TRAI mulls over revenue-based SUC for internet service providers

By August 21st, 2016 AT 10:35 AM

TRAI, the country’s telecom regulator, has come up with a consultation paper to seek public feedback on levying spectrum usage charges linked to annual revenues for Internet service providers (ISPs). The government currently levies spectrum usage charges linked to annual revenues on telecom operators in India.

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In a consultation paper, the regulator said service providers with Cellular Mobile Telephone Services and Unified Access Service Licence are assigned spectrum through market-based mechanism (auctions).

It said that these service providers pay spectrum usage charge (SUC) on the basis of percentage of their gross revenue called AGR. However, there are certain categories of telecom/ broadcast licensees to whom spectrum is assigned administratively and SUC is based on a formula basis.

“ISPs are among such licensees… present criterion of spectrum allocation to ISPs is city-wise basis, subject to the availability of spectrum,” the regulator added.

ISPs in India currently pay formula-based spectrum charges, and the new method, if implemented, could potentially push up broadband costs for consumers.

ISP Association of India (ISPAI) President Rajesh Chharia told PTI that the current practice of “administrative allocation” of airwaves is within reach of small ISPs, which use spectrum for enhancing rural connectivity.

“This spectrum is being used in parts of the country where optical fibre does not reach. So, any additional charge on spectrum will lead to an escalation in cost of service and will have an adverse impact on Internet proliferation in rural areas,” Chharia was quoted as saying.

Internet service provider (ISP) licensees with BWA spectrum need to pay 1% of AGR–earned from BWA spectrum–as annual spectrum charges. But for all other spectrum assigned, the SUC is currently applicable on ISPs is based on a formula which was revised by the telecom department through its order dated March 22, 2012.

TRAI, in it paper, also asked if a minimum presumptive AGR should be introduced in the licence for levy of spectrum charges and the basis for calculating the same. The regulator also asked if the percentage of AGR should be uniform for all ISP licences or vary based on revenue, spectrum holding, or any other criteria. The regulator also sought discussion on the mechanism to differentiate between revenue generated from use of spectrum and without using the airwaves.

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