TRAI opposes DoT’s proposed formula to charge spectrum usage charge

Department of Telecom’s proposed formula for collecting spectrum usage charge has been criticized by the Telecom Regulatory Authority of India (TRAI) saying it may not be “close to reality” and it can at best be a temporary solution.

TRAI has been suggesting DoT to move towards a flat levy for all operators, irrespective of the quantum of the spectrum the operators hold.

DoT, however, suggests that the formula to charge the spectrum usage fee based on weighted average principles that take into account the total quantum of the spectrum an operator holds. As a short-term solution, TRAI has proposed another measure where the formula will be based on the revenue earned by the operator from each frequency band. This could mean higher payouts for telcos compared to the DoT scheme.

For example, an operator with 20 MHz spectrum in 2300 MHz band and another 5 MHz spectrum in any other band would be currently paying 4 per cent as revenue share. Under the DoT’s weighted average formula the operator would pay 2 percent of revenues.

Under the existing rules, operators pay different rates based on the type of spectrum they own. If an operator has spectrum in the 2300 MHz band, they pay 1 per cent of their annual revenues as spectrum fee, while those with airwaves in 900 MHz and 1800 MHz pay about 3-4 per cent.