New Delhi:
A group of ministers in charge of recommending the cost of spectrum to the cabinet has taken a call today to charge telecoms a one-time entry fee against their existing mobile network 2G licenses.
Here's why this is important:
A group of ministers headed by P Chidambram have decided that telecoms will have to pay a one-time fee for any spectrum they hold beyond 4.4 MHz mark. The fee will be based on the upcoming auction of second-generation spectrum.
This one-time fee will kick in from the day the cabinet clears the proposal and will apply for the remainder of every telecom's license period. A minimum of Rs 27,000 crore will be due to the government.
The fee, say ministers, is necessary because the Supreme Court earlier this year cancelled 122 licenses for second-generation spectrum, and ordered an auction of the airwaves. So the group of ministers says that in order to provide a level-playing field between old and new firms, current license-holders must pay up.
In 2008, second-generation or 2G licenses were issued for about Rs 1,600 crore each. The reserve price for the upcoming auction has been set at Rs 14,000 crore.
The group of ministers have ignored the opinion of the Attorney General of the country, GE Vahanvati. He had said that the fee should apply retrospectively on spectrum beyond 6.2 MHz from July 2008 which is when the government had first decided to charge this fee. It was not implemented because the decision was not conveyed timely to operators.
According to the existing contracts, the government is obliged to provide spectrum up to 6.2 MHz to GSM operators. The Attorney General feels that charging operators for an excess of 4.4 MHz violates the contract.
But the government says that there are many telecoms who were granted 4.4 MHz. If the fee only kicks in at the 6.2 MHz mark, they will ask for the balance of the spectrum owed to them without paying for it.
Telecoms who do not want to pay the additional fee will be allowed to surrender the spectrum they hold beyond 4.4 MHz.
The group of ministers handling the issue has deferred a decision on re-farming or relocating spectrum. The government has been thinking about asking asking telecom operators like Airtel and Vodafone to give up their existing spectrum (in the highly-efficient 900 MHz band) and buy less-efficient airwaves when their permits come up for renewal.
The Department of Telecom has suggested that operators can bid for the more-efficient airwaves in an auction next year, or they can buy replacement airwaves in the less-efficient 1800 MHz band.
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