Videocon Telecom advocates Uniform Spectrum Usage Charges, however only on spectrum procured thru auction, that too limited to recover administrative charges only.

~ Favors Uniform SUC regime but feels SUC charges should be applicable for spectrum obtained through auction only and should be levied @ 1% of AGR to recover administrative expenses, similar to BWA license terms ~

~Recommends lower SUC rates for new players as an incentive to ensure level playing with incumbents, hence greater choice for customers~

New Delhi: January 6, 2014: Videocon Telecom, the telecommunication arm of the $4 Billion Videocon Group, favors uniform SUC, but only on spectrum procured thru auction and that too to the extent of recovering administrative expenses similar to the current BWA license terms.

The telco is of the opinion that in the earlier regime, spectrum was allocated administratively where there was no payment made for spectrum allocation by any operator, hence there was a logic behind charging slab based SUC in accordance to amount of spectrum allocated. In the current regime, however, spectrum is allocated thru an open market mechanism, to derive the exact market value of the spectrum. Therefore it is fair that SUC charges should levied only to the extent to cover the administrative expenses towards the management of the spectrum.

Under the current SUC policy, charges are levied according to the amount of airwaves held by the operators, and are charged between 3% to 8% basis the spectrum allocation. In short, the Incumbents who are holding large amount of spectrum will end up paying SUC at the upper end of the range.

TRAI on this has recommended uniform spectrum usage charge (SUC) of 3% to 5% of revenue earned by mobile operators from telecom services from April 1, 2014. The uniform SUC, if implemented as per recommendations made by TRAI, will be favorable to the incumbents.

The views of telco has come in just before the TRAI’s recommendations are to examined by the Telecom Commission on levying of an uniform annual fee on spectrum usage.

According to Mr. Arvind Bali, Director and CEO, Videocon Telecom “In the earlier license regime, spectrum was allocated administratively, where there was no payment by the operator for spectrum allocation, hence the reason of a slab based Spectrum usage charges was logical. However, in the current regime, spectrum is allocated thru auction, where the operator is paying the market value of the spectrum, thus SUC to the extent to cover the administrative expenses should be payable, which is the case of BWA license terms.

The new policy recommendation is only beneficial to bigger operators as a flat SUC rate will bring them huge monetary savings on the spectrum administratively obtained in the earlier regime.

Worldwide, telecom policies support newer operators with various advantages and I feel that the same should be followed in the Indian telecom sector as well. Any policy should promote level playing field for all, and we recommend lower SUC for new players to ensure level playing field for all and hence greater choice to customers.