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DOT justifies its licensing policy

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CIOL Bureau
New Update

NEW DELHI, INDIA: The Department of Telecommunication defended the decision to give fresh telecom licenses to companies, by way of adopting licence fee on the basis of revenue share, rather than any auction process.

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The DoT said in a statement today that licence fee collection have been increasing every year and licence fee of the order of Rs.7843 crore was collected during the period 2007-08 for access services and a total licence fee and entry fee amounting to approximately Rs. 54840 crore have been collected so far.

The DoT statement claimed that had the spectrum been auctioned, it would not have been possible to charge the higher spectrum usage charges of the order of 2-6 per cent and maintenance and administration cost, which is typically of the order of 0.5 per cent to 1 per cent could be recovered in a judicial manner.

“Low entry barriers with graded spectrum usage charges with quantum of spectrum does not put an initial burden on the operator as well as subscribers as one time initial charges would have to be recovered along with the interest from the subscriber and would have resulted in higher tariffs for subscribers,” it added.

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According to DoT, the graded spectrum charges have resulted in growth in revenues in respect of GSM and CDMA spectrum from Rs.626.37 crore in 2003-04 to Rs. 2884.0 crore in 2007-2008 and are likely to continuously increase in future also.

This increase in revenues has been there despite a tremendous fall in tariff as indicated earlier, it said.

According to the DoT, very high license fee were quoted by the service providers, which resulted in practically nil growth of services till 1999 when a migration package was offered to migrate from high fixed annual license fee to a revenue sharing arrangement.  The growth of telecom sector is established, without doubt, by such a measure, it said.

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The competition has forced the tariffs to come down drastically from Rs.16 to Rs.1 per minute over the period of time with the expansion of mobile telephones from 1.2 millions in March 1999 to 305.13 millions at the end of August 2008.  

The Government of India had formulated the New Telecom Policy 99 for proliferation of telecom services and facilities at affordable rates across the length and breadth of the country, the DoT said.

It claimed that every phase of introduction of new operators with present approach has seen reduction in tariffs, expansion of subscriber base and provision of more Value Added Services for subscribers with increased revenues of the Government.

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