3G spectrum earns TRC Rs. 1 b a year

Friday, 22 July 2011 01:35 - - {{hitsCtrl.values.hits}}

By Uditha Jayasinghe

The Telecommunications Regulatory Commission (TRC) yesterday rejected charges made by UNP-backed forum Corruption Watch saying that Radio Frequency Spectrum (RFS) was not sold at minimum prices and insisted the allegations were “baseless”.

On Wednesday Corruption Watch Media Spokesman and United National Party (UNP) Provincial Member Sri Lal Lakthilaka told the media that the Government had sold RFS for a nominal price.

He charged that the three companies that purchased 3G spectrums paid only Rs. 50 million each when the service was worth many times more.

However, TRC Chairman Anusha Palpita told Daily FT that these charges were baseless for several reasons. One was that the bands were sold over five years ago and that the prices paid for them were far higher than what Corruption Watch stated.

Spectrum Management Deputy Director H. Ranatunga explained that there were several bands that could be bought for 3G networks and that each company has to pay Rs.2.4 billion as an upfront frequency charge. This is valid for 10 years.

In addition each company also has to pay an annual license fee of around Rs. 200 million for usage each year. Since all five mobile companies are allocated 3G bands, the TRC earns over Rs. 1 billion from licensing fees each year. This is far in excess of the Rs. 19 million named by Lakthilaka.

“The TRC must safeguard the user, the company and earn for the Government,” Ranatunga said, adding that if the regulatory body priced the bands too high, the cost would be passed on to the consumer. “We still get complaints from some companies saying that our prices are too high, but compared to the prices in the rest of the region, these are reasonable. There is a fully transparent process when allocating these bands,” he insisted.

Lakthilaka earlier alleged that in India the same RFS was sold at US$ 15.05 billion. However both Palpita and Ranatunga stressed that the difference in economies and market size meant that Sri Lanka’s bands could not be sold at such a high rate with the latter also pointing out that the band structure was different in the two countries.

They also observed that since Sri Lanka’s telecommunications industry was far ahead of India’s, the 2G bands were sold around a decade ago and the 3G was allocated over five years back, questioning the practicality of bringing this issue out now.