operator (for 1

st

, 2

nd

 and 3

rd

 Cellular operators) and the entire spectrum for 4

th

Cellular operator is in the GSM 1800 MHz band. 

4.3.1.2.2 

Annual Spectrum License fees for WLL Services (now 

cellular mobile) 

The present spectrum/license fees for WLL services is 2% of AGR (upto 2x5 

MHz) in the complete service area for Wireless Access Systems. In addition, 

charges have to be paid separately in respect of frequencies used for 

microwave links and backbone. 

  4.3.2 Implications of the current pricing regime on spectrum efficiency 

The current pricing regime is based on revenue rather than the payment of a 

fixed amount per unit of spectrum licensed.  This has the advantage for 

operators that the amount payable is small in the early days of network rollout. 

Also, the regime is very simple, easily understandable and accountable. 

However, this mechanism poses certain difficulties in the present scenario.  

a)  The amount increases sharply as the network matures and revenue 

increases, potentially restricting the scope for infrastructure investment 

and/or tariff reductions.   

b)  The low level of fees during the early stages of network rollout does not 

provide any significant financial incentive to use spectrum more 

efficiently, hence the level of efficiency is determined by the regulatory 

limit placed on spectrum assignments.  This is currently linked to the 

number of subscribers, which means that in the initial phase of network 

rollout Service Providers may be tempted to adopt a sub optimal 

approach to network design.   

c) This pricing mechanism would tend to penalise the most efficient 

operator (in terms of revenue). The spectrum charge per MHz paid by 

efficient operators would be more than inefficient ones, even in the 

same technology. 

d)  Under Unified License with service providers deploying technologies 

that are at large variation in efficiency and revenue realisation, it would 

be difficult to ascertain the service that would be provided using the 

spectrum, thereby, making the spectrum charges highly unpredictable 

and variable. 

It is, therefore, advisable that in a scenario where there are likely to be a large 

number of licensees with similar rights to spectrum, the fee be based on the 

amount of spectrum assigned rather than the level of revenue and the number 

of subscribers. This would enable Service Providers to balance their approach 

to network design against the cost of a larger spectrum assignment.   

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