Cabinet Nod for 3% Spectrum Fee, Auction Gets Green Signal [ Current Affairs - Economics ]

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The union cabinet approves minimum 3% spectrum usage charge to adjust the gross revenues. So, every mobile operator will require to pay the exchequer and the same charge will be applicable for the spectrum to be acquired in the upcoming round.

Image shows the Mobile technology

Image shows the Mobile technology

showing image of Mobile technology

  • Mobile technology has moved from second generation (2G) to third generation (3G) to fourth generation (4G) and is now in move to fifth generation (5G) technology.
  • In this industry more company are proving a mobile. The competition during spectrum auctions has increased because of more demand from consumers.
  • Spectrum usage charge (SUC) is the annual fee that telecom pay the government for using the natural resource.
  • Also pay to the weighted average of the new SUC to 3% of annual revenue for airwaves bought in the upcoming auctions, from the 5% pegged in the previous two sales.
  • Telecom industry in those holding spectrum in the 2,300 MHz band - which is charged at 1%.
  • It will need to use the weighted average formula and pay in proportion to their overall holdings across various frequencies.
  • Some companies SUC payout: Reliance Jio and Bharti Airtel hold spectrum in the 2,300-MHz band.

    • Reliance Jio and Bharti Airtel: 3.8% from 4.9% it pays now.
    • Vodafone: To pay around 4.8%
    • Idea: To pay around 4.5%

What is spectrum?

  • For the adjustment of gross revenue (AGR), licence fee and spectrum charges of telecom service sector is known as Spectrum.
  • Telecommunications has turned into a highly competitive industry in Past years. Companies are competing to buy valuable spectrum.
  • Competition has been generated by technological advancements, privatization, and liberalization.

Spectrum Auctions:

  • Spectrum auction has been potential to improve the quality of telecom services across the country.
  • These are a step toward market-based spectrum management and privatization of public airwaves and way for governments to allocate scarce resources.
  • In 2015, Government raised Rs. 11 lakh crore from the previous round of auction.
  • Higher spectrum availability expected arise the issues related of call drop and poor broadband speed.

Auction details:

  • Auction likely in September.
  • Spectrum will be auctioned across seven frequencies.
  • In 700 MHz band airwaves will be sold for first time.
  • Sales are expected around September.
  • Airtel’s SUC payout come down by 1 % nearly when reliance Jio, SUC rate go up around 3.05%

- Published on: August 4, 2016