The Telecom Commission recently deferred decision on Spectrum Usage Charges. TRAI had proposed a 3% overall SUC. Reliance Jio Infocomm aim (for the present) is to roll out a BWA 4G LTE service on its 2300MHz network. This spectrum (1x20MHz) was won in the 2010 auctions in which the conditions included 1% SUC on Adjusted Gross Revenue (AGR) from this spectrum. If TRAI’s recommendation of 3% flat SUC for all types of spectrum is accepted, RIL’s SUC would go up by 200bps.
Crucially, for ISPs, voice services into a PSTN network in India were not allowed in 2300MHz spectrum. Only pure internet telephony (VoIP to VoIP) was allowed. Since the SUC on 2300MHz revenue would be significantly lower at 1%, to prevent arbitrage, the auction condition was that 2300MHz BWA revenue should be reported separately. However, with the New Unified License 2013, VoIP calls can terminate into a PSTN network as well.
It opens up arbitrage opportunities – telcos can attempt to show revenue under the lower SUC spectrum which means that any revenue stream that involves spectrum with multiple levels of SUC would be suspect. Networks with combinations of technologies would also be suspect. Any such revelation is likely to be turned into the next scam.
We feel what the final outcome will be is – 1% SUC on BWA and a higher flat rate (say 3%) on other spectrum.