Telecom: Uniform licence fee to be delayed

Telecom operators looking for uniform licence fee will have to wait longer as the Telecom Regulatory Authority of India seeks to take the view of the industry on the issue, a process that would take about two months.

A department of telecommunication official said the regulator has already put questions relating to uniform licence fee to the stakeholder in its consultation paper 'Overall Spectrum Management and Review of License Terms and Conditions'.

Therefore, the department will have to wait till Trai comes out with its recommendations on the same, said the official.

It would take at least two months to send the recommendations, said a Trai source.

The DoT had decided that the existing variable licence fee structure for telecom operators should be replaced with a uniform one and had suggested a uniform licence fee of 8.5 per cent for all types of services from the current 6-10 per cent.

Trai has sought response from stakeholders on advantages and disadvantages of a uniform license fee and if there should be a uniform licence fee across all telecom licences and service areas, including services covered under registrations.

If introduced, what should be the rate of uniform licence fee, asked the regulator.

With Trai's queries, any decision of uniform licence goes back to the original question of need of such a fee.

Although DoT's final decision is not binding on Trai's proposal, but by and large, the recommendations will have bearing on any final decision of the department, said the official.

Trai had urged the government to consult it before deciding on a uniform licence fee for operators, saying it has implications on the Centre's revenue as well as of the service providers.

The uniform licence fee is mooted to help avoid arbitrage over integrated operators, who are allegedly loading up maximum revenues on licences with lower fee.

A change in the licence fee structure, an analyst said, would have an adverse impact on long-distance operators and internet service providers, who pay only six per cent of their annual revenues as licence fee.

It will also have a negative impact on mobile operators offering services in C Circle states such as Assam, Bihar and Orissa as they are paying only six per cent. An additional 2.5 percentage point outgo could weigh heavily on their toplines.

Mobile operators in metro regions and Circle A states will, however, gain since they currently pay a 10 per cent licence fee, said the analyst.

For the government, this will have a positive impact as it plugs the loophole in the current system where the operators were giving wrong financial reports.