TRAI to recommend administrative charges for 3G spectrum

TRAI has advised the department of telecommunications about some changes that need to be made in the rules for 3G spectrum.

Among the changes, the regulator has recommended an annual administrative fee of 2 per cent of the highest bid amount for 3G.

It has stressed that the spectrum availability status should be put in public domain for the knowledge of bidders. DoT's estimates that bidding for 3G would be conducted around January-February 2009, but the fresh recommendations from TRAI may upset the calendar.

Some key recommendations

• Two per cent of the highest bid amount as annual administrative charge during the validity period of 3G spectrum.
• As the operators will take time to roll-out their services after the allocation of spectrum, therefore TRAI recommended a moratorium of one year from the date of allocation of spectrum in respect of payment of administrative charge.
• The standalone 3G operators who do not have any allotment of 2G spectrum should also pay an annual spectrum charge of 3 per cent of annual adjusted gross revenue  (AGR), which is equivalent to the lowest slab of 2G operator. It is clarified that this is besides the administrative charges.
• All available spectrums in 2.1GHz including anticipated spectrum availability within the next one year is put to auction so as to maximize the number of 3G service providers.
• The availability of 3G spectrum including anticipated should be put in public domain for the knowledge of bidders. It becomes particularly relevant as DoT has already decided to allocate spectrum to BSNL and MTNL. Therefore, it is essential that the principle of level playing field is urgently restored by putting all available spectrum for auction 

The regulator has also endorsed the government's move to hike spectrum usage charges for all existing operators. At present, all telecom services in the country are offered on 2G services pay 2-6 per cent of their annual revenues to the government as spectrum user charges. This usage charge depends on the amount of spectrum they hold.

Here is a list of the proposed charges

Spectrum in MHz in 2G	Proposed Charges as % of AGR
upto 4.4/2.5	3
upto 6.2/5	4
upto 8	5
upto 10	6
upto 12.5	7
upto 15	8

As per the new charges which were proposed by the DoT and endorsed by TRAI, there will be a flat 1 per cent increase in the spectrum usage charges for all radio frequencies that telcos hold till the 8 MHz mark. Beyond this limit, spectrum usage charges would go up by 2 per cent. The increase in spectrum usage charges will mean an additional revenue Rs3,000 - Rs4,000 crore of additional levies for all operators combined. The regulator has also added that these revised rates would be applicable to existing operators irrespective of whether they are successful in their bids for 3G radio frequencies.