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Tata Teleservices to surrender excess spectrum in all circles barring Delhi, Mumbai

Tata Teleservices, India's sixth-biggest mobile phone firm by users, has decided to return a large chunk of its CDMA mobile airwaves 'under protest' against the government's decision to impose a 'one-time fee' on its frequencies, providing yet more evidence of the diminishing potential of a sector once hailed as a poster-child of liberalisation.

Tata Tele, 26% owned by Japan's NTTDoCoMo, has informed the government that it will surrender all airwaves beyond the 2.5 MHz limit in 15 regions, with the exception of Delhi and Mumbai, where it will retain 3.75 MHz by paying the surcharge.

The Tatas' decision also has major ramifications for the industry, as all incumbent telcos may now be forced to pay this surcharge or surrender all additional airwaves they currently hold.


In December, the Cabinet had approved a one-time fee on all airwaves held by incumbent operators, and the industry may have to shell out about Rs 28,000 crore towards this charge if the decision survives legal cha-llenge. This pa-yment is applicable on all airwaves held by mobile firms, except startup spectrum of 2.5 MHz, the bare minimum bandwidth required to offer CDMA-based cellphone services. For GSM operators, the startup spectrum is 4.4 MHz.

The Centre had asked Tata Tele to pay Rs 1152.7 crore towards this one-time levy. In the GSM space, the company does not have to pay this fee as it only has start-up airwaves in all regions.

Tata Teleservices to surrender excess spectrum in all circles barring Delhi, Mumbai
Executives with rival operators expressed surprise at Tata Tele's move to surrender part of its CDMA airwaves, especially since the company had obtained a stay from the Calcutta High Court against the Centre's notification of a one-time fee. All leading operators have challenged the surcharge in different courts across the country.


A top executive with a leading mobile operator admitted that Tata Tele had strengthened the government's case against the industry by paying the surcharge in Delhi and Mumbai.

In a letter dated April 9, Tata Tele has told the telecom department that it would return its CDMA frequencies within 120 days while slamming the government for imposing a one-time fee on the ground that there were no provisions under existing rules to levy this charge. The company said the government went ahead with this move despite the industry pointing out that any attempt to impose this fee — that is linked to auction-determined prices — was illegal, violative of licence conditions and bound to create "inequalities and discrimination" against existing operators.

"When the government sucks the industry dry, operators will have no option but to return airwaves. It is yet another indication that airwaves are priced too high in India," said Rajan Mathews, the secretary-general of the Cellular Operators Association of India (COAI).

For the Tatas, giving up airwaves beyond the start-up spectrum is set to impact the CDMA businesses further, especially data offerings through dongles, an industry executive said on condition of anonymity. The company suffered a setback last year when it lost its CDMA permits in three regions after the Supreme Court quashed 122 licences issued by former telecom minister A Raja.

Source : Economic Times
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