DoT secy says spectrum usage fee not capped at 5%; no revenue loss - Free Press Journal

The ministerial panel also decides there would be no change in the usage levy for 4G spectrum holders like RIL, who currently pay the levy at 1%

NEW DELHI : Clarifying on the decision by the Empowered Group of Ministers taken on spectrum usage charges, Telecom Secretary M.F. Farooqui said the new levy would not be capped at 5% when taking into consideration the total weighted average of spectrum use levy of telecom companies–both new and old. "It is not capped," Farooqui said.

Earlier on Monday, Telecom Minister Kapil Sibal said spectrum usage charge for spectrum to be auctioned in the upcoming airwave sale will be at 5% and that the companies will have to pay a weighted average of the old usage levy and the new spectrum usage charge rate, but capped at maximum 5%. Average spectrum usage charge is currently about 4.8%, Farooqui said.
Contradicting Sibal, Farooqui also said the new spectrum use levy will not lead to any reduction in revenues accrued to the government.
"As far as the revenue is concerned in 2014-15, we expect that level to be protected," Farooqui said. Sibal had said the new spectrum use levy will lead to some reduction in revenues to the government.
Farooqui said over a period of time, flat rate will provide a level playing field to all the operators, but for the time being, the flat spectrum use levy has been introduced for the upcoming spectrum auction.
The ministerial panel had also decided there would be no change in the usage levy for broadband wireless access (2,300 Mhz) or 4G spectrum holders, who currently pay the levy at 1%.
Farooqui said telecom companies are mandated to segregate their 4G service revenues from other revenue sources generated through voice services over 1,800 Mhz or 900 Mhz and also 3G revenues over 2,100 Mhz band. However, Cellular Operators Association of India has opposed the decision. "…the EGoM's decision to charge 5% for all new spectrum is way too high than global average SUC (spectrum usage charge) of 1%," the industry body said. -Cogencis