COAI backs TRAI recommendation on spectrum charge; DoT, Reliance Jio oppose

GSM industry body Cellular Operators Association of India (COAI) has requested the department of telecom (DoT) to consider the proposal  by Telecom Regulatory Authority of India (TRAI) for a flat spectrum usage charge on all users, even as the DoT cited provisions in the tender offer to discard TRAI's recommendation.

TRAI had recommended levying a flat spectrum usage charge of 3 per cent of adjusted gross revenue on operators holding broadband wireless access airwaves.

In a letter to DoT secretary M F Farooqui, COAI said, "The recent TRAI's recommendations of flat spectrum usage charge is a step in the right direction to address the ongoing anomalies without giving any special consideration to one set of operators."

The DoT's move to junk the sector regulator's recommendation of levying a flat spectrum usage charge of 3 per cent would benefit Reliance Jio Infocomm.

Currently, companies pay anything between 3 per cent and 8 per cent depending on their spectrum holding.

COAI said the current policy of raking up charges discourages purchase of spectrum "distorts spectrum auction" and skews technology choices that may result in lower revenues for the government.

"Different SUC for different spectrum bands creates anomalies and discrimination apart from creating non-level playing field," COAI director general Rajan S Mathews said in the letter.

The GSM operators body said an escalating SUC over and above an upfront charge for spectrum leads to a wide variation in the total cost of spectrum, paid over the period of the licence by the existing players in comparison to new players.

"...We sincerely request DoT to correct the discrepancies in the current practise of levying SUC and consider TRAI's proposal, which is aimed at ensuring a level playing field as well as long term benefits to the exchequer as also boost investor confidence," COAI said.

Reliance Jio Infocomm, on the other hand, said the TRAI's suggestions on a uniform spectrum charge will only help to make the third round of auction inconsistent and legally untenable.

TRAI's recommendations are weighted in favour of incumbent operators, the Mukesh Ambani-led Reliance Jio alleged.