Financial Daily from THE HINDU group of publications
Thursday, May 05, 2005
Regulatory Bodies & Rulings
TRAI to propose zero entry fee, introduce rollout obligation for 3G services
Thomas K. Thomas
New Delhi , May 4
THE Telecom Regulatory Authority of India is set to propose a zero entry fee for IMT 2000 spectrum, used for offering third generation (3G) services, for existing operators, even as it introduces rollout obligation as part of the spectrum policy guidelines to be announced this week.
TRAI is likely to bring down the annual spectrum fee for all operators from a maximum of 6 per cent to 4 per cent of the revenues, to reduce the cost of services.
These measures are aimed at bringing down the cost of offering high-speed mobile services where consumers will be able to watch movies and surf the Internet at speeds higher than 256 kbps.
TRAI may suggest that each operator be given 10 MHz of 3G spectrum in the IMT-2000 band. In case of constraint of availability, a minimum chunk of 5 MHz of IMT-2000 spectrum must be given to each mobile operator. TRAI is unlikely to suggest an additional annual charge for this 3G spectrum.
To prevent hoarding of spectrum and promote efficient usage, the telecom regulator is likely to recommend a rollout obligation for all operators taking the 3G spectrum. Mobile operators will be required to offer 3G services in at least 10 per cent of district headquarters within one year of allocation of spectrum.
TRAI may also recommend an additional per MHz spectrum fee, which will be withdrawn after meeting rollout obligations.
At present, cellular operators pay a one-time spectrum fee and an annual fee in terms of percentage of the revenue for using radio frequency.
The additional annual spectrum charge, in terms of per MHz for 3G service, will continue unless rollout obligations are completed. This scheme is aimed at providing incentive on rollout and disincentive for non-serious players to raise the demand for 3G spectrum, even when they have no inclination to start the services.
To maintain the level playing field, new players have to pay a one-time entry fee for getting 3G spectrum, which will be the same as that paid by mobile operators under the unified licence regime. This fee will continue till two years after the unified licence regime is introduced.
If the Government is not able to ensure the availability of adequate 3G spectrum in a time-bound manner, then TRAI may recommend that the spectrum should not be allocated to any operator unless sufficient spectrum is available for allocation to each existing operator who demands this spectrum.
The Government could also use the bidding option but that would increase the cost of operations.
TRAI has suggested earmarking 30 Mhz of radio frequency in the 2Ghz band so that every operator gets at least 5 Mhz radio frequency for 3G services. The TRAI recommendations would be submitted to the Government in the next few days.
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