A committee formed to study complications in implementing ‘Telecommunications Radio Frequency Distribution and Pricing Policy 2012’ has suggested the government to make amendments to the telecom law by mid-July this year for auctioning the spectrum to involve a new company or assigning the 4G spectrum to the companies seeking it. Two companies — Nepal Telecom (NT) and Ncell — for the last three years have been demanding the 4G frequency.
The policy had targeted to bring a new company for 4G service. “Our existing Act does not allow to bring in a new company through spectrum auctioning,” said Mahesh Prasad Adhikari, coordinator of the study team, who is also a member of Nepal Telecommunications Authority (NTA). “Thus, we have recommended either to amend the law immediately to bring a new company or auction the 4G spectrum between NT and Ncell.”
The 4G technology, also a successor to third generation (3G), can provide high-speed broadband data connection, except usual voice. For example, a customer can enjoy watching high-definition video without streaming by being connected with 1GB per second data speed. The government has been planning to use 700 MHz, 3300 MHz and 2600 MHz bands for 4G service.
According to Amber Sthapit, member of the study team and deputy director of NTA, they have recommended the NTA board to charge one-time frequency acquisition fee for the first year and annual frequency fee from second year onwards, as in the international markets. “We concluded that the government should charge a certain per cent of the annual income as frequency fee after one-time charge of frequency fee fixed from the auctioning,” he said.
For example, if the spectrum fee is fixed at Rs 15 million per MHz from the auction, companies using the frequency will be liable to pay this fee as one-time acquisition fee in the first year.
The committee has suggested the government to fix annual spectrum charge at 0.9 per cent of total income for using second generation (2G), 3G and 4G spectrum. “If a company uses only 2G and 3G spectrum, the government should charge it 0.7 per cent of its annual income,” said Adhikari.
Currently, telecom companies are paying 0.4 per cent of the total annual income as fee for minimum frequency and Rs 12 million per MHz for 3G. Only NT and Ncell have been providing 3G service using 2X10 MHz frequency. The committee report said that up to 0.9 per cent charge is recommended, as the companies had no mechanism to separate the income from 2G, 3G and 4G services.
The committee has suggested the NTA board to fix the base price for auction at Rs 12 million per MHz for 4G spectrum, as in 3G. Through the policy, floor price of 3G spectrum for auctioning was set at Rs 12 million per MHz. Both NT and Ncell have been saying that they were ready for LTE service.
Based on board’s decision, the Radio Frequency Policy Determination Committee under the Ministry of Information and Communications set the pricing of spectrums. After telecom companies complained of frequency policy being rigid, the study committee had been formed to suggest needful changes.
Recommendation highlights
• Make amendment to Telecommunication Act 1997 by mid-July to bring in a new company for 4G service
• Fix 4G spectrum fee at Rs 12 million per MHz as base price
• Allocate 10 MHz each to telecom companies seeking 4G spectrum
• Charge 0.9 per cent of annual income as spectrum fee to companies using 2G, 3G and 4G spectrum
• Spectrum fee determined from auction should be one-time acquisition charge
• Companies using 2G and 3G spectrum should be charged 0.7 per cent of their annual income as spectrum fee
• Form a three-member monitoring and evaluation committee for effective implementation of spectrum policy
• Review impractical timelines mentioned in the policy
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