India's DoT revives flat rate SUC proposal

12 Nov 2018

India's Department of Telecom (DoT) is reportedly looking to revive a proposal to implement a flat spectrum usage charge (SUC) for all airwaves, rather than the price varying based on when the airwaves were acquired.

The telecom ministry is likely to write to the law ministry seeking an opinion on whether it would be legally allowed to implement a flat annual SUC rate, the Economic Timesreported.

The move is likely to be strongly opposed by India's newest market entrant, Reliance Jio Infocomm, which pays an annual SUC of a mere 1% of its revenue on most of its spectrum, due to the terms of a 2010 4G auction.

Other operators may end up paying a lower proportion of their revenue under a flat rate regime compared to the current system.

The DoT had proposed in 2016 to implement a flat 4.5% SUC for all auctioned airwaves, including those acquired in 2010, but was required to water down the proposal after a legal opinion from India's attorney general that SUCs for 4G airwaves sold in 2010 could not be changed retrospectively.

But according to the report, the DoT now believes that due to the move towards technology neutral spectrum allocations and the imminent arrival of 5G, previously fixed SUCs may become outdated, and it may be a good decision to switch to a flat rate instead.

Reviewing fees and levies is one of the main priorities of the Indian government's recently ratified New Telecom Policy, and implementing a flat rate SUC has been recommended by telecoms regulator Trai.

The government has plans to auction spectrum in the 700-MHz, 800-MHz, 900-MHz, 1800-MHz, 2300-MHz, 2500-MHz, and 3300-MHz to 3600-MHz bands, for both 4G and 5G use.

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