TRAI asks DoT to refer Uniform license fee to regulator

Last Updated: Monday, September 14, 2009 - 14:02

New Delhi: Telecom regulator TRAI has urged
the government to consult it before deciding on a uniform
license fee for operators, saying it has implications on the
Centre`s revenue as well as of the service providers.

The Department of Telecom has decided that the existing
variable licence fee structure for telecom operators should be
replaced with a uniform one. An departmental note suggests a
uniform licence fee of 8.5 percent for all types of services.

In a letter to DoT on Friday, TRAI said the proposed
change in the license fee would impact both government revenue
and the operators` businesses which, in turn, will affect the

TRAI said the views of all stakeholders must be taken
into cosideration before arriving at the new figure.

A DOT official said minister A Raja would take a call if
the matter is referred to TRAI. But the DOT feels the Telecom
Commission, the policy-making wing of the DOT, should take the
final call on this.

If the matter is referred to TRAI, then it is going to be
a long haul as the DoT may insist on a time-bound response
while TRAI would like to do it through the usual consultation
and recommendation process.

The uniform licence fee is mooted to help avoid arbitrage
over integrated operators allegedly loading up maximum
revenues on licences with lower fee.

A change in the licence fee structure, an analyst said,
would have an adverse impact on long-distance operators and
Internet service providers who pay only six per cent of their
annual revenues as licence fee.

It will also have a negative impact on mobile operators
offering services in C Circle states such as Assam, Bihar and
Orissa as they are paying only six per cent. An additional 2.5
percentage point outgo could weigh heavily on their toplines.

Mobile operators in metro regions and Circle A states
will, however, gain since they currently pay a 10 per cent
licence fee.

For the government, this will have a positive impact as
it plugs the loophole in the current system where the
operators were giving wrong financial reports.

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

The government has recently ordered a third party audit
into the accounts of all integrated telecom companies as some
of these were found to be under reporting revenues in segments
attracting revenue share.

Bureau Report

First Published: Monday, September 14, 2009 - 14:02

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