Indian telecom companies have been getting a very favorable environment in the country for the past year. The same is expected to continue in this year too, with Telecom Regulatory Authority of India (TRAI) likely to carry forward discussions pertaining to Uniform Spectrum Usage Charge (SUC), which has been holding the Telcos back from offering next generation communications and other broadband services.
Telecom Commission (TC), the inter-ministerial body levied with the responsibility of considering the grievances of the Telecom Sector, is likely to meet on January 7 mainly to discuss proposal of levying Uniform Annual Fee on spectrum usage across all players in the sector.
Why was SUC restricting Telcos?
In the present scenario telecom companies were paying a varying rates per slab of spectrum. Needless to say this was very high as well as uncertain and caused the telecom companies to reserve and later pay huge sums of money with no assurance of revenue generation. But the revised formula, a technique at which TRAI is very skilled at, will affix the fees based on the revenue generated.
The panel will discuss recommendation made by TRAI for levying a SUC of 3% of revenue earned by mobile operators from telecom services from April 1st, 2014 (New Financial year) and keeping the upper limit of SUC at 5%. In other words, the Spectrum Usage Fees will be as per the revenue generated by the telcos. Thus a smaller company will have to pay lower fees based on its revenue.
At present SUC is levied annually by the government and it varies from 3-8% for mobile service providers and 1% for holders of Broadband Wireless Access (BWA) spectrum that can be used for 4G services. Thus the revision will benefit GSM companies like Airtel, Vodafone and Idea, but will increase the burden for companies like Reliance Jio Infocomm (RJIL) who is the only company to hold BWA Spectrum for 4G.
Image Source | Livemint