In a set of decisions that have wide ramifications for the telecom sector, the union cabinet today approved a levy of around Rs31,000 crore as one-time fee on spectrum held by established or 'incumbent' telecom companies like Bharti Airtel and Vodafone – a decision aimed at creating a level playing field for old and new operators.
Other suggestions from an 'empowered' group of ministers headed by finance minister P Chidambaram accepted by the cabinet include allowing Tata Teleservices to launch GSM-based operations in Delhi; annulling a provision to charge a special levy on mergers and acquisitions in the telecom sector; and allowing mobile phone service providers to share spectrum.
Chidambaram told newspersons in New Delhi that the cabinet has approved the recommendation of the EGoM that GSM-based telecom operators be asked to pay for airwaves they hold beyond 4.4 Mhz at an auction-determined price, while CDMA carriers must pay for spectrum held beyond 2.5 MHz for the remaining validity of their permits.
Operators on the GSM platform holding more than 6.2 MHz of spectrum will pay a retroactive fee for the airwaves from July 2008.
Chidambaram said while the price discovered in the auction which is to begin on 12 November will apply for the one-time fee to be charged from incumbent GSM operators, the Department of Telecommunications (DoT) will work out the basis for a similar charge from CDMA operators.
Fixing the charges for CDMA-based services has become complicated because both the potential buyers in the 800Mhz CDMA band – Tata Teleservices and Videocon Telecommunications – have pulled out of the auction, so there can be no auction-determined price, the finance minister acknowledged.