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Vodafone Seeks 1% Uniform Spectrum Usage Charges For 3G & BWA Spectrum

Our coverage of the 2G Auctions is brought to you by OnMobile Global, India’s leading Mobile Value Added Services [VAS] company

Vodafone India has sent a letter to the Department of Telecom (DoT) and Ministry of Communication and Information Technology, seeking a level playing ground between 3G players and BWA players since it believes that there is now no distinction between services that will be offered on 3G and BWA network. It has also sought clarity on the implementation of EGoM’s decision to reduce spectrum usage charges earlier this week.


The telco has asked that going forward, the government should apply a standard spectrum usage charge (SUC) of 1% Annual Gross Revenue (AGR) for for both 2.1GHz/3G and Broadband Wireless Access (BWA) spectrums with a weighted average for existing spectrum allocations in 900 MHz and 1800MHz band. Vodafone also pointed out that TRAI had earlier recommended this step and says such a move will enable faster rollout and proliferation of mobile broadband.

Note that empowered group of ministers (EGoM) had earlier retained 1% SUC for BWA players, although it mentioned that players will have to pay a 5% usage charge for the new spectrum acquired during the spectrum auction next week. Following this, Cellular Operators’ Association of India (COAI) Director-General Rajan Mathews had raised concerns of an unlevel playing field, saying that 4G players should also pay the same usage charge as GSM operators, especially now that players like Reliance Jio has received pan-India unified license through which it can offer voice services to its consumers.

Other Issues Raised by Vodafone: 

Weighted Average for Existing Allocations? Vodafone has asked for a confirmation on whether the weighted average approach will be applied to existing allocations from the date of allocation, if it acquires additional spectrum in the forthcoming auctions. For instance, if it acquires additional 5MHz 1800MHz spectrum in Delhi where it already has 10MHz 900/1800MHz spectrum (and paying 6% SUC), this weighted approach would mean it would have to pay a weighted SUC of 5.7% AGR.

Applicable on 3G Spectrum bought in 2010? Vodafone has sought a confirmation on whether this weighted approach will be applicable to the 3G spectrum acquired in 2010 from the date of its allocation. The company believes the government should apply this approach from the date of allocation since it was also considered by an Inter-Ministerial Committee in 2008, when 3G spectrum usage charge issue was being discussed.

Change in SUC rate during extension time? Vodafone has also sought confirmation on whether the existing allocations in 1800 MHz spectrum acquired in November 2012 auction will be removed from the earlier slab during the extension time, which will result in a change in applicable SUC rate since spectrum acquired or re-assigned post 2010 attracts SUC at 5% of AGR.  If confirmed, this is expected to benefit telcos since the spectrum usage charge will drop significantly.

Finally, Vodafone has sought formal notification of the revised SUC and clarity on the topics above to be included in the NIA (notice inviting applications) prior to the auctions scheduled for Monday (February 3).

Our 2G Auctions 2014 coverage

5% Spectrum Usage Fee For New Spectrum in 2014 2G Auctions Pre-Qualified Bidders
2014 2G Auctions: 8 Telcos Submit Bids; Videocon, Loop & SSTL Not Participating
DoT Modifies 2014 2G Auction Guidelines: Rollout Obligations, Performance Guarantees
India’s 2014 2G Auction Postponed: To Begin On 3rd February 2014
The Lowdown: DoT’s Guidelines For 2G Spectrum Auction In January 2014

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