“non-tax revenue management” - nicf.gov.innicf.gov.in/pdf/non-tax-revenue-management.pdf · 5...
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1
WORKSHOP
ON
“NON-TAX REVENUE MANAGEMENT”
From 16.01.2012 to 20.01.2012
NATIONAL INSTITUTE OF COMMUNICATION FINANCEMINISTRY OF COMMUNICATIONS & IT
GOVERNMENT OF INDIA
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INDEX
S.
No.
Subject Page NO.
1. Circulars & orders relating to License fee 3-81
2. Salient Features of various Types of Licenses 82-97
3. Applicability of Accounting Standards w.r.t License Fee 98-103
4. Back Ground reading material related to WPF 104-119
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CIRCULARSAND
ORDERS RELATINGTO
LICENSE FEE
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Circulars and Orders relating to License FeeDOT No. 10-3/2000-BS-II dated 09.04.2001
To BSNLSubject: License Fee for Provision of Basic Telephone/National Long Distance Service.References: (i) License No. 10-3/2000-BS-II dated 29th September 2000
(ii) DOT letter No. 10-2/2000-BS-II dated January 25, 2001.
In pursuance of the subject mentioned reference, the undersigned is directed to state that based on therecommendations of Telecom Regulatory Authority of India (TRAI), the competent authority has decidedas follows:
(i) The annual license fee as percentage of Annual Gross Revenue (AGR) for Basic telephoneService shall be payable @ 12%, 10% and 8% for Category ‘A’, ‘B’ and ‘C’ circles as per thelist enclosed.
(ii) The license fee as percentage of Annual Gross Revenue (AGR) for National Long DistanceService shall be payable@ 10% plus prescribed contributions towards the Universal ServiceObligation (USO) fund with a total cap of 15%. Presently USO is 5% of Annual Gross Revenue(AGR).
(iii) The above decisions are effective from 01.10.2000.(iv) The license fee can be reimbursed subject to fulfilling social and other obligations as stipulated in
NTP ’99 at the behest of the Government and not covered by USO.
(P.K.Mittal)DDG(BS)
EnclosureLicense Fee Payable by Licensees for Provision of Basic Telephone Service in DifferentCategories of CirclesTelecom Circles % of revenue as license fee
Category ‘A’ CirclesAndhra Pradesh 12%Delhi 12%Gujarat 12%Karnataka 12%Maharashtra (including Mumbai & Goa) 12%Tamil Nadu (including Chennai) 12%
Category ‘B’ CirclesHaryana 10%Kerala 10%Madhya Pradesh (including Chattisgarh) 10%Punjab 10%Rajasthan 10%UP (West) (including Uttaranchal) 10%UP(East) 10%West Bengal (including Calcutta) 10%
Category ‘C’ CirclesAndaman & Nicobar 8%Assam 8%Bihar (including Jharkhand) 8%Himachal Pradesh 8%Jammu & Kashmir 8%North East Orissa 8%
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DOT No. 1-6/2001-LF dated 08.10.2002
To: CCAs Delhi, Tamil Nadu, Karnataka, Kerala, Orissa, UP (E), Andhra Pradesh and Rajasthan
Sub: Transfer of work relating to Licensing Finance Functions in respect of Cellular and BasicServices to the office of Controller Communication Accounts (O/o CCA)- Reg.
Reference: O.M. No. 34-31/2000-SEA dated 30.01.2001
Attention is invited to the orders contained in the office Memorandum (para 8 refers) referred toabove, whereby the work relating to “Collection of License Fee in the form of Revenue Sharingfrom various operators on behalf of the Government” has been delegated to the O/o CCA.
2. It has been decided that the work relating to collection of License Fee in the form of RevenueShare in respect of Cellular and Basic Service would be handled by the O/o CCA in pursuanceof the above mentioned order. In this connection the discussion held at the Workshop conductedon on 25.09.2001 on the subject may kindly be recalled. A detailed schedule of activities that areproposed to be undertaken for the smooth transition of work from DOT HQ to O/o CCA issummarized below for strict compliance.
3.1 The date of effect.The actual date of effect of transition of work to O/o CCA is 01.01.2003. The license fee
payments which are collected quarterly in advance for the financial year 2002-03 are due on01.04.2002, 01.07.2002, 01.10.2002 and 01.01.2003. The licensees have been allowed periodof 15 days from the commencement of quarter for payment of license Fee. Thus the last date forpayment of license fee is 15th of the month of commencement of the quarter. The LF section atDOT HQ has already collected the License fee for the initial two quarters of the current FinancialYear from some of the licensees and will continue to collect the payment upto 31.12.2002.However, from 01.01.2003, the O/O CCA would be collecting the License Fee pertaining toquarter beginning 01.01.2003 in addition to any left over payment for the current financial year.All adjustments/short payments pertaining to period prior to 01.04.2002 shall continue to becollected by DOT HQ.
3.2 Submission of returns on collection of License Fee:Since the collection of License Fee is being monitored at the highest level, instant
communication of collections received by O/o CCA to the DOT Hqtr is of utmost importance. It istherefore, requested that as soon as the collections are received, a report (proforma atAnnexure-A) is sent on the same day by FAX followed by a postal confirmation. In addition, aMonthly report on the collections received during the month is also required to be sent. If thereare no payments received during the month, a “NIL” report is required to be sent invariably. Itmust be ensured that the amount mentioned in the monthly report fallies with the booked figureunder relevant head in the CAC of the month. If there are any differences, the reasons for thesame are to be furnished. The due date for receipt of Monthly Report (Proforma at Annexure-B)is 5th of the following month. All payments should be in the form of DD/pay order only.Being high value DD/Pay order, it may be ensured that they are deposited on the same day andalso the clearance of the same watched.
3.3 Classification of Payments:The quantum of License Fee depends on the percentage of Adjusted Gross Revenue (AGR) asdefined in the License Agreement. The rates of License Fee are 12%, 10% and 8% in respect ofCircles in the category of “A”, “B”, and “C” respectively. The list of Circles/Metro classified underA, B and C are furnished in Annexure-C. An apportionment of Revenue Share is to be made byclassifying 5% of AGR under Universal Service Obligation (USO) irrespective of any category ofCircles and remaining to License Fee is to be effected. For example, in respect of Category Acircle, 7% of AGR is classified under License Fee and 5% under USO. The detailed accounthead is also furnished in Annexure-C.
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3.4 Maintenance of FBG:At present Financial Bank Guarantees (FBG) and Performance Bank Guarantees (PBG) are
maintained at DOT Hqrs to guard against default of any payment or breach of any licenseconditions as per the provisions of the license agreement. All the original Financial BankGuarantees along with the annexure etc. will be handed over to the respective O/o CCA whoshall be required to personally receive the same. However, the FGs will continue to be held atDOT HQs. A detailed instruction on the maintenance of the Bank guarantees is placed atAnnexure-D. The formats of the registers to be maintained for the maintenance of the BankGuarantees are also enclosed. Since the Bank Guarantees are an integral part of the LicenseAgreement, timely renewal and proper upkeep of the Guarantees is to be ensured.
3.5 Calculation of Interest/Penalty on delayed payment:According to the provisions of t amendments signed by the licensees, interest on delayed
payment of license fee at the rate of PLR+5% is leviable. The interest shall be compoundedmonthly and a part of the month shall be reckoned as a full month for the purpose of calculationof Interest. In addition, in case the amount paid on the self assessment falls short by more than10% of the payable license fee, a penalty of 150% of the entire amount of short payment isleviable. However, if such short payment is made good within 60 days from the last day of thefinancial year, no penalty shall be imposed.
4. Maintenance of records:The following registers are to be maintained at the O/o CCA in order to ensure timely
submission of various returns as explained above.(i) Collections Register: This register is intended to record the collections from the licensees
on day-today basis and format for the same is enclosed at Annexure-E.(ii) Revenue Share Register: This Register is intended to record the AGR as per affidavit
and the Revenue share payment for each quarter. This register is maintained service-wise/licensee-wise. This register forms the basis for finalization of revenue share at theyear end. The format for the same is enclosed at Annexure-F.
(iii) Bank Guarantee Register: The details of FBG of the licensees are recorded in a registerfor monitoring purposes. Any extensions or replacements are recorded in a register formonitoring purposes. Any extensions or replacements are recorded in the register. Theformat of this register is given at Annexure-G.
5. List of documents to be handed over to O/o CCA:The following documents will be handed over to the representative of O/o CCA who shallpersonally receive the same under acquaintance.
(i) Details of Revenue share collected pertaining to financial year 2002-03 Circle/Licensee-wise.
(ii) Affidavits/quarterly statement furnished by the licensees for the 1st three quarters of thecurrent financial year.
(iii) Copies of license agreements/amendments signed by the licensee.(iv) Original FBG along with extension letters, if any.
6. Revenue Share from MTNL/BSNL/VSNL:All transactions relating to these organizations shall continue to be dealt at the Headquartersitself and it is not proposed to decentralize the work relating to these units at this stage.
7. Time Schedule:The collection of revenue share from the licensees at O/o CCA is to commence from
01.01.2003. Hence all the Heads O/o CCA are requested to arrange for collection of their abovementioned documents from DOT Headquarter, New Delhi. Doubts regarding the modalities shallalso be clarified to the representative deputed here. A separate communication in this regardshall follow.
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8. License agreement & Amendments thereof:It must be ensured that the license agreement and the amendment thereof are thoroughlystudied. Notwithstanding anything contained in this letter, the terms and conditions as stipulatedin the License Agreement and amendments thereof with particular emphasis on the financialconditions may be adhered to scrupulously.
9. Powers to be exercised by O/o CCA vis-à-vis the licensees:No action shall be initiated by the O/o CCA in terms of the conditions of the license Agreementsthereof except for invocation of the Financial Bank Guarantees in case of its non-renewal andnon-payment of License Fee. Such powers shall be exercised only with the approval of the Headof the O/o CCA. Intimation regarding initiation of such action shall invariably be reported to theDOT HQ.
ANNEXURE-ADepartment of Telecommunication
Office of the Controller of Communication Accounts___________________________Name of the Circles
Daily Report of License Fee received from Cellular/Basic Service Operators on______________
Sl.No.
