Reliance Jio Infocomm opposes change to spectrum usage charge for BWA

"Unilateral increase in SUC for BWA spectrum from 1 percent to 3 percent will be illegal. Government may take appropriate decision on SUC for forthcoming auctions but without altering the present SUC regime, either directly or indirectly, for already allocated/auctioned spectrum," Mukesh Ambani-led RJIL said in the letter to Telecom Secretary.

Levied annually by the government as a percentage of revenue earned by mobile operators from telecom services, SUC varies from 3 to 8 percent.

The uniform SUC, if implemented as per recommendations made by Telecom Regulatory Authority of India (TRAI), will provide relief for mobile operators such as Airtel, Vodafone and Idea, but will increase rates for broadband wireless access (BWA) spectrum holders like RJIL.

(Also see: TRAI recommendations inconsistent, legally untenable: Reliance Jio Infocomm)

The Reliance Jio letter comes a day before the scheduled meeting of inter-ministerial panel Telecom Commission which will look at possible approach towards SUC and send its recommendations to Empowered Group of Ministers (EGoM) on telecom, headed by finance minister P Chidambaram.

The company said the terms and conditions of Notice Inviting Application (NIA), main document of spectrum auctions, are equally binding on both DoT and bidders and "any post facto deviation in auction rules which extends undue benefit to incumbent operators will not stand judicial scrutiny".

RJIL said that companies, while buying spectrum in the auction factored in conditions including SUC in their bid amounts with reasonable expectation that the conditions notified will not be altered.

The company added that at lower uniform SUC for spectrum that had been auctioned in past, there would have been more participation and bids more aggressive.

"Therefore, retrospective reduction in the SUC would not only cause huge loss to the government but also would have deprived some of the operators to acquire spectrum through these auctions," RJIL said.

DoT estimates that lowering of SUC as per TRAI recommendations will cause the national exchequer a minimum loss of Rs. 3,738 crores over period of 20 years on renewal of the six licences belonging to Airtel, Vodafone and Loop Mobile that are due to expire in 2014.

(Also see: DoT estimates Rs. 3,738 crore loss if it lowers annual spectrum fee as per TRAI)

RJIL referred to the submission made by GSM industry body, Cellular Operators Association of India, ASSOCHAM and top executives of leading GSM mobile operators and said the representations do not necessarily put forward the correct facts and might mislead the government.

The joint communication by Bharti Airtel CEO Gopal Vittal, Vodafone India CEO Marten Pieters, Idea Cellular Managing Director Himanshu Kapania, Uninor Chairman Sigve Brekke demanded that the government implement a flat SUC across the industry.

If that is not possible at present, they added, then it should levy uniform charge of 1 percent for all the players deploying the 4G technology.

Without naming RJIL, COAI has said that by allowing BWA spectrum players to migrate to Unified Licence (new licensing regime) the terms of agreement have already been changed for the BWA players.

"These players cannot be heard to say that the terms of NIA are sacrosanct and cannot be changed," COAI said.