Lok Sabha Question No. 3197 (UNSTARRED), answered on 2018-03-14
Subject: Calculation of Licence Fee and Spectrum Usage Charge
Ministry: COMMUNICATIONS
Asked by: HARI BABU KAMBHAMPATI

## GOVERNMENT OF INDIA MINISTRY OF COMMUNICATIONS DEPARTMENT OF TELECOMMUNICATIONS

## LOK  SABHA UNSTARRED QUESTION NO. 3197 TO BE ANSWERED ON 14 th  MARCH, 2018

## CALCULATION OF LICENCE FEE AND SPECTRUM USAGE CHARGE

3197. DR. KAMBHAMPATI HARIBABU:

Will the Minister of COMMUNICATIONS be pleased to state:

- (a) whether  the  current  method  of  calculating  licence  fee  and  spectrum  usage charge is around twenty years old and has not been reviewed by the Government so far;
- (b) if so, the details thereof and the reasons therefor; and
- (c) whether  the  Government  has  received  any  complaints  pertaining  to  gross revenues  and  adjusted  gross  revenues  of  telecom  companies  and  if  so,  the  details thereof and the action taken by the Government thereon?

## ANSWER

## THE MINISTER OF STATE (IC) OF THE MINISTRY OF COMMUNICATIONS & MINISTER OF STATE IN THE MINISTRY OF RAILWAYS (SHRI MANOJ SINHA)

- (a)  &  (b) The  New  Telecom  Policy  (NTP)  1999  gave  an  option  to  the  licensees  to migrate from fixed license fee to revenue sharing fee. This change from fixed to revenue share  was  also  as  per  the  demands  of  the  majority  of  the  Telecom  Industry. Accordingly, letters dated 22.07.1999 were sent to different licensees offering them a change over to NTP-99 regime, which inter alia stated:

'the  license  fee  as  percentage  of  gross  revenue  under  the  license  shall  be payable w.e.f. 01.08.1999. The Government will take a final decision about the quantum  of  the  revenue  share  to  be  charged  as  license  fee  after  obtaining recommendations of the Telecom Regulatory Authority of India (TRAI).'

After receipt of the TRAI recommendations on the issue, the definition of Gross Revenue and Adjusted Gross Revenue was finalized by the Government.

The current method of calculating the License Fee and Spectrum Usage Charges is based on a percentage of revenue share as introduced by the New Telecom Policy, 1999. The Adjusted Gross Revenue for this purpose would be the total revenue of the licensee company excluding:

- I. PSTN related call charges actually paid to other eligible/entitled telecommunication service providers within India,
- II. Roaming revenue actually passed on to other eligible/entitled telecommunication service providers and,
- III. Goods and Services Tax (GST) paid to the Government if gross revenue had included a component of Goods and Services Tax.

The Revenue Share Regime has resulted in the stabilization and growth of the Telecom Sector and has also generated significant revenues for the Government. While the  basic  principles  of  the  regime  have  not  changed,  clarifications  have  been  issued from time to time in consultation with the stakeholders i.e. Telecom Service Providers.

(c) The  Telecom  Service  Providers  have  filed  cases  before  the  various  legal  fora since  2003  challenging  the  definition  of  Adjusted  Gross  Revenue  in  the  license agreement. They have contended that Adjusted Gross Revenue can only relate to the revenue directly arising out of telecom operations licensed under Section 4 of the Indian Telegraph Act, 1885 and should exclude revenue from non-telecom related activities. The matter was decided in the favour of Government by the Hon'ble Supreme Court in 2011. In its decision, the Hon'ble Supreme Court upheld the provisions of the License agreement. However, subsequently the operators challenged various demands raised by DoT in the TDSAT. The TDSAT gave a Judgement in April 2015, which has been challenged  both  by  the  Department  and  Telecom  Service  Providers  in  the  Hon'ble Supreme Court where the matter is still pending.

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