Name ofLicensee
Circle/City
Service % ofRevenue
Share
Nameof theBank
DD/Payorder no.and date
Challan No.
LFPeriod
Date ofReceipt
GrossAmt.
Amt.LF
Amt.USO
1.
2.
3.
4.
5.
ANNEXURE-BDEPARTMENT OF TELECOMMUNICATION
Office of the Controller of Communication Accounts___________________________________(Name of the Circles)
Monthly Report on the Collection of License Fee from Cellular/Basic Service Providers for themonth of___________________________(In Rupees)
Sl.No.
Name ofLicensee
Circle Service %RevenueShare
Date ofReceipt
DD/payorderAmt
Amount(LF)
Amount(USO)
Head ofAccount inwhichclassified
LF USO
1 2 3 4 5 6 7 8 9 10 111.2.3.4.
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ANNEXURE-C
CATEGORIZATION OF SERVICE AREAS IN CELLULAR MOBILE TELEPHONE SERVICE AND BASICTELEPHOEN SERVICE
Sl.No. SERVICE AREA CATEGORYBASIC CELLULAR
1. Andhra Pradesh A A2. Chennai - A3. Delhi A A4. Gujarat A A5. Karnataka A A6. Kolkata - A7. Maharashtra A A8. Mumbai - A9. Tamil Nadu A A10. Haryana B B11. Kerala B B12. Madhya Pradesh (Including Chattisgarh) B B13. Punjab B B14. Rajasthan B B15. Uttar Pradesh(including Uttaranchal) B B16. West Bengal B B17. Andaman & Nicobar C C18. Assam C C19. Bihar (including Jharkhand) C C20. Himachal Pradesh C C21. North East C C22. Jammu Kashmir C -23. Orissa C C
Note: in respect of basic Service there are no separate Metro circles. Hence, Chennai, Kolkatta, andMumbai are part of their respective territorial circles.
CLASSFICATION OF ACCOUNT HEADSClassification Account Head
Revenue share of Cellular Mobile Service 1275-00-104-01Revenue share of Basic Service 1275-00-104-02Universal Service Levy irrespective of any service 1275-RAT-(USO)Telecom Deposits- Non Bering interest –OTD 8447001011205
ANNEXURED-D
MAINTENANCE OF BANK GUARANTEEThe LF section is maintaining Performance Bank Guarantee (PBG) and Financial Bank Guarantee(FBF) issued by the Licensee’s Bankers in favour of The President of India, acting through TelegraphAuthority to guard against any default in payment or deficiency in service of the licensee. Consequenton the decentralization of functioning of LF Branch at DOT Headquarters, Financial Bank Guaranteesare being made over to the concerned O/o CCA. A brief summary of action to be taken formaintenance/upkeep of the Bank Guarantees is furnished below.
1. The value of the FBG is prescribed in the amendments to the License Agreement signedconsequent on the migration of old operators and in the financial conditions of the newagreement in the case of new operators.
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2. The validity period of Bank Guarantee is ONE YEAR. It is the responsibility of the licensee fortimely renewal of the Bank Guarantee. The licensee is expected to renew the Guarantee onemonth prior to the expiry of the Bank Guarantee. In case of any default in renewal of the same,a telephonic reminder may be given to the licensee at least 15 days before the expiry of thesame which is not mandatory. In case the licensee fails to renew the Bank Guarantee, a writtenletter to Bank is sent asking for the proceeds of the guarantee with a copy to the licensee. Amodel letter is enclosed herewith. Invocation letter should be signed by an officer not less thanthe rank of Chief Accounts Officer. No prior approval of DOT HQs is required for invocation ofBank Guarantee in case of default in renewal. However if the licensee furnishes the renewal ofthe Bank Guarantee, then the invocation letter to Bank is withdrawn with due intimation to thelicensee. The proceeds of the Bank Guarantee if received are to be credited under ‘Major Head8447001011205 (TACT Code 58) - Telecom Deposits - Non Bearing interest - Other TelephoneDeposits till it is disposed off.
3. In some cases, the licensee furnishes a fresh Bank Guarantee from a different Bank in lieu ofextension. In such cases, the old Guarantee is returned to the issuing Bank with a coveringletter copy to the Licensee after verifying that the new Bank Guarantee is found in order.
4. In case of default in payment of license Fee, a written reminder (time bound) id to be sent to thelicensee intimating the status of outstanding dues with a polite warning of impending actionagainst the default.
5. All Bank Guarantees of the licensees, Licensee-wise/Service-wise, are entered in a BankGuarantee register, (a model of the same is annexed). This register contains the details of BGNO. & Date, Amount, Bank Name and Expiry Date. Any amendments in the Bank Guaranteewith regard to its period or the value are entered in the register. The Bank Guarantees are to bekept under lock and key with a responsible officer. In addition, , a control register to watch therenewal of these Bank Guarantees (a model of the same is enclosed) are also required to bemaintained to ensure timely renewal which should be gone through as frequently as possible toavoid any lapse.
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(Letter No.)Government of India
Ministry of CommunicationsOffice of the Controller of Communication Accounts
_______________________Circles
Dated:………………..To,(Bank )
Sir,
Subject: Guarantee given by you on behalf of M/s ___________(License)- reg.
We are in possession of the following guarantees given by your bank by way of security on behalfof the above mentioned company for their due observance and performance of their contractualobligations/duties in accordance with license agreement entered into with this Department foroperation of cellular/Basic Service.
Sl.No.
Guarantee No. & Date Amount Valid upto
2. It has been found that the above mentioned licensee has failed to discharge their contractualobligation by their failure to extend the validity of the above mentioned guarantee as per the terms andconditions of the license agreement. This has caused loss/damage to the licensor by reason of failureof the licensee in non-complying with the terms and conditions of the license agreement.3. In view of the above, I have been directed to say by this communication that the ENTIRE value ofthe above mentioned guarantees be paid and sent. You are accordingly requested to remit theproceeds of the said guarantees forthwith through a PAY ORDER/DEMAND DRAFT payable at___________drawn in favour of “Communication Accounts Officer, O/o Controller of CommunicationAccounts,___________________Circle.
Yours faithfully,
Dy. Controller of Communication AccountsCopy to,(Licensee)
ANNEXURE - ECOLLECTIONS REGISTER
SERVICEPay
orderDDNo.
Payorder/DD
Date
BankName
Licenseefrom
whomreceived
ServiceArea
Date ofreceipt
Amount received (Rs.) Date ofremittance
of PAO
Date ofClearance
RemarksLicense
FeeUSO Total
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ANNEXURE – FREVENUE SHARE REGISTER
Name of License: Circle:
QuarterBeginning
GrossRevenue
PSTNCharges
RoamingRevenueof otherService
Providers
ServiceTax
NetRevenue
(AGR)
ProvisionalRevenue
Share paid
Date ofPayment
Remarks
Note: The payment received for 4th quarter should note be less than the amount paid for the previousquarter.
ANNEXURE – GBANK GUARANTEE REGISTER
M/s ABC LTD Name of the Circle……………………….
Sl.No.
Name of theBank
GuaranteeNo./Date
FBG/PBG Amount Valid Upto
Remarks
1. State Bank ofIndia
4/75Dt. 2.5.01
FBG 1000000 1.5.03
2. Central Bankof India
X242Dt. 5.5.01
FBG 10000000 4.5.03
3. DeutscheBank
8/9/05Dt. 8.5.01
FBG 100000000 7.5.03
Note: DOT No. 1-6/2001-LF dated 03.12.2003 with the same contents was sent to CCAs Assam, Bihar,Madhya Pradesh, Gujarat, Haryana, Himachal Pradesh, Andaman & Nicobar, Maharashtra, North East,Punjab & UP (West):
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DOT No. 1-6/2004/FBG/dated 16.02.2004
Subject: Maintenance of Financial Bank Guarantee
Presently the FBGs for various Basic/UASL and Cellular Operators (except MTNL) are beingmaintained by the CCAs. The following decisions have been taken with respect to maintenance ofFBGs.
1. Review- Review of FBGs from now onwards shall be carried out on a quarterly basis todecide on the appropriate quantum of Financial Bank Guarantee.
2. Encashment of FBG- The FBG can be encashed by the CCAs, under intimation to DOT HQin case, in the following cases.(a) FBGs are not renewed in time a(as already specified – one month in advance before
expiry)(b) Operators have not submitted an FBG for an appropriate amount as directed by CCAs.
3. Additional Bank Guarantee – in some cases it is found that there is a substantial jump in thelicense fee, requiring a revision in the FBG amount. It is now decided that fresh BG oradditional BG shall be asked from the operators, in case there is a 25% jump in thequarterly license fee.
4. The revised percentage rates of revenue share to be collected from Basic and CellularService Operators have already been conveyed vide endorsement. No. 17-11/2002-LFdated 29/1/2004. The same is enclosed for ready reference. The new rates are applicablefrom 01.04.2004 and revenue shares at these rates will be due for payment by 15.07.2004.
In view of this reduction it has been decided that the operators, can be permitted to offerrevised FBG for a proportionately lower amount, only after 15.04.2004, provided the 4 th
quarter (03-04) revenue share has been paid.
For example it the present highest quarter License Fee is Rs. 5 Cr. The existing FBG is foran amount of Rs. 11 crores. With effect from 15.04.2004 the FBG will be for an amount of8.8 crores, in case the rate has come down from 10% to 8% (i.e. Category B circle).
In addition to this reduction, for the first two circle cellar operators (licenses awarded before1999), there is an additional relief of 2% (copy of relevant orders enclosed). The FBGamounts in their cases will governed accordingly.
This revision in FBG will be allowed even if the Bank Guarantees are due for expiry at alater date. In any case the review will be again due in the next quarter.
5. Reduction in FBG of BSO was on account of migration to UASL _After migration all BSOshave to follow the same set of financial conditions including FBGs, as in the 4th cellularlicense agreements (licenses awarded in the 2001). Therefore, the migrating BSOs have tosubmit FBGs in line with what is submitted by the 4th cellular licensees.
The above is for necessary action at your end. Please feel free to interact for any furtherclarification.
