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Telecom Regulator Recommends Reducing USO Levy to 3%

Trai also introduced the concept of applicable gross revenue (ApGR), which would be equal to total gross revenue of operators as reduced by revenue from operations other than telecom activities, receipts from USO Fund and income from rent, insurance claims among others.
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Telecom Regulator Recommends Reducing USO Levy to 3%

New Delhi: Telecom regulator Trai today recommended that the USO levy, a part of licence fee paid by operators, should be reduced to 3 per cent of their adjusted gross revenue (AGR) from the current 5 per cent.

Telecom operators pay 8 per cent of their AGR as licence fee to the government, of which 5 per cent go to the Universal Service Obligation Fund (USO Fund) and the rest 3 per cent to the government.

The recommendation, if implemented, would bring down licence fee to 6 per cent of AGR for operators.



USO fund, administered by the DoT, was set up in 2002 to provide mobile services and broadband connectivity in rural and remote areas of the country.

Trai recommended that with effect from April 1, 2015, the component of USO levy should be reduced from the present 5 per cent to 3 per cent of AGR for all licences.

"With this reduction, the applicable uniform rate of licence fee would become 6 per cent (from the present 8 per cent) of AGR viz. the 3 per cent of LF that directly accrues currently to the government will not change," Trai said in its recommendations on definition of revenue base for the reckoning of licence fee and spectrum usage charges.

The Telecom Regulatory Authority of India (Trai) said USO funds have not been utilised fully in the past few years.

"Of the Rs 58,579 crore collected for the USOF between 2002-03 to 2013-14, Rs 33,683 crore remained unutilised as on March 31, 2014, representing 57 per cent of the USO levy collected," Trai said.

The Authority notes that even after the lapse of more than 10 years, utilisation is well below 50 per cent.

Trai said since 2010, about Rs 1,50,830 crore has been mopped up from spectrum auctions and telecom operators, excluding BSNL and MTNL, have paid around Rs 18,075 crore as spectrum usage charges (SUC) between 2010-11 to 2013-14.

"It is ironical that the industry is expected to continue a low tariff regime even as it asked to pay out high auction-determined spectrum prices. And, these spectrum prices are amongst the highest in the world," Trai said.

Trai also introduced the concept of applicable gross revenue (ApGR), which would be equal to total gross revenue of operators as reduced by revenue from operations other than telecom activities, receipts from USO Fund and income from rent, insurance claims among others.

"AGR then would be arrived be deducting pass through charges (deductions) from ApGR," Trai said.

The regulator said no change is recommended in the existing definition of pass through charges or deductions under different licences to arrive at AGR for the computation of licence fee and SUC except the inclusion of access charges paid by telecom operators providing international calling card services and toll-free charges. .

Trai recommended that SUC should be levied on "AGR of respective telecom services which use access spectrum in operations".

The Authority recommended that intra-circle roaming charges should not be allowed as deduction from ApGR for calculating AGR of the telecom service provider for the purpose of computation of licence fee and SUC.

The Authority also recommended that infrastructure providers category-I (IP-I) services may not be brought under the licensing regime.

Companies registered as IP-I can provide assets such as dark fibre, right of way, duct space and tower.

"The Authority is of the view that steps should be immediately taken by the DoT to introduce a system of licence fee deducted at source with effect from April 1 2015 and develop an e-portal for submission of licence fee and SUC by April 1, 2016," it added.

The recommendations have come after Trai took note of disputes between licensor and licensees on definition of gross revenue and AGR under licences granted by Department of Telecom.

The National Telecom Policy 2012 portrayed the need to rationalise taxes, duties and levies impacting the Indian telecom sector, the Trai said.

The authority, therefore "suo motu" decided to review the existing definition of revenue, licence fee rate and other related matters.

It also added that there was a reference from DoT requesting it to submit recommendations for delinking of licensing of networks from delivery of services through virtual network operators including associated issues such as AGR, terms of sharing infrastructure etc under unified licensing regime.



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