‘Administrative fee is setback for potential 3G bidders’

December 15th, 2008 - 10:43 pm ICT by IANS  

New Delhi, Dec 15 (IANS) Describing the telecom regulator’s move to levy an annual administrative charge of 2 percent on the highest third generation (3G) bid as a “retrograde step”, a leading telecom industry body Monday said the proposal was a setback for potential bidders.In a letter sent to Telecom Secretary Siddharth Behura, the Cellular Operators Association of India (COAI) said: “This additional charge recommended by the TRAI (Telecom Regulatory Authority of India) is being viewed by the entire industry and stakeholders as a retrograde step and has come as a serious setback to both the potential Indian as well as foreign bidders for 3G.”

“It is apprehended that the imposition of multiple levies under different heads would not only take away from the attractiveness of the sector, but also create a serious negative perception of the auction process,” he added.

The TRAI Dec 9 proposed that companies successful in their third generation (3G) bids pay 2 percent of the highest bid amount annually as ‘administrative charges’ for utilising these radio frequencies.

Standalone 3G players and new entrants who want to enter the Indian market via the 3G route, according to the TRAI proposal, will have to pay an additional 3 percent of their annual gross revenues (AGR).

“Further, an additional fixed “administrative charge” over and above the levy of spectrum usage charges as per the slab system, would only add to the financial burden of the service providers,” Ramachandran said.

He suggested that the charges for 3G spectrum be recovered through the auction price and a spectrum usage charge as originally envisaged.

Also, if at all an administrative charge is to be imposed, then it should be in place of, and not in addition to, the slab system of spectrum usage charges.

According to the Department of Telecommunication (DoT), the 3G auction yield could fall by Rs.50 billion (Rs.5,000 crore) due to 2 percent administration charge. Its initial estimates of yield were at Rs.350-400 billion.

The Telecom Commission will take a final decision on the levy issue.

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