DoT Allows Telcos to Reduce Spectrum Usage Charges on Fresh Radio Waves in 5G Auction

The Department of Telecom (DoT) has issued a new order that will enable telecom operators to reduce spectrum usage charges proportionately on buying fresh radiowaves in the upcoming 5G auction.

The DoT, in the order dated June 21, has removed spectrum usage charge (SUC) from the radiowaves that will be bought in the auction scheduled to start from July 26.

The government will, next month, auction about Rs. 4.3 lakh crore worth of airwaves capable of offering fifth-generation or 5G telecom services including ultra-high-speed internet.

The DoT collects SUC from a company based on a weighted average method, where charges applicable for each auction and spectrum acquired is taken into account and the sum is divided by the total spectrum acquired by it in various auctions.

The order notifies a new formula which makes the SUC rate nil for the upcoming auction.

Till the previous auction, telecom operators were required to pay SUC based on 3 percent of the amount at which they purchased the spectrum. The Cabinet in September 2021 had approved removal of SUC from future auctions.

"The SUC order by DoT is a positive move with 3 percent interpretatively going off. Industry could see the real benefit of nil SUC charges proposed in the 5G auction being available to the participating players," EY Global TMT Emerging Markets leader Prashant Singhal said.

"We welcome and thank the government and Minister of Communications for the much-awaited DoT order regarding the levy of SUC charges for spectrum... The order will provide clarity to telecom service providers for the upcoming auctions," industry body COAI Director General S P Kochhar said.