Telecom Towers
Govt could reduce spectrum usage charge ahead of the mega sale. Picture: Sun rises over the telecommunication towers in New Delhi December 22, 2007.Reuters

The Telecom Ministry will approach the Cabinet for a nod to bring down the spectrum usage charges (SUC) from 5 percent of adjusted gross revenues (AGR) to 3 percent for the spectrum that will be purchased in the next round of auction in July, reported the Press Trust of India.

The government is slated to auction more than 2,000 MHz of spectrum across seven frequencies in July. The bouquet of frequencies will, for the first time, also include the lucrative but highly-expensive 700 MHz band.

SUC is a charge levied annually as a percentage of the AGR that mobile companies make from telecom services. The companies currently owe Rs. 24,281 crore as SUC to the government, the highest of all charges or penalties that telecom companies owe to the Telecom Ministry.

Reduction in SUC is expected to free up cash as much as Rs. 3,200 crore for the debt-burdened mobile service operators, while also lowering consumer tariffs for calls and broadband, reported the Times of India. The daily added that operators have persistently sought a reduction in SUC, a demand endorsed by Telecom Regulatory Authority of India (TRAI).

The regulator had, in fact, suggested a uniform 3 percent SUC for all types of service providers, including Broadband Wireless Access (BWA) operators, saying a difference in the charges will open up the possibility for arbitrage. The suggestion was met with stiff opposition from Mukesh Ambani-owned Reliance Jio Infocomm, which holds pan-India licence for BWA at 1 percent SUC, said PTI.

In response the government had then asked all BWA licensees, including Aircel and Airtel, to continue paying 1 percent on BWA. Further the mobile service operators were asked to pay 5 percent of AGR on all spectrum they will purchase in future.