Reliance Jio says a flat spectrum fee will disturb level-playing field

Redoubling its efforts to counter demands of GSM players for a uniform annual spectrum fee, Reliance Jio Infocomm on Wednesday said a flat fee will disturb the level-playing field for incumbent operators and new entrants.

In a fresh letter to explain its legal position, the Mukesh Ambani-led telecom firm in a letter to Telecom Minister Kapil Sibal has said the demands by Cellular Operators Association of India (COAI) to alter spectrum usage charge "are not only factually incorrect and misleading but are without any valid justification".

The letter is also marked to members of the Telecom Commission, which is expected to deliberate on the matter in the next couple of days.

The spectrum usage charge is levied annually as a percentage of revenue earned by telecom companies from telecom services. It varies between 3 to 8 percent.

COAI has demanded government should implement regulator TRAI's suggestion of a uniform uniform (spectrum usuage charge) SUC between 3 to 5 percent from April 1, 2014 across the sector.

RJIL said that SUC terms are based on notice issued (NIA) for spectrum auctions based on which companies buy airwaves.

If this recommendation is accepted by government then it will burden firms holding broadband wireless access (BWA) spectrum, including RJIL that at present pays 1 percent SUC, it added.

"It is respectfully submitted that the submission by COAI that on migration of ISP (Internet service providers) operators with BWA spectrum to unified licence, SUC of these operators can also be changed by the DoT, is totally incorrect, misplaced and contrary to the provisions of BWA NIA and Unified License."

Reliance Jio said the spectrum allocated to incumbent telecom operators carry mobile signals more efficiently compared to the airwaves (2.3Ghz) that Reliance Jio holds and will call for 2-3 times more investment in infrastructure for telecom services than others.

"Given these spectrum characteristics across different bands, there cannot be any valid justification for levy of uniform SUC, as demanded by these operators, irrespective of spectral efficiencies," Reliance Jio said.

Justifying the current SUC rate, the company said that with higher spectrum holding in the most efficient bands the operators also start attaining efficiencies because of additional spectrum.

"Ideally SUC on the incumbent operators having more spectrum should be levied at a higher percentage," it said.

It said any move to levy uniform fee will seriously disturb the level playing field for incumbent operators and new entrants and will drive the new entrants out of the market.