TTSL & RCom launched 3G in CDMA segment - Vodafone wants DoT to levy more

Escalating the war of words over spectrum, Vodafone Essar has now alleged that Reliance Communications and Tata Teleservices have already launched third-generation (3G) services and therefore should be charged higher levies that are applicable to 3G operators.

Telecom companies that offer third-generation services are required to pay a higher spectrum usage fee. In the case of CDMA operators, both second generation (2G) and 3G services are offered using the same airwaves or spectrum. Incumbent GSM operators have alleged that the high-speed data services offered by RCom and Tatas constitute 3G services. GSM operators are, however, waiting for 3G airwaves auction that are scheduled to begin next month.


Vodafone has also alleged that the Department of Telecommunication’s recent move to hike 2G spectrum usage charges at a time when the Trai was looking into the issue makes the regulator’s consultation prejudiced. The telco has also pointed out that GSM-based operators will face the brunt of the increase in spectrum usage fee.

Until last month, telcos paid between 2-6% of their revenues as spectrum usage fee depending on the area of operation. The DoT then increased this levy by up to 50% implying that telcos are now charged 3-8% of their revenues as spectrum usage fee.

“The service providers like Vodafone and Bharti will by far be the major contributors of the incremental amount of spectrum charges resulting from increase in the rates. For example, in Mumbai service area, Vodafone and Bharti will together contribute more than 60% of the incremental amount. Similarly in UP (East), Vodafone and Bharti will together contribute 62% of incremental amount, with Vodafone alone contributing 43% of the incremental amount.”

The telco has also sought that the DoT reconsider the hike in 2G spectrum fee. “The magnitude of differences in rates as per MHz of spectrum paid by various operators at current rates is itself startling. With the increased rates, this magnitude will increase further, again by a significant margin,” it added.
Incumbent GSM operators say that dual technology licence holders such as RCom and Tatas hold more airwaves (their GSM and CDMA spectrum combined) than them, but pay a much lower spectrum usage fee.

While the Association of Unified Service Providers of India, the body representing dual technology licence in their earlier reply to Vodafone’s communication had pointed out the GSM and CDMA airwaves cannot be combined, the UK-headquartered telco, in its counter said: “Spectrum is fungible and 800 MHz is used for GSM services in the Americas. Dual technology operators should not be rewarded through lower spectrum fees for their own commercial decisions to take both CDMA and GSM licenses and not to seek to deploy a single network technology.”