Spectrum Auction: DoT Gives Relief to Telcos by Scrapping Spectrum Usage Charge Floor Rate

In order to provide relief to telecom service providers the Department of Telecommunications (DoT) has scrapped 3 percent floor rate on spectrum usage charges.

"For spectrum acquired through auctions held after 15 September 2021 in different access spectrum bands, no SUC (Spectrum Usage Charges) shall be charged," the DoT said in an order dated June 21, 2022.

The weighted average of SUC rates across all spectrum assigned to an operator in all access spectrum bands including the Broadband Wireless Access spectrum in the 2300 MHz/2500 MHz band acquired in 2010 auction shall be applied for charging SUC.

"The weighted average is to be derived by the sum of the product of spectrum holdings and applicable SUC rate, divided by total spectrum holding. The weighted average rate should be determined operator-wise for each service area, the DoT said in the order.

The Department of Telecommunications order will give relief to the telecom service operators.

"We welcome and thank the Government and Minister of Communications for the much-awaited DoT order regarding the levy of SUC charges for spectrum in 600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz 2500 MHz, 3300 MHz and 26 GHz bands. The order will provide clarity to telecom service providers for the upcoming auctions," said S P Kochhar, Director General, the Cellular Operators Association of India (COAI).

For the purpose of calculation of spectrum usage charges, the Department of Telecommunications said, "there shall be a minimum/presumptive AGR which shall be not less than 5 percent of the bid amount."

The calculation of spectrum usage charges shall be on the basis of minimum/presumptive AGR or the actual AGR whichever is higher, the DoT said.

The weighted average rate shall be kept to two decimal points by the rounding off the second decimal figure to the next higher digit. The rounding off shall be made to next higher digit at two decimal points even if the third decimal point is less than five, the DoT noted in the order.