DoT sets up panel to decide on 2G, 3G revenue break-up

Mumbai: The department of telecommunication (DoT) has set up a committee to examine the possibility of segregating 3G and 2G revenues in the face of opposition from the Telecom regulatory Authority of India (TRAI) to the move.

The DoT is now reportedly considering a review of its decision to allow operators to break up their 2G and 3G services for payment of annual spectrum fee. DoT is objecting to the move as it fears operators may manipulate revenues.

While DoT says the segregation of revenues generated from 2G and 3G services would help work out annual spectrum usage charges and maintain transparency, it wold also result in huge savings for the existing operators who win 3G spectrum.

The separation of 2G and 3G spectrum charges may lead to operators roping in more subscribers for 3G services as they have to pay a lower spectrum fee compared to what they pay for 2G services, say industry watchers.

According to TRAI, there will be many common control equipment for 2G and 3G and apportioning the cost to these two services will be a very complex and cumbersome exercise. Such bifurcation of revenues may also lead to wrong booing of revenues by some of the service providers and lower spectrum charges.

Operators currently pay a maximum of four per cent of their annual revenues depending on the quantum of the 2G spectrum they use.

DoT has said that operators need to pay one per cent on revenues earned from offering 3G services as spectrum charges.

This means that an operator like Bharti Airtel, instead of coughing up a total of five per cent of their combined revenues from both 2G and 3G services, will have to pay one per cent on revenues from 3G services and another four per cent on revenues from 2G services separately.

Given the average revenue per user at present is around Rs 300 per month, operators will have to pay a maximum of around Rs 3 per 3G subscriber each month to the government under the new formula. If DoT had imposed the revenue on combined revenues, then operators would have had to pay Rs 15 even for the newly acquired 3G subscriber.
 
DoT's decision, however, is in line with its earlier stand to allow operators with dual technology to pay spectrum charges separately.

The committee is headed by DoT joint secretary and has members from WPC, IIT Chennai, TEC and DDG (Licensing Finance).

The committee, which will look for a mechanism to segregate revenues from 2G and 3G for a service provider and decide on what components like voice, data, roaming will form part of 3G revenue, is expected to submit its report within four weeks.