Anil Ambani wants PM to step in on licence fee

NEW DELHI: Anil Ambani, who is seeking GSM spectrum to roll out services across the country, has demanded that PM Manmohan Singh intervene to ensure that new entrants in the GSM segment be charged lower entry fee to create a level playing filed.

In a letter written to the PM on November 26, Mr Ambani has said that the Department of Telecom should consider reducing the licence fees to be paid by new GSM entrants, including his own company, Reliance Communications.

Interesting, RCOM has already paid the Rs 1,650 crore fee for a pan-India GSM licence. Apart from RCOM, 45 new companies have applied for licences in the GSM space, including AT&T, DLF, Videocon, Unitech, the Hindujas, Ispat group and the Sterlite group.

Mr Ambani logic for demanding a lesser entry fee for new players is as follows: Existing operators have already build nation-wide networks enabling them to ‘saturate all circles’ and capture leading market shares ahead of competition, they have captured millions of high value customers, cornered valuable and excessive spectrum over the past several years and also enjoyed a substantial cost advantage by cornering spectrum in the 900 MHz band, which entails 50% lover capital expenditure compared to the higher 1800 MHz band in which spectrum will be allotted to new entrants.

Mr Ambani has also told the PM that GSM entrants cannot be made to bid for 2G spectrum as Trai, which had examined the matter recently had said that there should be no auction for second generation radio frequency bands. He has also added that the Cellular Operators Association of India, the body representing GSM players had sought opinion of leading legal experts, who had said that an auction for 2G spectrum would be in conflict with the existing licence conditions.

Mr Ambani has pointed out to the Prime Minister that as recently as December 2006, the DoT had issued 23 licences to leading GSM players such as Idea Cellular, Vodafone, and Aircel as per the existing licence fee, and the new entrants, which included RCOM, were therefore only being called upon to pay identical fees that the others had paid.

“It is submitted that once the licence fee paid just 10 months back by leading GSM operators has been accepted by the government as correct and proper and has been duly acted upon, it would be discriminatory and unfair to now suggest that the same requires revision for new entrants,” Mr Ambani said.

In fact, as many as 50 new licences have in all been issued by the DoT in the past few years, culminating as above in December 2006, with the new licensees paying the identical quantum of fees as is now being charged for new entrants, and the same has been consistently been adopted by the Government as proper,” Mr Ambani said in his communication to the PM, dated November 26.

Mr Ambani has alleged that GSM players were spreading false propaganda to prevent fair competition and create artificial barriers for the entry of new players, including existing licensees opting for dual technology, by suggesting that the entry fee ‘be raised above the levels prevailing in the past’.

At present, new entrants are charged a license fee of about Rs 1650 crore for a pan-India telecom license, but this price was discovered in 2001. Recently, North Block had asked the Department of Telecom to explain the logic behind continuing to charge the license fee that was based on the 2001 estimates for new entrants.

He also reiterated his earlier demands that GSM operators must be forced to return what he termed as excess spectrum as their licenses entitled them to only 4.4 MHz or 6.2 MHz based on the circle of operation.

At the same time, it must however be pointed out that GSM operators maintain that they are are given spectrum above 4.4 MHz based on the government of India policy unveiled in march 2006, which allows GSM players to get up to 15 MHz of spectrum based on certain pre-defined subscriber targets.