Department of Telecommunications mulls changing spectrum user charges

In what could be a huge policy change in Indian telecom, the Telecom Department is considering changing the spectrum user charge regime from the existing weighted average to a flat rate. Telecom Commission- the inter ministerial decision making body in the Telecom Department will meet tomorrow to decide on this issue.

Sources say, the Commission- headed by Telecom Secretary JS Deepak - will decide on moving to a flat spectrum user charge of 4.5 percent for all telcos from the present weighted average formula by which telcos pay between 3 to 8 percent as charges.

Spectrum user charges are annual payments made by telcos as a percentage of revenues; for using their spectrum holdings.

The weighted average mechanism came into effect in January 2014; ahead of the auctions that took place in February 2014.

The change in policy stance will positively impact incumbents like Bharti Airtel, Vodafone and Idea that pay much higher SUC than the proposed. flat rate of 4.5%.

The Commission will also decide on removal of 1% SUC for BWA companies like Rel Jio and Bharti Airtel. The move is likely to be seen positively by incumbents that have all along questioned lower SUC for BWA players like Rel Jio.

Telecom Commission will also decide on pricing of spectrum for bands that will be put up for auction and payment schedule. The proposed payment schedule is upfront payment of 10percent, followed by 18 instalments in which telcos can pay for spectrum acquired in the upcoming auction.