Telecom Reforms: Ravi Shankar Prasad Sets Up Panel To Lower Licence Fee, Spectrum Charges

The government has finally recognised that telecom operators are under financial stress and need support in the form of rationalisation of various levies, like licence fee and spectrum usage charge, which add to their burden. Telecom minister Ravi Shankar Prasad said that he has set up a committee under department of telecommunications secretary Aruna Sundararajan to look into the entire issue of rationalisation of levies and submit a report in two weeks’ time.

Prasad also said that he will shortly meet the telecom operators to discuss the issues.

“The telecom sector has been going through stress for a very long time, I have myself noted that… I have formed a committee under the telecom secretary to look into the entire issue of rationalisation of levies, etc, and ease of doing business. I have also told her to revisit the whole issue of spectrum usage charges and I expect a report in two weeks’ time,” Prasad said. He added that there has been a disruption in the sector but it has also resulted in cheapest mobile and data rates for people in the country.

The industry has for long been demanding lower taxes and levies, which add up to about 30% of their revenues and in the previous tenure of the NDA government, a telecom policy statement also said such levies would be rationalised. The outstanding industry debt is pegged at over Rs 7 lakh crore.

In fact, in the past, the Telecom Regulatory Authority of India has recommended lowering of certain levies by way of providing financial relief to the operators. For instance, it has recommended fixing a flat spectrum usage charge for operators at 3% of their adjusted gross revenue.

Currently, the SUC operators’ pay varies between 3% and 5% because they hold a mix of administratively allocated spectrum and through auctions. A higher SUC on administratively allocated spectrum is understandable but SUC on spectrum won through auctions also varies. For instance, operators pay 5% SUC on spectrum won in earlier auctions and 3% in the one held in 2016. As a result, there’s a weighted average formula to calculate the SUC of the operators.

Trai had also suggested that SUC on all spectrum won through auctions held 2014 onwards should be made flat 3% and gradually decreased to 1%. The idea was that since operators pay high prices in auctions, SUC should cover only administrative cost, which should be marginal.

Apart from SUC, telecom operators also pay 8% of their adjusted gross revenue as licence fee. Here also, the Trai has recommended that the fee be brought down to 6% by cutting the universal service obligation component by 2 percentage point to 3%. Currently, out of the 8% licence fee, 5% goes to the USO and remaining 3% to the government.

Prasad said that apart from bringing the telecom sector back to health, revival of BSNL and MTNL will be the top priority for him. Soon, a Cabinet note will be formulated for the revival of the two state-run telecom firms, he said.―Financial Express