommunications is expected announce later this week dates for 3G auction process.
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First Published: Tue, Sep 08 2009. 11 19 PM IST