The Department of Telecom (DoT) and sector regulator TRAI are at loggerheads again. This time, the issue is about extending the licence tenure of existing service providers. The licences of most operators are set to expire in the next few years. While DoT has proposed that an existing operator should pay Rs 825 crore for a ten-year extension, TRAI has rejected this and wants the licence to be extended without any fee.

With the government set to unveil the policy for third-generation (3G) services, the DoT had worked out a formula to calculate the fee that existing 2G telcos will have to pay for extending their licences. The DoT has reasoned that licences of all existing players will have to be extended.

This is because following the auction of 3G spectrum, successful bidders — both existing operators and new entrants including international communication majors — will be given these radio frequencies for a period of 20 years. But, the licences of all existing 2G players — which were given in the 90s for a 20-year period — are set to expire over the next couple of years.

The DoT feels ‘since the licences of existing operators would expire on different dates before the end of the 20-year period of 3G spectrum allocation, they would not be allowed to use the third generation frequencies for the full tenure’.

“To extend a level-playing field amongst the existing operators and the new entrants, it is necessary to have a provision to extend the licence period of winning bidders from amongst existing operators to make it co-terminus with the period of 3G spectrum allocation,” the DoT proposal said.

Under this proposal, if a telco needs to extend its licence by 10 years, it would have to pay about Rs 825.5 crore. This fee is calculated as follows: The entry fee of Rs 1,651 crore multiplied by 10 (the number of years for which the licence needs to be extended), and the total is divided by 20 (the number of years for which the telco can use the 3G spectrum). The DoT is of the view the government can garner an additional Rs 3,000 crore by extending the licences of existing players.

The DoT had on July 1 sought TrAI’S approval to implement this formula. TRAI, however, feels the ‘renewal of licence should be automatic unless extreme conditions of national security warrant otherwise’. TRAI has told the DoT it should not impose any fee on telcos.

In its reply to the DoT last week, TRAI has acknowledged that the ‘government had the powers to impose renewal fees at any time’, but it added any such move would be a violation of the current licencing conditions. “The renewal of licence should not be linked with auction of spectrum for 3G. At present, the government is thinking of auction of spectrum for 3G, while in the future some more spectrum may have to be auctioned for telecom services which would again necessitate extension of some licences, if this practice is followed,” Trai added.

Source:economictimes