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Govt to fix uniform license fee on telcos to reduce arbitrage

Last Updated: Monday, August 31, 2009 - 23:21

New Delhi: The government on Monday said it will
soon come out with a uniform and single licence fee for telecom service provider, which is currently between 6 and 10 per cent of the revenue of these companies.

"The uniform licence fee will be shortly announced," Telecom Secretary Siddharth Behura said at ISPAI function.

"We have agreed on the rationalisation of licence fee. It
should be one uniform licence fee which will be announced
shortly," Telecom Secretary Siddharth Behura said here at an
ISPAI function.

At present operators pay between 6 and 10 per cent of
their annual revenue to the government as licence fee,
depending on the type of service and circle they operate. This
allows operators with multiple licences to take advantage of
the differential fees and show higher revenues under the
licence with lower revenue share to evade higher licence fee.

Behura said, "this would reduce arbitrage across the
board when you have one uniform licence fee in the telecom

Although he did not divulge at what percentage the fee
would be fixed, industry sources said the uniform licence fee
could be 9 per cent of the revenue of the telcos.

The move, long overdue, is aimed at removing the
arbitrage scope available to integrated operators with mobile,
basic, NLD and ILD licences.

In this regard, the government has already undertaken
special audit of all integrated telecom players like Bharti
Airtel, Reliance Communications, Vodafone Essar and Tata
The Secretary indicated that the Department of Telecom may consider delinking of licences and spectrum proposal as suggested by an internal committee of the DoT. Currently,
Unified access licenses come bundled up with 4.4 Mhz of spectrum at a licence fee of Rs 1,651 crore.

"The spectrum issue has also been referred again to TRAI in a different context and the committee of Subodh Kumar has also suggested that the spectrum should be delinked from the
UAS licence for all times to come. So, considering this I do not think there would be much difficulty solving these two issues," Behura said.

Following stake sale by two private companies — Unitech Wireless and Etisalat DB (formerly Swan Telecom) — to their foreign partners at much higher premium the spectrum they got
along with the license, there was an outcry if spectrum should come along with the licence at such a low cost.

Behura added that the DoT and the Department of Space are trying to find an amicable solution to the issue raised by the DoS on interference of spectrum band that it has been asked to
release for WiMax auction.

There are apprehensions that the dispute may delay WiMax spectrum auction. The issue between the DoT and the DoS is that the latter insists Wimax operations will interfere with
sensitive satellite communications in adjacent spectrum bands.

Bureau Report

First Published: Monday, August 31, 2009 - 23:21
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