The telecom companies would welcome the decision of Empowered Group of Ministers (EGoM), to lower the spectrum usage charge (SUC). In the new structure, it has been planned that SUC will be capped at 5%. This in turn could lead to a lowered call charges.

Spectrum usage charge is charged as a percentage of the telecom companies’ revenue. In the new structure, it will be calculated by taking a weighted average cost of existing and new spectrum fees. However, spectrum usage charge for 4G broadband holders like Reliance Jio will be maintained at existing 1%.

Earlier spectrum usage charge, charged for the telecom companies ranged from 3% to 8% of their annual revenue, depending on quantum of spectrum held. Providers with larger quantum of spectrum such as Vodafone and Bharti Airtel challenged for a flat SUC; however, the existing structure was favoured by many providers with lesser quantum of spectrum.

With revised SUC and clarity on norms pertaining to the auction, it is expected that bidders are to participate with much more enthusiasm. The spectrum auction was planned earlier to be held in January. The delays in decision making by EGoM lead to change in schedule. The spectrum auction is planned to be held on 3 February, 2014.

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