In July, the major private telecom providers namely Airtel, Jio and Vodafone Idea implemented price hikes for their recharge plans. Since then, a remarkable change has occurred, with many consumers opting for services offered by the public sector telecom company BSNL. Recent reports suggest that private telecom companies are poised to potentially reverse these price hikes, depending on upcoming government action.

The Cellular Operators Association of India (COAI), which represents the interests of these telecom providers, has formally requested the government to consider a reduction in the license fee imposed on telecom operators.

Currently, the license fee is structured at 8 percent of total revenue, which includes a 5 percent network duty fee. COAI is advocating a revised fee structure that would lower this license fee to a range between 0.5 percent and 1 percent. They argue that lowering these fees would facilitate more efficient network upgrades and expansions.

Important to this discussion is the historical context of the license fee structure. COAI claims that the original rationale for the existing fee – based on a relationship with spectrum – has been significantly reduced since the 2012 decoupling of the fee from spectrum, which is now allocated through a transparent auction process. Accordingly, it has been suggested that the license fee should be limited to cover only the administrative costs associated with the permitting process.

COAI Director General SP Kochar has expressed that it is unwarranted to continue with high license fees, especially after removing the earlier spectrum-related justifications. He believes that the fee should be set at a level commensurate with administrative costs, rather than the current onerous rate.

In addition, telecom operators argue that acceptance of this requirement by the government and the telecommunications authority can bring significant benefits to the industry. While attending the recent India Mobile Congress, several officials conveyed that the current financial requirements, including the obligation to pay Adjusted Gross Revenue (AGR), Corporate Social Responsibility (CSR) contributions, Goods and Services Tax (GST) and corporate taxes, impose significant constraints for their ability to invest in technological progress. Consequently, these tax burdens put telecom companies at a comparative disadvantage relative to other sectors.

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