End: 3 as above
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This circular was not readily available.
EnclosuresNo. 842-47/2002-VAS (part)/14/10 dated 27.01.2004
To all Cellular Mobile Services Licensees
Subject: Amendment in the License Agreements for Cellular Mobile Telephone Service (CMTS)Licenses with respect to License Fee.
The undersigned is directed convey the approval of competent authority for amendment in theCMTS. License agreement in respect of license fee and that the license fee shall payable at arevised rate given below with effect from 01.04.2004.
CMTS Service Area Present Rate of License Fee Revised Rate of License FeeDelhi, Mumbai, Chennai,Kolkata, Andhra Pradesh,
Gujarat, Karnataka,Maharashtra, Tamil Nadu
12% of Adjusted GrossRevenue
10% of Adjusted GrossRevenue
Haryana, Kerala, MadhyaPradesh Punjab, Rajasthan,UP (West), UP (East), West
Bengal
10% of Adjusted GrossRevenue
8% of Adjusted GrossRevenue
Assam, Bihar, HimachalPradesh, Jammu & Kashmir,
North East, Orissa
8% of Adjusted GrossRevenue
6% of Adjusted GrossRevenue
2. Other terms and conditions of the license agreements remain unchanged.
EnclosureNo. 842-47/2002-VAS (Part)/14/20 dated 28.01.2004
Sent to first and second operators
Sub: Amendment in the License Agreements for Cellular Mobile Telephone Service (CMTS)Licenses.
In continuation of letter No. 842-47/2002-VAS (Part)/14/10 dated 27.01.2004, regarding reductionin License Fee w.e.f. 01.04.2004 regarding reduction in License Fee w.e.f. 01.04.2004, theundersigned is directed to convey the approval of competent authority for amendment in the licenseagreements relating to license fee with effect from 01.04.2004 that license fee shall be furtherreduced by 2% of Adjusted Gross Revenue (AGR) for a period of 4 years w.e.f. 01.04.2004 subjectto minimum of equivalent to a contribution for Universal Service Obligation Fund which is 5% ofAGR at present. Accordingly, the license fee shall be charged at a rate of 6% of Adjusted GrossRevenue for a period of four years w.e.f. 01.04.2004
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DOT No. 1-6/2001-LF dated 28.05.2004
Sub: Transfer of work relating to Licensing Finance Functions in respect of NEW UASL to the officeof Controller of Communication Accounts (O/o CCA) and a Review of earlier Instructions-Reg.
References: (1) 1-6/2001-LF dated 8.10.2002(2) 1-6/2001-LF dated 8.12.2003(3) 1-6/2001-PBG dated 16.02.2004
1. Attention is invited to the office Memorandum referred to at (1) and (2) above, whereby the workrelating to collection of license fee in the form of revenue share and maintenance of Financial BankGuarantees in respect of various Basic and Cellular licenses was decentralized to the respectiveoffices of Controllers of Communication Accounts (CCA).Subsequently. All the Basic Service licenses have migrated to Unified Access Service licensingRegime, (expect BSNL and MTNL). Several new Unified Access Service Licenses have also beenissued.
It has therefore been decided that, the collection of license fee and maintenance of FBGs in respectof new Unified Access Service Licenses, in addition to existing Basic (now migrated to UASI) andCellular licenses, will also being handled by the respective offices of the CCA or Jt. CCA withimmediate effect.
The FBGs in respect of new unified access service licenses (UASL) received in this office alongwith a copy of the concerned license agreement are being passed on to respective CommunicationAccounts Units in parallel.
2. Para 3.2 of this OM dated 8th Dec. 2003 (reference 2 above) may be seen. The licensees have tomake license Fee payment by Demand Draft or Pay Order. These payments being of high valuemust be deposited promptly in the concerned bank (preferably on the same day ) and the creditpersonally monitored by the head of the unit.
From June, 2004 onwards, information about the date of receipt of license fee date of deposit to theBank and affording of credit by the Bank in respect of each receipt of the past month should be sentto DOT HQ. The existing proforma for the monthly statement be augmented to include thisinformation.
3. Instances have come to the notice of this office where quarterly payments from licensees havebeen refused on the plea that these were not supported by Affidavit and AGR statement. It isclarified that under no circumstances should the license fee payments be refused. However thelicensee shall be immediately handed over a letter informing him of his lapse and asking him tosubmit the required/prescribed documents within a weak. A sample format is enclosed herewith.
4. Your attention is further invited to this office letter under reference at (3) above. In addition to theinstruction therein you are required, for more effective control over Financial Bank Guarantees, toensure that the Bank Guarantee Register is reviewed periodically by yourself and the other officerswith at least a monthly review by you as the head of the Unit. A monthly report should be sent toDOT HQ in the form of certificate from the head of the CCA unit, stating that Bank Guarantees havebeen reviewed during the month and there have been no lapses in this regard. This report shouldinvariably be sent in the first week of following month.
5. Computation of the FBG amount-The practice presently followed to compute the amount of FBGis that the highest amount of Quarterly license fee paid by a licensee in the previous four quarters ismultiplied by two and this resulted amount is enhanced by 10% to provide for expected growth inGross revenue of Licensee Company in future.
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It has been decided by the competent authority that henceforth an arithmetic mean, of the quarterlyamounts of license fee paid by operators during the last four quarters, be taken as the base.(instead of the highest quarterly license fee), multiplied by two and the resultant enhanced as usualby 10% to arrive at the quarter of FBG to be demanded from the operator at the time of review.
The amount may be revised upwards in case the department considers it necessary to secure itsinterest. A regular review of FBG’s may however the carried out on a half yearly basis. This will beapplicable to all licensees under the revenue sharing regime.
With regard to reduction of FBG amounts following the reduction of license fee percentagesannounced by the government (ranging from 2% to 4% of the AGR) for the Cellular, UASL andBasic service licensees w.e.f. 1st April 2004, the amounts of FBGs of these licensees are to bereviewed on the line suggested above immediately. The outcome of such review in view of thereduction in the rates of license fee may however be implemented for a licensee only after ensuringthat licensee has paid his dues up-to-date.
6.The heads of the Communication Accounts Units are also required to reconcile a license feecollected as is stated out in the monthly report with that recorded in the accounts of the Unit. Youare also requested to prepare a statement of such reconciliation for the year 2003-2004 andforwarded the same to HQ within a fortnight.
7.The quarterly Affidavits and the AGR statements submitted by the licensees may be sent to HQwithin a fortnight after retaining the original in your office. The copy sent here may be dulyauthenticated.
8. All other past instructions remain unchanged except for those as states above.
Enclosures
Department of TelecommunicationO/o the CCA
To,M/s……….
Sub: Submission of Accounting Documents
We have received an amount of Rs……………….towards the license fee for the period……..inrespect of the license no. dated………..it is noted that the affidavits and the AGR statement asrequired under conditions………….. of the license agreement has not been submitted.
You are directed to submit the documents within a week, failing which the department will takesuitable action as deemed fit under the license conditions.
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MONTHLY STATEMENT PROFORMA
DEPARTMENT OF TELECOMMUNICATIONSOffice of the Controller of Communication Accounts
______________________(Name of the Circle)
Due date: 5th day of the Month
Monthly Report on the Collection of License Fee from Cellular/Basic Service Providers for themonth of _________________________
In Rupees
Encl: (i) Photo Copies of Challan(ii) Authenticated Copy of AGR/Affidavit
Sl.No.
Nameof
Licensee
Circle Service
% ofReven
ueShare
Dateof
Receipt
DD/payorderAmt.
Amt.(LF)
Amt.(USO)
Head ofAccountin whichclassified
Dak ofdepositin theBank
Dateof
givenby
Bank
Remarks
1 2 3 4 5 6 7 8 9 10 11 12 13 141.2.3.4.
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DOT No. 17-20/2003/BSNL/LF dated 10.01.2005
Sub: License Fee of BSNL: Regarding
Kindly find enclosed copy of Secretary, Department of Telecom D.O. No. of even dated 29.12.2004 foryour information and necessary action.
The license Fees/Revenue Share received may be accounted for as per extant instructions.
Enclosure
Secretary DOT D.O. No. 17-20/2003-LF (BSNL)(Pt.1) dated 29.12.2004
To CMD BSNL
This is in continuation of our letter dated June 17, 2004 (copy enclosed) regarding the not-submission
of AGR statements along with quarterly license fee payment by BSNL which amounted to violation of
the financial conditions contained in various telecom service licenses held by it.
Kindly ensure that from the 3rd quarter of 2004-05, service wise and service area-wise AGR statements
are positively submitted (along with the quarterly license fee payments) as per the schedule
incorporated in license agreement. The payments in respect of basic and cellular licenses may be got
deposited with the respective CCA offices while those in respect of other services may be paid in the
office of the CCA, New Delhi.
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DOT No.15-7/2003/LF (pt) kw dated 09.08.2005
Sub: Verification of Operator-wise Pass-thorough charges claimed by a Licensee as Deductionfrom its Gross Revenue.
This is regarding verifying the correctness of the pass-through charges claimed by a licenseeat. deduction in the audited AGR statements submitted by it. In this regard your attention isdrawn to the prescribed AGR statements annexed to the License Agreement copies, which arealready available with you. The methodology as to how these AGR statements are to be drawnup and presented is contained in the respective license agreements.
2. To elaborate further, it is stated that while on one hand the operators have to submitquarterly AGR statements and Affidavits while making the stipulated quarterly payments. On theother hand at the end of the financial year they also have to submit, together with other prescribeddocuments, duly Audited AGR statements for each quarter. The documents include a report from theCompany's statutory Auditor in the proforma proscribed in the License Agreement.
3. DOT headquarters has been carrying out the annual assessment of license fees based onquarterly audited statements as also other disclosures like Annual Financial Accounts/ Reports,Reconciliation statements, etc. This involves verification/ assessment of the gross revenue as well asdeduction claimed to arrive at AGR. In most of the cases provisionally assessed thus far it has beenfound that the operators have not furnished operator-wise details of pass-through charges reducedby them from the gross revenue to arrive at the Adjusted Gross Revenue. While such deductionsclaimed, for which the gross value has been certified by their Auditor, have not been disallowed,the assessments continue to remain provisional for reasons, Inter alia, of what is stated above.
