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India proposes extra airwave surcharge

Ministerial panel recommends telcos not affected by the 2G license crisis pay a retrospective fee for airwaves they own above the 6.2 megahertz (MHz) mark.
Written by Jamie Yap, Contributor

An Indian ministerial panel has recommended older established mobile phone operators not affected by the country's revoked 2G licenses scandal--which had impacted newer carriers--should pay a retrospective fee for owning part of the airwaves.

Reuters reported Thursday the latest proposal for a surcharge on operators holding 2G airwaves above 6.2 MHz for 2008 to 2012, if implemented, would put extra burden on carriers such as Bharti Airtel and Vodafone's Indian business.

India's empowered group of ministers (EGoM) panel earlier also recommended all operators fork out a surcharge, from 2013 onward, for operating airwaves above 4.4 MHz over the remaining period of their permits based on the price determined by the upcoming 2G spectrum auction.

This retrospective surcharge will, however, be based on the 2001 spectrum price, and not the upcoming auction where the starting price is more than seven times the former.

The Indian Cabinet will make the final call on the panel's proposal for the surcharge, according to the report.

The 2G auction, due to begin Nov. 12, was the result of the Indian Supreme Court revoking all existing 122 licenses, following allegations they were issued fraudulently in 2008.

Companies such as Bharti Airtel and Vodafone India were not affected by that court order because they already held airwaves, the Reuters report said.

The government is hoping to raise INR 400 billion (US$7.4 billion) from the auction and set the base price at INR 140 billion (US$2.5 billion) for 5MHz of pan-India 2G spectrum in the 1800MHz band for all 22 telecom zones in India.

Reuters said carriers paid INR 16.58 billion (US$319.2 million) for 4.4 MHz of airwaves bundled with their permits in 2008--a figure the comptroller and auditor-general of India (CAG) had criticized as "unbelievably low".

Meanwhile, Indian telecoms minister Kapil Sibal said the panel deferred a decision by the Telecom Commission on spectrum refarming as "there wasn't enough time", according to another report by the Economic Times Thursday.

The EGoM panel was to review the Commission's recommendation for carriers to give up all their airwave holdings in the more-efficient 900 MHz band, starting November 2014, when it is time for their permits to be renewed. This means carriers either rebid for those airwaves, a process called as spectrum refarming, or buy replacement airwaves in the less efficient 1800MHz band, the report said.

The Commission's plan drew fire from the industry, which said it would cost over INR 1 billion (US$18.8 million) to buy replacement airwaves, it said.

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