Telecom Commission bats for 3% floor spectrum usage charge

Inter-ministerial panel Telecom Commission today recommended 3 percent annual usage charge for the spectrum to be sold in upcoming auction while fixing the same as the minimum rate even for existing airwaves with all operators. The suggestion, which will now go to the Union Cabinet for approval, may hit telecom players who are paying less than 3 percent spectrum usage charge (SUC).Sources said that bidding for Rs 5.66 lakh crore mega-spectrum auction will start in 45-50 days from the date the Cabinet approves the proposal."We have to maintain level-playing field and then move towards uniform SUC rate for all airwaves which Trai has been suggesting. The recommendation made by Telecom Commission earlier will stay. A new point has been added that all telecom operators will have to pay a minimum 3 percent SUC," an official source said.Earlier, the Telecom Commission had recommended a spectrum usage charge of 3 per cent for airwaves to be sold in future auctions. It had also suggested that players will continue to pay weighted average of fee for existing airwaves.The Union Cabinet, last month, approved spectrum auction rules, except SUC, recommended by the Telecom Commission and asked the panel to take a Trai's opinion on the matter.The uniform SUC rate has been a highly contentious issue of late with the industry due to difference in the fee for 2300 Mhz band (1 per cent) and other bands. Reliance Jio, which bagged airwaves in 2300 Mhz band in 2010 auction, has opposed levying of uniform SUC rate, as suggested by Trai, as it pays only 1 percent fee on the BWA spectrum as per the norms fixed for sale at that time.However, it acquired some spectrum later on which higher SUC was being charged and the company is required to pay as per the weighted average formula.Speaking to CNBC-TV18, telecom expert Mahesh Uppal said it was "disappointing" that the Commission had stuck to its stance."This will impact Airtel and Reliance Jio. The data market is not growing as expected. The government should have had a more liberal approach towards SUC," he said but added that this would unlikely impact telcos' decision on bidding for spectrum going forward.He added that he expects more consolidation in the sector ahead.(Disclosure: Reliance Industries, which owns Reliance Jio, also owns Network18 and moneycontrol.com)- With inputs from CNBC-TV18