4. In this background it has now been decided to entrust the work of verifying the deductionsclaimed by the various operators, in respect of already assessed cases through CCAs. To begin withthe verification is to be carried out in respect of those Access Services Providers (Basic, Cellular andUnified Access Services) for whom the above-referred CCA offices are engaged in collection oflicense fee and maintenance/ review of FBGs.
5. A little background of how licenses are organized in a particular Service Area will be relevant atthis stage. By and large in a Service Area there are about 4 to 5 Access Service Providers (ASP)and therefore will have interconnect arrangement of the same order. Besides, they may also haveinterconnected with NLD and ILD operators for carriage of long distance calls. Therefore, an ASPcan legitimately claim deductions in respect of pass-through charges actually paid to other ASPwithin his Service Area and also to NLD & ILD operators. There may also be cases involvingpayments of roaming charges to operators even beyond the Service Area.
6. To begin with, the CCA Offices are to verify the deductions claimed in respect of an operator’spass-through charges paid to operators within the same Service Area and to Long Distanceoperators. In this regard kindly refer to the Audited AGR statements wherein against item “BB” thedeductions have been claimed. The CCA Office would need to details showing party-wise breakupof the amounts of deductions claimed together with the relevant underlying commercialarrangements/agreements, obtain the same, verify whether the claimed amounts were actuallypaid in the first instance and assess whether these should qualify as deductions under theextant license definitions. It may be noted that charges other than "cell charges" are notdeductible from Gross Revenue.
7. For the purpose of verification, duly authenticated details must be obtained from theoperator, preferably together with an Affidavit. After obtaining these detail it may be checked up asto against which operators the maximum pass-through charges have been shown as paid for. These
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cases may thereafter be checked up with reference to the underlying vouchers/invoices. In thisregard the operators may be addressed to furnish details of abort 10'% of such paymentspertaining to each quarter and summarized results of such verification be sent to DOT(Headquarters) for taking a final view.
8. In order to ensure that deductions claimed in respect of pass-through charges paid to all operatorsare verified during for the succeeding year, some of those cases which were not verified in theprevious year must be taken up and so on. It is mentioned that provisional assessments havealready-been carried out for most of the financial years starting from 01.08.99 when the revenuesharing structure took effect.
9. It is requested that a suitable officer, at least of the level of Joint CCA, be deputed to DOT(Headquarters) for a day or two so that he can be apprised of the exercise with further detailsand also handed over the Audited AGR statements and connected documents to proceed withthe verification exercise. The time and date can be telephonically ascertained from the undersignedupon receipt of this letter by you.
10. Needless to mention, Member (Production) considers this verification drive as very importantand therefore it may be assigned top priority so that the provisional assessments are finalizedwithout delay.
11. Kindly acknowledge receipt.
DOT No. 1-6/2001-LF (Vol. II) dated 21.11.2005
Subject: instructions regarding Collection and Accounting of License Fee
During the inspections of CCA Offices, the Member (F), Telecom Commission hasobserved that physical as well as computer records (including subsidiary/ relateddocuments) concerning Bank Guarantees and License Fee payments are not maintainedor authenticated properly. It has also been found that prescribed reports are not receivedfrom the CCAs in the manner and with periodicity as prescribed. Further, upon a review ofthe reports received, it is seen that there are various errors in bifurcating the amountsreceived towards USO and License Fee as also indicating the services category pertainingto the payments.
In view of the above, the following instructions are hereby issued. These areorganized under the following heads:
i) Maintenance of Bank Guaranteesii) Collection and accounting of license fee
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MAINTENANCE OF BANK GUARANTEES:
(I) Bank Guarantee Registers:The proforma in which the Bank Guarantee Register is to be maintained hasalready been circulated to all CCA offices. These are required to be dulyauthenticated by the officer concerned. As and when there is an invocation orrenewal or release of a Bank Guarantee, appropriate entries must be recorded andduly authenticated in the register itself. The DCCA must carry out a periodical(monthly) check of the register and results of the review brought on record andsubmit to the head of the office (CCA/ Jt. CCA) through relevant control files.
(II) Review of Bank Guarantees:a) Review of profoma: As and when a fresh Bank Guarantee (or an amendmentdue to change of amounts of extension of validity to an existing one) is received, itmust be immediately verified word-for-word with reference to the formatprescribed in the License Agreement (or in out letter demanding theenhancement/extension) and in the event of any deviation, the new instrumentshould be immediately returned to the licensee and he should be directed to setthe error right within a reasonable period or face the likely consequences, interms of License Agreement of his failure to do so. In the event of non-compliance the existing Bank Guarantee may be invoked with intimation to DOTHQ. Care should be taken to ensure that in no case shall DOT be without aneffective Bank Guarantee or cash security. As no preforms has beenprescribed for renewals/ enhancement etc. to Bank Guarantees, the CCAOffices have to be extra careful when such amendments are received. At thestage of amendment, only those pares need to be amended which state theamounts and/or period of validity.b)Monthly review for validity: The Bank Guarantee available with the CCA mustbe reviewed each month for their validity and all such cases, where the BankGuarantees have not been renewed in accordance with the License terms, areminder must he issued giving clear 7 days time to set right the default, beyondwhich the Bank Guarantee may be invoiced without any further notice andproceeds dealt with in accordance with instruction under Para IV below.
c)Review for amounts required: Review for amounts required shall only be on asix monthly basis in terms of instructions already issued in this regard vide DOTletter of even number dated 28.5.04. Additional Bank Guarantees pursuant tothe six-monthly review will need to be obtained no matter what the increase inthe requirement is.
(III) Reporting to Headquarters:Earlier it has been directed that CCAs should furnish a certificate at the end ofeach month that the Bank Guarantees have been reviewed and there is no case ofBank Guarantee lapsing. From now onwards it is directed that while review has to becarried out as prescribed, the reports be furnished to Headquarters (LF Branch) onlyon a quarterly basis. These reports should contain the outcome of reviews forvalidity, amounts required and also the proforma of the Bank Guarantee submitted
21
by various licensees during the quarter. The report in this regard shall accordinglybe furnished in, the proforma enclosed as Annexure-I to this letter.
While Annexure-I is self explanatory, it is hereby clarified that the remarks column isfor recording suitable narration about important events concerning Bank Guaranteesand the action taken by the CCA office in this regard, as the case may be. Thisreport shall be furnished by the heard of the CCA offices. It is also clarified that reviewof amounts is to be based up on the amounts of License Fee payable as certified bythe Licensee through its quarterly AGR Statements and Affidavits and not merely theactual payments made. The first report shall follow immediately upon receipt of thisletter and thereafter as on 31st January, 30th April, 31st July and 31st October and soon. In accordance with these instructions the second report shall become due onJanuary 31st, 2006.
(IV) Invocation of Bank Guarantees:
In addition to the above the instances/occasions when CCA Office can invoke theavailable Guarantee are summarized below:
Proforma of Bank Guarantee not being in order and the licensee falling to rectifythe fault to within reasonable time.
The amount of Bank Guarantee falls short of the amount required and licensee fatsto submit additional Bank Guarantee.
The licensee fails to make the requisite quarterly payments even while he hassubmitted an AGR Statement and Affidavit indicating the license fee payable onself-assessment and the amount remains unpaid upto 7 days from the prescribeddate for making such payments.
Bank Guarantees can also be invoked if the licensee have neither made paymentnot submitted the prescribed documents like AGR, Statements and Affidavits asalso when the licensee have submitted AGR statements in a manner other than theprescribed proforma and fails to rectify the default after a notice period of 10 days.
It is however clarified that in cases concerning non-payment of amountsdemanded by DOT (HQ) upon annual assessment of License Fees, the invocationwould be as per directions issued by DOT (Hqrs).
(V) Treatment of Bank Guarantee Proceeds:In case a Bank Guarantee has been invoked for realizing the amounts due whichrelate to a quarterly unpaid sum or the demand issued by the Department pursuant toannual license fee assessment, the equivalent portion of the proceeds shall becredited to Revenue Head and the balance to Security Deposit. In such cases adirection has also to go to the Licensee stating the requirement of replenishment ofBank Guarantee to restore the level of security to the required level as per Licenseterms and instant instructions. In all other cases the proceeds shall be credited to theSecurity Deposit head w i t h appropriate entries in the payments register as also theBG Register. Subsequently when amounts lying in SD are adjusted to outstandingamounts, proper journal entries have to be passed apart from recording explanatorynarration in the relevant records. These events must be adequately recorded in thequarterly reports as well.
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COLLECTION OF LICENSE FEES AND ITS ACCOUNTING
The revenue shares payable are at prescribed rate applicable to AGR, wherein 5% of AGRis allocable to Universal Access Levy. The Account Codes in this regard have already beencirculated. Subsidiary records like revenue share register as also collection register asalready prescribed shall continue to be maintained and duly authenticated from time totime.
(I) Reporting of collection to DOT Hqrs.
Proforma in this regard is hereby revised to include items to ensure that the reportitself serves the purpose of check and monitoring. The report that must be submittedto DOT Headquarters is now as amended and placed at Annexure II. No daily reportis required any further and the report now prescribed shall only be monthly and shallcontain all the payments of a particular license, be these quarterly or annualpayments.
It must be ensured that the payments as and when received are immediately creditedto the Govt. accounts and clearance of the instruments watched. This must be carried outby the concerned Communication Accounts Officer and must be reviewed periodically bythe Head of CCA. It must also be ensured that necessary accounting entries are carried outin the monthly accounts. At the end of every 6 months it must be certified by the respectiveCCAs that the amounts received (making an express mention of the amount received)have been credited to the Government Account and that at the same have been alsoreconciled with the monthly accounts. The total as also the License-wise break up ofamounts received should also be indicated in this report.
