DoT to impose one-time spectrum fee from January 1 despite protests

NEW DELHI: Despite vehement protests from mobile phone companies, the department of telecom ( DoT) will implement its decision to impose the one-time spectrum fee on existing telcos from the beginning of the coming year.


Internal DoT documents reviewed by ET reveal that the department will soon issue a circular informing telcos that the recent decision of the Union cabinet on charging a one-time spectrum charge, both prospectively and retrospectively, on incumbent GSM telcos, will come into effect from January 1.

Last month, the Cabinet endorsed the recent decision by an inter-ministerial panel to impose a one-time airwaves charge on GSM-based operators, a move that will force the industry to shell out about Rs 24,989 crore. Off this, the share of private operators is about Rs 13,171 crore and the Centre will bear the cost of this one-time fee for state-owned companies – BSNL and MTNL. A decision on a similar fee for CDMA players was deferred as the government did not have any price to benchmark the airwaves following the cancellation of the auctions in the 800 MHz band.

Recently, the chief executives of India’s top three mobile phone companies Bharti Airtel,Vodafone and Idea Cellular had sought PM Manmohan Singh’s intervention against this onetime fee. Bharti Airtel CEO Sanjay Kapoor, Idea Cellular MD Himanshu Kapania andVodafone India MD and CEO Marten Pieters, in a joint communication, had told Singh that the one-time charge violated terms of the licence, breached the bilateral settlement the government had reached with the industry in 2002 and also contradicted the statement made by the ministry on the floor of Parliament. They had also added that this time time charge contradicted the government's stance in affidavits it had filed with the telecom tribunal and was also against Trai’s views and recommendations during the last 10 years.

According to the internal DoT note, the one-time fee will be calculated based on the base price for airwaves in the four regions – Delhi, Mumbai, Karnataka and Rajastan – as these circles did not attract even a single bid in the recently concluded auctions and the market price could not be established.

The note further added that for airwaves in the 900 MHz band, the charge would be calculated as double that of the auction discovered price in the 1800 MHz band. Telcos will also be given the option pay a third of this charge upfront and the rest in equal annual installments based on the validity of their licenses.

The one-time fee will be adjusted based on the market rates after next round of spectrum auctions, the circular that will be issued to telcos add.

The one-time fee has two components to it - mobile phone companies have to pay for all their 2G spectrum holdings beyond the 4.4 MHz prospectively for the remaining period of their licences based on the prices discovered in the recently concluded auctions.

The second component is that incumbent GSM operators such as Bharti, Vodafone, Idea and BSNL will be charged a one-time fee retrospectively for all ‘excess’ second-generation airwaves they hold beyond the 6.2 MHz mark from July 2008 to December 2012.

These charges will be calculated by indexing the 2001 spectrum auction prices to the interest rates of State Bank of India.