Reliance Jio protests move to levy flat 3% SUC charge

Reliance Jio Infocomm, the telecom arm of Mukesh Ambani's Reliance Industries Ltd, has objected to the demand for a uniform spectrum usage charge (SUC) of three per cent made by GSM operators and accepted by the Telecom Regulatory Authority of India, which has already recommended the standardised fee.

"Unilateral increase in SUC for BWA spectrum from 1 per cent to 3 per cent will be illegal ... the government may take appropriate decision on SUC for forthcoming auctions but without altering the present SUC regime, either directly or indirectly, for already allocated / auctioned spectrum," Reliance Jio – which currently focuses on 4G services – said in a letter sent to the telecom secretary on Monday.

TRAI has proposed a uniform fee of 3 per cent irrespective of the spectrum held by an operator. Broadband wireless access (BWA) spectrum holders like Reliance Jio pay only one per cent SUC. Established mobile service providers on the GSM platform like Vodafone India, Bharti Airtel and Idea Cellular want the fees to be uniform as they pay as much as eight per cent SUC.

Reliance Jio said that terms and conditions of the 'notice inviting application', the main document of spectrum auctions, are equally binding on both the Department of Telecommunications (DoT) and bidders, and any post facto deviation in auction rules which extends undue benefit to incumbent operators will not stand judicial scrutiny.

It further said that companies while buying spectrum in the auction factored in conditions, including SUC, in their bid amounts with reasonable expectation that the conditions notified will not be altered. At lower uniform SUC for spectrum that had been auctioned in past, there would have been more participation and bids more aggressive. "Therefore, retrospective reduction in the SUC would not only cause huge loss to the government but also would have deprived some of the operators to acquire spectrum through these auctions."

Referring to the submission made by the Cellular Operators Association of India (COAI), which represents GSM operators, the Associated Chambers of Commerce and Industry of India (ASSOCHAM), and top executives of leading GSM operators, Jio said the representations do not necessarily put forward the correct facts and might mislead the government.

Jio's move comes a day before the Telecom Commission meets to take a view on the fees after which the empowered group of ministers will take a final decision. A decision on the issue is crucial for bidders because a flat fee would encourage operators to buy more spectrum, while an escalating charge would discourage them from increasing their spectrum holding.

The ongoing tussle over SUC forced DoT to postpone the auction from 23 January to 3 February 2014. The department, under the telecom ministry, estimates that lowering of SUC to three per cent will cause a loss of Rs3,738 crore to the government over 20 years on renewal of the six licences belonging to Airtel, Vodafone and Loop Mobile due to expire in 2014.