In so far as the Heads of Accounts are concerned it is mentioned here thatalthough the Department has been allotted detailed heads of account towards Basic,Cellular, NLD, ILD etc., there is no accounting head for recording receipts in respect ofUASL Operators. It is hereby clarified that while the subsidiary ledgers and periodicalreports be prepared indicating the appropriate service category, the receipt will continue tobe classifiable appropriately under the relevant Basic, Cellular heads, in other words, forthe new UASL service providers (i.e. Licenses granted after November 2003) the receiptsmay be recorded against the head of accounts of Basic Service. For the licensees whohave migrated to UASL, the receipt would be recorded under the respective categorieswhich they were, before their migration to UASL took effect. For the licensees whichcontinue to remain in basic or cellular category, the amounts received shall be classifiableaccordingly.
Accounting of receipts under Universal Access Levy : As per the extant orders theCCA offices are reporting their monthly collection indicating break-up of their receiptsbetween pure License fee and Universal Access Levy. W hi le either of thesecomponents gets credited to the Consolidated Fund of India necessary accountadjustments have to be carried out in the monthly cash account prepared by theCCA, to accurately reflect the amounts of Universal Access Levy so collected. Whiledetermining the component of Universal Access Levy so collected. While determiningthe component of Universal Access Levy vis-à-vis our quarterly payment received duringthe year is a straight forward process, ambiguity may however exist when the CCA office
23
received payments from the Licenses pursuant to annual assessment demand raisedfrom DoT HQ. These amounts will also include apart from balance revenue shareelements of interest as also penalty. It is mentioned that such Interest and penalty arelinked to the license Fee structure under revenue sharing and would be classifiableunder License Fee and Universal Access Levy. It is hereby clarified that such paymentspertaining to earlier years bifurcated on a pro-rata basis with reference to the applicablerates of revenue share for the financial year to which the payments otherwise pertainsto.With the decentralization of license fee collection for BSNL and MTNL, the CCA officesare also receiving license fees in respect of BSNL's VSAT and NLD services. Theamounts received in this regard shall be classifiable in terms of the heads of accountscirculated by the Budget Branch and endorsed by LF Branch of DOT Hqrs.It has been seen that the CCA Offices are at times not reporting all payment details.This leads to computational error in DOT Hqrs and wastes valuable time inreconciliation. Care must be taken to ensure that such cases do not occur.
(II) Submission of documents to DOT Hqrs:Instructions already exist that the supporting affidavits and the AGR Statementsreceived from the Licensees are to be forwarded to DOT Headquarters. Howeverthese are not received from all the CCAs on a regular basis.
It must be ensured that beginning the first quarter of 2005-06, copies of all suckdocuments (as applicable) must be sent to DOT HQ, together with the monthly report onlicense fee collection for the concerned months. These documents must be organized licensewise together with a summary sheet placed below. This applies for quarterly payments and alsoany other payments received from the Licensees. In respect of last quarter, keeping in view theterms of the License, the documents be sent only after 15th of April following the financial yearand must include affidavits received on 25/3 as also 15/4.
Authentication of Records maintained in CCA Office:a. Revenue Share/License Fee Collection Register to be maintained by CommunicationAccounts Officer must be countersigned by DCCA after verification of relevant documents tohis/her satisfaction.b. Clearance particulars of instruments deposited be obtained from cash branch and recordedin file on regular basis.c. Monthly collection and periodical reconciliation to be carried by the CCA office with theknowledge of the head of the CCA.d. Bank Guarantee Register to be maintained by Communication Accounts Officer and entriesverified by DCCA.e. Monthly check for validity of existing Bank Guarantees and proforma (for new/renewed BankGuarantees) be done by Jt. CCA and suitable narration recorded.f. Periodical review for amounts of Bank Guarantee to be seen by head of the CCA and theresults communicated to DOT HQ.
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Clarification : The above set of instructions shall take immediate effect. These may becarefully gone through and in the cases of any doubts clarification may be sought from DOT HQwithin a month from the date of issue of this letter.
Annexure - I
Department of TelecomQuarterly Report on Maintenance and Review of Financial Bank Guarantees
Name of CCA office________________Quarter ending ________Year_______
Sl.
Nameof
Licensee
LicenseNo.
Bank Guarantee Details Amount of
bankGuarantee
required
Whetherauthentic
ationdone by
theconcerned officerin BG
Register
Whetherthe BankGuarante
e is inorder/prof
ormaprescribed
Remarks
Guarantee
Validityupto
NameofBank
Amount ofGuarantee
TOTAL
25
Annexure-IIDepartment of Telecom
Monthly Report on Collection of License FeeName of CCA office ________________Month________Year___________
Sl. Name ofLicense
ServiceCategory
ServiceArea
% ofRevenue
Share
Type ofPayment(Qtrly orannual
assessmentbased)
Paymentfor theperiod
(qtr/year)
1 2 3 4 5 6 7
Date ofReceipt
AmountReceived
AGR on Self-assessment
(asapplicable)
AmountstowardsLicense
Fee
Amounttowards
USO
Head ofAccounts in
whichclassified
Remarks
8 9 10 11 12 13 14
NB: All payment must indicate whether it is a quarterly payment or a payment receivedupon demands raised by DOT. In the event of combined payments/unclassified paymentsrequisite certificate be obtained.
No. 1-27/2005-LF dated 05.01.2006To all Telecom Service Providers of Basic/UASL/CMTS/NLD/ILD/PMRTS/IP-II andCommercial VSAT Service
Sub: Payment of License Fee for the 3rd Quarter of 2005-06 regarding.
As per the financial conditions of the concerned License Agreements, the license Fee forthe 3rd quarter of the financial year 2005-06 shall be payable within 5 days from thecompletion of the relevant quarter.
You are therefore directed to comply with the concerned license conditions and make therequisite license Fee payments for the 3rd quarter of the financial year 2005-06accordingly.
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DOT No. 15-7/02-LF (BG)/Pt. Vol.III dated 12.01.2006
Sub: Verification of Bank Guarantees for Genuineness
It has been decided that the Bank Guarantees (including their amendments) received byand maintained in the concerned Communication Accounts Offices, be verified for theirgenuineness from the respective Banks.
2. The Banks may be addressed to confirm the genuineness of the instruments issued bythem and be given a predefined time period within which they must revert back to theDepartment.
3. In case the Bank do not respond or respond in the negative the matter must beinformed to DOT Headquarter, with complete details of the Bank Licensee.
4. The above instructions take immediate effect.
DOT No. 6-42/2005/TA-I dated 14.02.2006
Sub: Schedule of Payment of License Fees/Spectrum Charges by TelecomOperators (Remittances to RBI/SBI by CCAs/PAO (HQ)
………all……….instruments received on Friday or where the next day following the due
date happens to be a non working day/Saturday, the concerned should ensure that the
instruments are remitted to RBI/SBI by Saturday itself. This is to be done by calling the
necessary staff to office. Furthermore, the credit of the instruments remitted is also to be
followed up with RBI/SBI to ensure that there is no undue delay by the bank in crediting
them to the Government Account.
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DOT No. 15-1 0/2006/LF dated 20.03.2006
Office Memorandum for Introduction of Challan System For Receiving License Fees AndSpectrum Charges
Subject: System for Receipt of License Fee and Spectrum Charges in the Department ofTelecom Headquarters and the Controller of Communication Accounts Offices.
1. License Fee and Spectrum Charges from commercial Telecom Service Providerslicensed under Section 4 of Indian Telegraph Act 1885 were being received directly by theDepartment of Telecom, Headquarters. Subsequently, the collection of these statutory levieswas decentralized in respect of Access Service Providers to the Controller ofCommunication Accounts. Following decentralization of collection of LicenseFee/Spectrum charges from BSNL, CCA Delhi has started collecting License Fee for NLDservice of BSNL.
2. Payments made in DoT HQ are received by the concerned branches (LF/WPF) whichdeposit the sums (received through DDs etc. drawn in favour of PAO, HQs) to PAO, HQsand an acknowledgment of the payment is given to the Licensee on their forwardingdocuments. A receipt is being issued through the prescribed ACG-67 proforma, upon receiptof these sums by the CCA officer.
3. This process of receiving a payment and issuing an acceptance is being revised followingthe approvals accorded by the competent authority. The new system shall becomeeffective from April 01, 2006.
4. A system of challans is being introduced which has to be uniformly adopted in DoTHeadquarters, as also CCA offices for receiving payments from various telecom serviceproviders. The proforma of the challan, which has to be in triplicate, is annexed to thismemorandum. The challan form can be downloaded from DoT website http://www.dot.gov.inand shall be used for making payments for License Fee as also Spectrum Charges.
5. The following steps are to be followed for making payment of License Fee and orSpectrum Charges:
a. The Licensee should download this form from DoT website as and when anamount becomes payable by them (both quarterly dues as also dues arisingupon annual assessment of License fees).
b. The relevant particulars of the payments describing the purpose of paymentas also the details of the instrument must be recorded in the challan formwhich shall be in triplicate.
c. The documents relevant to the payment and as applicable shall be captionedat the space provided at the end of the challan form.
d. The Licensee should approach the concerned branch (LF/WPF) in DoTHeadquarters or the CCA office, as the case may be, who shall record the
28
Head of Account for the payment and upon receipt of the documents mentionedin the challan shall record an acknowledgment there to.
e. Thereafter the concerned Licensee shall go to the concerned cash branch ofthe office (PAO for DoT Headquarters and Communication Accounts Officer,(Cash) for the CCA offices) together with the instrument (DD/Banker's cheque)to be deposited.
f. The concerned officer, who receives the payments, shall verify the entriesrecorded in the challan with reference to the underlying instrument andthereafter receive the payment. As an acknowledgment one copy of the challanshall be returned to the concerned service provider.
g. At the time of receiving the payment the concerned office shall record a serialnumber on the challan form (in all the three copies) and this serial numbershall be a running serial number. The Sl . No. shall be of six digits with the firstthree digits to indicate the CCA DoT Hqr office code. The office code is thesame code that is followed for the purpose of monthly accounts.
h Even if the concerned operator may not have submitted relevant/ requisitedocuments, under no circumstances a payment be refused except when theinstrument is a cheque.
At the end of the day one copy of the challan in respect of each and everypayment received on that day shall be handed over to the concerned userbranch (LF, WPF or the officer designated in the CCA office), and theconcerned cash branch would retain one copy. The user branch/officer shallacknowledge receipt of this challan from the cash branch. For this purpose anodal officer in each of the branch/office shall be nominated by the concernedfunctional head or the CCA as the case may be.
