Union Cabinet approves Spectrum Usage Charge for the spectrum in various bands

The Union Cabinet has approved the rates for Spectrum Usage Charge (SUC) for various bands of spectrum for which auction are going to be conducted shortly.
With this approval the path is clear for issuance of the Notice Inviting Application (NIV) for spectrum auction by the Department of Telecommunications (DoT). SUC is the charge that telecom firms have to pay the government every year. The Union Government earns about Rs.7,000 crore annually from it.
SUC prescribed by Cabinet

• SUC in 700, 800, 900, 1800, 2100, 2300 & 2500 MHz band in the forthcoming auction will be charged at 3% rate of Adjusted Gross Revenue (AGR). It excludes the revenue from wire-line services.
• The weighted average will be derived by sum of product of spectrum holdings and applicable SUC rate divided by total spectrum holding.
• The Weighted Average Rate will be determined operator wise for each service area. It will be assigned to an operator in all access spectrum bands obtained in 2010 auction.
• The amount of SUC has been derived after taking into consideration the spectrum acquired in the coming auction.
• It has excluded the spectrum in 2300/2500 MHz band acquired prior to 2015-16. It will be treated as the floor amount of the SUC to be paid by the operators.

Comment
This will facilitate to move to a transparent, simple and flat ad-valorem SUC regime in the telecom sector. It will be done in accordance with the law and avoid creative accounting to bypass the revenues. It is considered as step towards a uniform rate for all players.

Month: Current Affairs - August, 2016