Context: The Department of Telecommunications (DoT) is unlikely to accept the Telecom Regulatory Authority of India (Trai) recommendations on lowering the licence fee of telcos from 8 per cent to 6.

More on news:

  • In its recommendations in 2015, TRAI had suggested lowering the licence fee of telcos to 6 per cent from the current 8 and suggested changing the definition of adjusted gross revenue (AGR).
  • The DoT may, however, consider lowering the component of universal service obligation fund (USOF) to 3 per cent from 5 per cent of revenue.
    • Close to Rs 50,000 crore is lying idle in that (USOF). Most of it is used for improving services in the rural areas.

What is AGR and the issue?

  • The AGR is divided into spectrum usage charges and licensing fees, pegged between 3-5 percent and 8 percent respectively.
  • As per DoT, the charges are calculated based on all revenues earned by a telco – including non-telecom related sources such as deposit interests and asset sales. 
  • Trai had then said that income from non-telecom sources should not be considered to define AGR of telcos.
  • Telcos, on their part, insisted that AGR should comprise only the revenues generated from telecom services.
  • The telcos were opposed to this and had challenged this definition in several forums, including the Supreme Court.

Supreme Court verdict

  • The apex court upheld the DoT’s definition of AGR and said since the licensee had agreed to the migration packages, they were liable to pay the dues, the penalty on dues, and the interest on penalty due to delay in payments. 
  • Recently, the top court asked the telcos to pay the AGR dues in the next ten years.

Universal service obligation fund

  • USOF aims for universal non-discriminatory access to quality ICT services at cheaper prices to people in rural and remote areas.
    • Currently, it is charged at the rate of 5%, while the telecom companies are demanding it to be reduced to 3%.
  • The fund is created under under Indian Telegraph (Amendment) Act, 2003
  • The Department of Telecommunications manages it.
  • It is a non-lapsable fund which means that the unspent amount for a financial year does not lapse and is used up for next years’ spending.
  • All credits to this fund require parliamentary approval.