6. Occasions where an amount is received by the Department upon invocation of the BarkGuarantee, the proceeds will be credited by the concerned branch to either securitydeposit or the revenue head as the case may be. The same challan proforma shall beused for this purpose as well. Necessary information regarding the instruments receivedfrom the bank as also the reference of DOT/CCA instructions concerning the invocationof a Bank Guarantee must be provided under the various heads as provided at the endof the challan proforma.
7. (i) Instruments from multiple banks/ branches towards a single stipulated payment willhave to be deposited through individual challans. The principle in short is therefore (onebank one challan).
(ii) Also payment should be made license-wise through individual challans on theprinciple of "one challans per license per type of payment-per Bank".
8. Segregation of USO:
29
(i) License Fee payments received from licensees may be for a stipulated quarterlypayment/payment of assessed demands and segregation between Universal ServiceLevy and pure License Fee may be difficult at the time of receiving the payment.Therefore, the concerned branch (LF/WPF or CCA office) shall only recording theHead of Account for License Fee alone In the receiving stage.
(ii) Once the payment is made, and one copy of the challan is received by the userbranch from PAO Headquarter, or the designated cash officer in the CCA, it shall,based on the underlying documents received from the Licensee, be segregatedbetween pure License Fee and Universal Service Levy.
(iii) A Journal Voucher, for allocating such sums received towards Universal ServiceLevy, shall be prepared by the user branch and handed back to the PAOHeadquarter (or the designated officer in the CCA offices within three days of thereceipt of the challan from the Cash branch.
(iv) At the end of the month, the PAO/ Cashier in CCA offices shall provide to theconcerned user branch the amounts received under different heads of account(License Fee, Universal Service Levy/Spectrum Charges). This shall be necessarilydone after accounts are closed for the month and after accounting for journalvouchers issued by the user branch as described in the Para above.
9. While the above instructions shall be effective from April 1st 2006 it may still take sometime for the new system to stabilize and in the intervening period there shall be no occasionwhen a payment is returned on grounds that the challan is not filled up. Such dispensationshall exist only for a month beginning April 2006.
10. As and when further decentralization of License Fee/ Spectrum collection is undertakensame instructions as above will apply with immediate effect.
11. Kindly acknowledge receipt.
Enclosed:
As above (Form-I and Form-II)
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Form-IVDepartment of TelecomPay & Accounts Office,
801, Sanchar Bhawan, 20 Ashok Road, New Delhi-1
CHALLAN FOR PAYMENT OF LICENSE FEE/SPECTRUM CHARGES/BG PROCEEDS
To be filled up by the Licensee (for payments) or by concerned licensing Branch (in case of Bank Guarantee proceeds)
Date………………………….
Name andaddress of the
licensee
Service Categoryand Service Area
Particular of payment(see Note 3 below)
Amount(in Rs.)
Nature Period
Total
Details of Payment instruments(s)Rendered
DD/Pay Order No. DD/Pay orderDate
Issuing Bank Amount (in Rs.)
Total in figures:
Amount in words:
Signature of the person depositing the amount ______________________Name _______________________Date _______________________
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To be filled in by the officer of the concerned branch handling the license fees/spectrumchargesDate Head of Account
Documents Received1 ____________________________ Signature of concerned branch official ________2 ____________________________ Name ___________________3 ____________________________ Date _______________________4 ____________________________ (Also affix stamp)
Acknowledgment (To be filled in by the official receiving the payments)
Serial Number ______________ Dated ___________________________Received __________ DD/Pay Order(s) as above totaling Rupees _____
Space for signature of the person receiving the amountSpace for office seal
NameDate
Notes and instructions:1. A challan form to be used for only one TYPE of payment (see note 3) and for one bank2. The challan is for remittance of license fees, Spectrum Charges and depositing BG
proceeds.3. Payment to be made by DD/Pay Order/Bankers Cheque by Licensee4. Indicate type of payment (L/Fee for Basic, UASL, CMTS etc, Spectrum Charges for
CDMA/GSM/PMRTS & other services, LD, Entry Fees, BG Proceeds etc.) and thequarter/year to which it related.
5. Serial number shall be given by the officer accepting the payment and will be six digits, thefirst three being the CCA Code.
Form-IIDEPARTMENT OF TELECOM
CONTROLLER OF COMMUNICATION ACCOUNTSCHALLAN FOR PAYMENT OF LICENSE FEE/SPECTRUM CHARGES/BG PROCEEDS
To be filled up by the Licensee (or payments) by concerned Licensing Branch (in case ofBank Guarantee proceeds) DateName and address of
the LicenseeService categoryand service area
Particulars ofpayment
(see note 3 below)
Amount(In Rupees)
Nature Period
TotalDetails o f Payments Instrument(s) Rendered
DD/Pay Order No. DD/Pay Order Date Issuing Bank Amount (in Rupees)
Total in figuresAmount in words
Signature of the person depositing the amount ________________________Name ________________________Date ________________________
32
For office Use only
To be filled in by the officer of the concerned branch handling the license fees/spectrumcharges
Date Head of Account
Documents Received
1 ____________________________ Signature of concerned branch official ________2 ____________________________ Name ___________________3 ____________________________ Date _______________________4 ____________________________ (Also affix stamp)
Acknowledgment (To be filled in by the official receiving the payments)
Serial Number ______________ Dated ___________________________Received __________ DD/Pay Order(s) as above totaling Rupees _____
Space for signature of the person receiving the amountSpace for office seal
NameDate
Notes and instructions:1. A challan form to be used for only one TYPE of payment (see note 3) and for one bank2. The challan is for remittance of license fees, Spectrum Charges and depositing BG
proceeds.3. Payment to be made by DD/Pay Order/Bankers Cheque by Licensee4. Indicate type of payment (L/Fee for Basic, UASL, CMTS etc, Spectrum Charges for
CDMA/GSM/PMRTS & other services, LD, Entry Fees, BG Proceeds etc.) and thequarter/year to which it related.
5. Serial number shall be given by the officer accepting the payment and will be six digits, thefirst three being the CCA Code.
33
DOT No. 1-27/2006-LF dated 30.05.2006To all Telecom Service Providers
Sub: Clarification regarding Payment of License Fee
I have been directed to issue the following clarification with respect to payment of LicenseFee:
"It is hereby clarified that for the purpose of payment of quarterly License Fees, theintervening holiday/s or holidays on the Last day of the prescribed period shall not resultin extension of the specified period of payment. Hence, Interest/ penalty as per the licenseconditions will apply on payment of quarterly Licenses Fee dues beyond the specifiedperiod”.
DOT No, 1-28/2006/LF dated 20.09.2006To all the UAS/Basic/CMTS Service Providers
(Circulated as an enclosure to DOT No. 1-28/2006-LF dated 21.09.2006)
Subject: Verification of PSTN Related Call Charges (Access Charges) and RoamingRevenue paid to other Telecom Service Providers, Service/ Sales Tax paid to theGovernment and claimed as Deductions.
Sir,
The License Agreement mandates payment of License Fee in four quarterlyinstallments. While making payment of License Fee, Statement of Revenue andLicense Fee, in the prescribed format showing the computation of revenue andLicense Fee payable is to be submitted to the designated offices.
2. For the purpose of arriving at Adjusted Gross Revenue, on which License Fee islivable, the license condition stipulates following deductions from Gross Revenue:
PSTN related call charges (Access Charges) actually paid to other eligible/entitledtelecommunications service providers within India;
Roaming revenues actually passed on to other eligible/entitled telecommunicationsservice providers within India and; Service Tax on provision of service and SalesTax actually paid to the Government if gross revenue had included thecomponent of Sales Tax and Service Tax.
It is to be noted that in the prescribed form of Statement of Revenue an LicenseFee the deductions claimed on account of above-mentioned items are to besupplemented with operator-wise details. It is therefore reiterated that details must befurnished, along with the quarterly Statement of Revenue and License Fee.
It has been the experience that deductions on account of above paymentsmade during the financial year are not readily furnished by the UAS/Basic/CMTSlicensees leading to a series of correspondence at the time of annual assessment ofLicense Fee. It has therefore, been decided by the competent authority that henceforth,
34
the deductions claimed by the UAS/Basis/CMTS licensees will be verified by theconcern CCAs on quarterly basis. The operator-wise details will be verified withrespect to the proof of payment. On demand, the proof of payment with respect to thedeductions claimed has to be submitted by the licensee.
The above verification for each quarter shall be completed by the CCA within astipulated time frame, i.e. by 15th October, 15th January, 15th April and 30th June forquarters I,II,III and IV respectively.
If any clarification is required the same may be obtained from LF Branch. Kindlyacknowledge the receipt.
DOT No. 1-28/2006-LF dated 21.09.2006
Subject: Verification of Deductions claimed from Gross Revenue by Telecom ServiceLicensees on Quarterly Basis.
This letter issues in continuation to the instructions contained in the letters:I) 1-6/2001-LF dated 8.10.2002II) 17-20/2003/BSNL/ LF dated 10.1.2005;
28.2.2005; 22.3.2005iii) 1-6/2001-LF Vol II dated: 28.11,2005
2. Although it is mandated by the License conditions, Operator-wise details of deductionsclaimed on account of PSTN related Call Charges (Access Charges) and roamingrevenue paid to other telecom service providers are not readily submitted by theLicensees. This affects the annual License Fee assessment.
3. It has therefore, been decided by the competent authority that the office of CCAs willhenceforth verify the deductions claimed by the UAS/ Basic/ CMTS Licensees from theGross Revenue for the calculation of AGR and License Fee on quarterly basis. Theproposed verification will be applicable for deductions claimed forn first quarter of financialyear 2006-07 onwards.
4. The quarterly payment of License Fee payable by 15th July, 15th October, 15 Januaryand 25th March is to be made together with Statement of Revenue and License Fee in theprescribed proforma. As per the prescribed proforma, the Licensee has to give operatorwise details of the;(i) PSTN related call charges actually paid to other service providers(ii) Roaming revenues actually paid to other service providers.
