Videocon Telecom has said that it wants spectrum usage charges in India to be uniform, applicable only on spectrum procured through auction, and that to, for only covering administative expenses, similar to the existing Broadband Wireless Access license terms. The telco is of the opinion that in the earlier regime, “spectrum was allocated administratively where there was no payment made for spectrum allocation by any operator, hence there was a logic behind charging slab based SUC in accordance to amount of spectrum allocated. In the current regime, however, spectrum is allocated through an open market mechanism to derive the exact market value of the spectrum. Therefore it is fair that SUC charges should levied only to the extent to cover the administrative expenses towards the management of the spectrum.”

At present, charges are levied according to the amount of airwaves held by the operators, and are charged between 3% to 8% basis the spectrum allocation. Thus, incumbent operators who hold a large amount of spectrum pay SUC at the upper end of the range. This statement from Videocon Telecom has come in just before the TRAI’s recommendations on levying of an uniform annual fee on spectrum usage are to examined by the Telecom Commission. TRAI had recommended uniform spectrum usage charge (SUC) of 3% to 5% of revenue earned by mobile operators from telecom services from April 1, 2014.

Videocon’s licenses had been canceled following the Supreme Court ruling on India’s 2G scam, and the allocation of licenses on a first-come-first-served basis in 2008. In a subsequent 2G auction last year, in November 2013, Videocon had picked up 24 blocks of spectrum in 6 circles (4 blocks of 1.25 MHz each in each circle), for Rs 2221.44 crore. It got spectrum in Bihar, Gujarat, Haryana, Madhya Pradesh, UP East and UP West. Videocon had withdrawn its bid for CDMA spectrum. As of October 2013, it had 3,484,547 connections, with only 52.53% of them (1,830,433) active.

MediaNama Take

Telecom auctions in India are seen as sources of revenue, conducted with an intent of helping reduce fiscal deficit for a big-spending government. Additional charges, and creeping regulation and an unpredictable and unreliable policy regime have led to significant uncertainty in the sector. The submission of Videocon that a policy of both conducting and auction, and levying significant additional spectrum usage charges is excessive, does appear to valid. In the end, the consumer ends up paying for it, and the wider goal of making telecom services affordable and pervasive is not served.