Telecom Commission backs SUC for telcos to 3%

The Dollar Business Bureau

Telecom Commission has backed the lowering of the spectrum usage charges (SUC) for telcos to 3% of their annual revenue on all brands during the July 2016 auction.

However, the panel has decided that the payout for the carriers will not be less than what it currently is, a decision taken to prevent the loss of revenue.

The calculation of revenue has become complicated as these telecom companies were allocated 3G and 4G services. It was easy prior to 2010, when there was only 2G spectrum.

The telecom department’s technical panel said it is difficult to segregate revenues due to the companies’ airwaves in multiple brands. The SUC has been one of the most controversial issues of late.

Reliance Jio has opposed the levying of a uniform SUC rate as suggested by Telecom Regulatory Authority of India (TRAI). The company said it pays only 1% of its spectrum in a 2,300-MHZ band, and the proposal to levy 3% would burden the company.

In January 2014, the government had decided to cap the SUC at a flat 5% rate for the spectrum which was procured for future auction.

The telecom operators were asked to pay the weighted average of their existing SUC (rate of 3-8%), based on the quantum of spectrum that was being held by them. If they acquired a new spectrum, they had to pay 5%.

Considering that 1% of the SUC on airwaves was being held by 2,300 MHz band, the same method was put in place for the broadband wireless access spectrum holders including Airtel, Reliance Jio and Aircel.

With this new proposal, operators will have to pay the weighted average at the current rates and also 3% for the spectrum which would be procured in future. The companies which do not procure spectrum in the future auctions will continue to pay the existing rates. The SUC’s annual collection is around Rs 7,000 crores.

The telecom department will move a note for inter-ministerial consultation on the auction of spectrum and place it before the cabinet for feedback and final decision.

The airwaves worth at least Rs.5.7 crores are being put up for sale in the July auction.