5. The CCAs are to verify the deductions shown by the Licensee in the Statement ofRevenue & License Fee on account of:
a) PSTN related call charges (Access Charges) actually paid to eligible/ entitledTelecom Service Providers within India,
b) Roaming revenues actually passed on to other eligible entitled telecom serviceproviders.c) Service Tax/ Sales Tax paid to Government, if the same had been included in
35
the Gross Revenue.6. The verification of deductions it to be done with respect to proof of payment. Theverification for each quarter shall be completed by the CCA within a stipulated time-framei.e., by 15th October, 15th January, 15th April and 30th June for quarters I, II, III and IVrespectively of the financial year.
7. The quarterly report of the verification in respect of each licensee has to be submitted toLF Branch within a week after the due date. The concerned Telecom Service Providers arebeing instructed separately about the verification and submission of relevant details.
8. Kindly acknowledge the receipt.
DOT No. 1-27/2005/LF dated 30.04.2007To all Telecom Operators
Subject: Submission of Documents for Annual Assessment of License Fee for theFinancial Year 2006-07 in respect of CMTS/UASL/ NLD/ILD Licenses held by you
1. For annual assessment of license Fee by this office, the licensee is required to submitthe requisite document within seven days of signing the Audit Report alongwith acopy of published Annual Accounts, in accordance with the provisions contained inrelevant sections, appendices and annexure of the respective license agreements.
2. Therefore, you are directed that, for each license held by you, the followingdocuments, as per the license agreement(s) for the FY 2006-07, may he submitted tothe LF Branch, DoT HQ as per terms and conditions of the extant license Agreement.(a) Audited Quarterly Statement of Revenue and License Fee for the License along
with Auditor's Report and appropriate disclosure notes.(b) Reconciliation statement, duly reconciling the revenues in the Audited Quarterly
statement of Revenue and License Fees and the published Audited AnnualAccount of the company.
(c) Duly audited quarter-wise operator-vise details of PSTN related call charges(access charges) and roaming charges actually paid to other telecom serviceproviders during the FY 2006-07.
(d) Duly audited details of Service tax/ Sales tax actually paid to the Govt. during theyear 2006-07, if included in Gross Revenue and deductions claimed.
3. While submitting the above documents, licensee must also submit a statement asper Annexure-I to this letter. Furnishing of incorrect information shall be dealt inaccordance with the terms and conditions of License agreement.4. Along-with the above-mentioned documents, you are also directed to furnish aLicense-wise statement of payments made towards License Fees for the FY 2006-07 inthe proforma enclosed as Annexure-II. This shall be reviewed in DoT vis-a-vis thepayments actually received for computation of interest and other dues as applicable.
5. A copy of the complete set of documents must also be submitted to the respective
36
O/o CCAs, where License Fees are deposited.
6. It must be ensured that the documents/accounts, in particular, the Statement ofRevenue and License Fee, have been prepared In accordance with the definition of GrossRevenue/ Adjusted Gross Revenue and norms and guidelines for preparation of accountsas contained in the respective license agreement(s). Any deviation thereof must bequantified and clarified by the Auditor.
7. It is to be noted that non-submission of requisite documents with adequate details intime leads to series of correspondence, causing delay and wastage of time and effort atthe time of annual assessment. Hence, it must be ensured that complete set ofdocuments and details are submitted.
8. One complete set of documents mentioned at para 2(a) & 2(b) may be given to Director(WPF), DOT HQ.
Annexure- IDetails of documents submitted for financial year 2006-07
Description Submittedor Not
Date of signing ofAnnual Accounts by
the Licensees Auditora) Quarterly Audited AGR statement for the License
along with Auditor’s Reportb) Reconciliation statement duly reconciling the
revenue in the Quarterly Audited AGR statementsand the Audited Annual Accounts of the company
c) Duly audited quarter-wise, operator-wise details ofPSTN related call charges (access charges) androaming charges actually paid to other telecomservice providers during the financial year 2005-06wherever mandated under concerned license.
d) Amount of service tax included in the GrossRevenue and deductions claimed, separately with acertificate towards amounts of service tax passed onto the Government during the year 2005-06
Signature of authorized representative:Name of the authorized representative:Date:
Space of Company sealAnnexure-II
DETAILS OF LICENSE FEE PAYMENT MADE FOR THE YEAR 2006-07Name of service
providerService Category
37
Service AreaCheque/DD/Bank
particularAmount Date Direct
payment(D)/Adjustment(a)/Credit extended and
adjusted (CR)
Remarks
Space for Company seal
Signature of authorized representativeName of authorized representativeDate:
Note: Narration be provided wherever necessary and unused rows be struck off.
DOT No. 20-73/2006-AS-I dated 04.07.2007To BSNL, MTNL, all UASL & CMTS license
Sub: Harmonization of Different Nomenclatures for same service areas.
It has been noticed that different nomenclatures have been used for same service area forUnified Access Service Licenses and Cellular Mobile Services Licenses.Therefore, to correct this aberration, name of all the service areas for which Unified AccessService License or Cellular Mobile Services Licenses have been issued till date have beenharmonized as per enclosed Annexure-I. Therefore, all the Unified Access Service Licensesand Cellular Mobile Services Licenses stands amended will respect to the name of theService Area (Telecom Circle/Metro) as per details in Annexure-I.
Encl.: As above.
38
Annexure-IHarmonization of Nomenclature of Service Area (Telecom Circles/Metros)
For the Purpose of the Existing UASL & CMTS Licenses and New UAS Licenses
Sl. Nomenclature used in theCMTS/UASL LicensesIssued prior to 4th July, 2007
Areas Covered Name ofService Areaw.e.f. 4th July,
2007
Category
1. West BengalCircle/TelecomCircle/Service
Area/Circle(Including A &N)/Andaman, Nicobar and
West Bengal TelecomCircle/West Bengal
Entire area followingwithin the Union Tenitoryof Andaman & Nicobarislands and area fallingwithin the State of WestBengal and the State of
Sikkim excluding theareas covered by Kolkata
Metro Service Area.
West BengalService Area
B
2. Andhra PradeshCircle/Telecom
Circle/Service Area/AndhraPradesh
Entire area falling withinthe State of Andhra
Pradesh.
Andhra PradeshService Area
A
3. Assam Circle/TelecomCircle/Service Area/Assam
Entire area falling withinthe State of Assam
Assam ServiceArea
C
4. Bihar Circle/TelecomCircle/Service
Area/Telecom Circle(including Jharkhand
Telecom Circle)/ Bihar
Entire area falling withinthe reorganized State ofBihar and newly created
State of Jharkhandpursuant to the Bihar
Reorganization Act, 2000(no. 30 of 2000)dated 25th
August, 2000.
Bihar ServiceArea
C
5. Gujarat Circle/TelecomCircle/Service Area/Gujarat
Entire area falling withinthe State of Gujarat and
Union Territory of Damanand Diu, Silvassa (Dadra
& Nagar Haveli)
Gujarat ServiceArea
A
6. Haryana Circle/TelecomCircle/ServiceArea/Haryana
Entire area falling withinthe State of Haryana
except Panchkula townand the local areas served
HaryanaService Area
B
39
by Faridabad andGurgaon Telephone
exchanges.
7. Himachal PradeshCircle/TelecomCircle/Service
Area/Himachal Pradesh
Entire area falling withinthe state of Himachal
Pradesh
HimachalPradesh
Service Area
C
8. Jammu & KashmirCircle/Telecom Circle/Service Area/Jammu &
Kashmir
Entire area falling withinthe State of Jammu &Kashmir including theautonomous council of
Ladakh
Jammu &Kashmir Service
Area
C
9. Karnataka Circle/TelecomCircle/Service area/
Karnataka
Entire area falling withinthe State of Karnataka
KarnatakaService Area
A
10. Kerala Circle/TelecomCircle/ Service Area/Kerala
Entire area falling withinthe State of Kerala and
union Territory ofLakshadweep and
Minicoy.
Kerala ServiceArea
B
11. Madhya PradeshCircle/TelecomCircle/Service
Area/Telecom Circle(including
Chhattisgarh)/MadhyaPradesh
Entire area falling withinthe reorganized State ofMadhya Pradesh as well
as the newly createdState of Chhattisgarh
pursuant to the MadhyaPradesh Reorganization
Act, 2000 (No. 28 of 2000)Dated 25th Aug, 2000
MadhyaPradesh
Service Area
B
12. Maharashtra Circle/TelecomCircle/Service Area/
Maharashtra
Entire area falling withinthe State of Maharashtra
and Union Territory ofGoa, excluding areas
covered by Mumbai MetroService Area
MaharashtraService Area
A
13. North East Circle/TelecomCircle/Service Area/North
East
Entire area falling withinthe states of ArunachalPradesh, Meghalaya,Mizoram, Nagaland,Manipur and Tripura.
North EastService Area
C
40
14. Orissa Circle/TelecomCircle/Service Area/Orissa
Entire area falling withinthe States of Orissa
Orissa ServiceArea
C
15. Punjab Circle/TelecomCircle/Service Area/ Punjab
Entire area falling withinthe states of Punjab and
Union territory ofChandigarh and
Panchkula town ofHaryana.
Punjab serviceArea
B
16. Rajasthan Circle/TelecomCircle/Service
Area/Rajasthan
Entire area falling withinthe states of Rajasthan
RajasthanService Area
B
17. Tamilnadu Circle/TelecomCircle/Service Area/Tamil
Nadu/Madras/ChennaiMetro
Entire are falling within thestate of Tamilnadu and
union territory ofPonduchery includingLocal Areas served byChennai Telephones,
Maraimalai Negar ExportPromotion Zone (MPEX).
Minzur andMahabalipuram
Exchanges
Tamil NaduService Area
(includingChennai
Service Area)
A
17A. Tamilnadu Circle/TelecomCircle/Service Area/Tamil
Nadu
Entire are falling within thestate of Tamilnadu and
union territory ofPonduchery includingLocal Areas served byChennai Telephones,
Maraimalai Negar ExportPromotion Zone (MPEX).
Minzur andMahabalipuram
Exchanges
Tamil NaduService Area
(excludingChennai
Service Area)
A
17B. Madras/Chennai Metro Local Areas served byChennai Telephones,
Maraimalai Nagar ExportPromotion Zone (MPEX),
Minzur andMahabalipuram
Exchanages
ChennaiService Area
A
41
Telecom Accounts and Finance Manual
Exchanges
18. UP(West)/UttarPradesh
(West) Circle/ TelecomCircle:Service Area, TelecomCircle (IncludingUttarachal)/ UttarPradesh (West)
Entire area covered byUttar Pradesh with the
following as its boundarydistricts towards Eastern Uttar
Pradesh: Pliibhit, Bareilly,Bodaun, Etah, Mainpuri and
Etawah.It will exclude the local
telephone area ofGhaziabad and Noida.
However, it will also includethe newly created state ofUttaranchal pursuant to the
Uttar Pradesh Re-organization Act, 2000
(No.29 of 2000) dated 25th
August 2000.
Uttar Pradesh (West) ServiceArea
B
19. Uttar Pradesh – EastCircle/Telecom Circle/Service Area/UttarPradesh – East
Entire area covered byEastern Uttar Pradeshwith the following as itsboundary districts towardsWestern UttarPradesh: Shahjahanpur,Farrukhabad, Kanpur andJalaun.
Utter Pradesh (East) ServiceArea
B
20. Delhi Metro! ServiceArea/Delhi
Local Areas served by Delhi,Ghaziabad. Fridabad, Noidaand Gurgaon TelephoneExchanges
Delhi Service Area Metro
21. Kolkata Metro/ ServiceArea/Kolkata/Calcutta
Local areas served byCalcutta Telephones
Kolkata Service Area Metro
22. Mumbai Metro /ServiceArea/Bombay/Mumbai
Local Areas served byMumbai,
New Mumbai and KalyanTelephone Exchanges
Mumbai Service Area Metro
*NO NEW LICENSE IS BEING ISSUED FOR SL.NO 17A AND 17B AFTER 15.09.2005NOTE:1. Yenum, an area of Union Territory of Pondicherry is served under Andhra Pradesh Telecom
Circle in East Godavari LDCA.2. The definition of Local areas of exchanges will be as applicable to the existing cellular
operators, i.e. at the time of grant of cellular Licenses in Metro cities.3. The definition of local areas with regard to the above service area as applicable to this
License is as per definition applicable to Cellular Mobile Service License as in the year 1994 &1995, when those Licenses were granted to them. This is in accordance with respective GazetteNotification for such local areas wherever issued and as per the statutory definition under Rule2(w) Indian Telephones Rules, 1951, as it stood during the year 1994/1995 where no specificGazette Notification has been issued.
42
DOT No. 1-28/2006/LF dated 05.07.2007
Sub: Verification of Deductions claimed by the Licensees through Quarterly Statement ofRevenue & License Fee Clarifications thereof
This letter issues in continuation to the instructions contained in the letters of even no.dated 20.09.2006 and 21.09.2006. It is reiterated that verification report for each licensee of thelicensed service area on a quarterly basis is to be submitted by the O/o CCAs as per theschedule given in letter dated 21.09.2006. For ready reference, the verification of each quartershall be completed by the CCA within a stipulated time frame i.e. by 15 th October, 15th January,15th April and 30th June for quarters I, II, III and IV respectively of the concerned financial year.
2. Based on the receipt of reports and letters from the CCAs, the following clarifications withrespect to the verification of deductions claimed from the Gross Revenue by the TelecomService Licensees through quarterly Statement of Revenue & License Fee are issued:
Issue No. 1 The Licensees are not submitting in time (a) operator-wise details of thedeductions claimed, and (b) proof of payment/adjustment.
Clarification - A separate letter is being issued to the Licensees for the submission of proofof payment and other details so as to back up the claimed. deductions as perquarterly Statement of Revenue & License Fee. In case of willful refusal bythe licensee to submit above details, the CCAs should sent a separate reportto the LF Branch, DOT so that necessary action against the licensee at theHQ level can be initiated.
Issued No. 2 Admissibility of the deductions claimed on account of ADC payment.Clarification The ADC payments made by the Licensees to another telecom service provider
qualify for deduction subject to proof of payment.Issue No.3 Admissibility of payment made by one division of a licensee company to
another division e.g. payments made by UASL division of the company to theNLD/ILD division of the same company when the licensee company haslicense for UASL/NLD/ILD.
Clarification - In case of inter-division payment of pass through nature payment (adjustmentsmade between UASL/NLD/ILD divisions of a Company having UASL/NLD/ILDlicenses), deductions of such payments are to be allowed based on proof ofinter-division adjustments. At the time of annual assessment of License Feesuch inter-divisional payments/adjustments are treated as permissibledeductions upon production of duly audited proof of adjustment as perprovisions of the extant license Agreement.
Issue No.4 - Deductions claimed by licensee for payments made for leased linecharges, port charges, charges for infrastructure sharing etc.
Clarification- No deductions other than those specified in the respective License Agreementsqualify for deductions from the Gross revenue which is to be furnished by thelicensee in the prescribed format of Statement of Revenue & License Fee.Therefore leased line charges, port changes, infrastructure sharing chargesetc. or any other type of set off (items of expenditure against revenue) do notqualify for deduction.
Issue No.5 - The actual date of payment for pass through charges in case of payment by cheque.
43
Clarification - In case of payment by cheque of PSTN/Roaming charge etc. the date ofpayment is to be taken as the date of receipt of such cheques by thereceiving l icensee.
Issue No 6 - Admissibility of payments made for Service Tax/sales tax and deductionsthereof.
Clarification – If the Gross Revenue includes the Service Tax/Sales tax, then actual paymentsmade by the licensee to the Government during the FY qualities for deduction forthat year. If the extant provisions of the Service Tax/Sales Tax permit the licenseecompany to avail CENVAT credit against the Service Tax/Sales Tax duespayable by the licensee then the Service Tax /Sales Tax paid will include suchcredits availed. The claim of such deductions will be admissible subject to proofof payment / adjustments and permission of the tax authorities.
Issue No.7 - Nature of poof of payment.Clarification - The proof of payment includes vouchers/ bank statement/receipts etc. The O/o
CCA has to check the admissibility of claimed deductions with respect to proof ofpayment/adjustments made and in accordance with provisions of the LicenseAgreement. The claimed deductions are to be taken as furnished by thelicensee through its quarterly Statement of Revenue & License Fee.
Issue No.8 Payment/adjustment of PSTN/Roaming charges made on net basis between twolicensees.
Clar if ication - In case of adjustment of PSTN/ Roaming charges between two licensees madeon net basis, the payment of only residual amount is effected. However therespective licensee will claim deduction of the full amount. As an illustration, incase of settlement between Licensee A and B, if the amount payable by A to Bis Rs 100 and amount payable by B to A is R s . 65 then the actual payment(transaction) made by A to B would be of Rs. 35 only. In this case Licensee Awill claim deduction of Rs 100 and Licensee me B will claim deduction) ofRs.65, even though cash transaction of Rs.35 only has been made. Thelicensee should however support this through proof of payment and adjustment.
Issue No.9 - Verification of claimed deduction on sample basis.Clarification - The O/O CCA has to ensure 100% verification of operator wise payments made and
claimed as deduction through Quarterly Statement of Revenue & License fee. Onlythe amount shown as deduction in the quarterly Statement is to be verified andreport sent about its admissibility or inadmissibility. Wherever the licensee doesnot submit the operator-wise details substantiating the deductions claimed asper quarterly Statement of Revenue & License Fee, the amount has to bequantified a n d the same has to be reported as inadmissible to the LF Branch,DOT HQ, as per schedule.
Issue No. 10 - Nature of proof of payment in case of roaming charges and in particularinternational roaming paid through clearing houses.
Clarification - The Office of the CCA will ask for statements from the Banks, duly signed bytheir authorized signatories along with statement of settlement of account ofRoaming charges from clearing house duly signed by the operators authorizedsignatories. The O/o the CCA has to check the admissibility of claimed deductionswith respect to proof of payment/adjustments made and in accordance with theLicense Agreement.
3. The format of the verification report to be sent to LF Branch, DoT HQ, is enclosed herewith.
44
4. The quarterly. Verification report in the prescribed format should he sent with the approval of theCCA.
5. The CCAs may also raise a dem and, if any shortfall is noticed based on the verification exercisetogether with Interest in terms of the License Agreement.
6. Soft copy of the report should be sent at e-mail ID: [email protected]
Enclosed: As above
SUMMARY REPORT OF VERIFICATION OF DEDUCTIONS CLAIMED IN QUARTERLYSTATEMENT OF REVENUE & LICENSE FEE WITH RESPECT TO <NAME OF THE SVC AREA>
LICENSE SERVICE AREA .Quarter - <qtr no.> of FY <financial year>
Fig. in Rs.SI.No.
Name of theLicensee
Service
Deductionsclaimed
Deductionsadmissible
Deductionsinadmissible
Shortfall ofLicense Fee
Total
REPORT ON VERIFICATION OF DEDUCTIONS CLAIMED BY THE LICENSEE THROUGHQUARTERLY STATEMENT OF REVENUE
AND LICENSE FEEName of the LicenseeLicense No. & DateService AreaRate of License FeeQuarterFinancial Year
45
- PART—I
SUMMARY OF QUARTERLY STATEMENT OF REVENUE & LICENSE FEE(AS SUBMITTED BY THE LICENSEE)
Fig. in RsS.
No.Item Previous
QuarterCurrentQuarter
Cumulative up tocurrent quarter
1. Gross revenue (item no. AA)2. Deductions (item no. B)(i) PSTN related call charges paid to
other operators(ii) Roaming revenue actually passed on
to other operators(iii) Service Tax paid to the Government(iv) Sales Tax paid to the Government3. Total Deductions (item no. BB)4. Adjusted Gross Revenue
(Item no. CC)5. Revenue Share payable6. Revenue share paid7. Date of payment
PART-IIREVISED CALCULATION OF REVENUE SHARE ON THE BASIS OF VERIFICATION OF
DEDUCTIONS CLAIMED IN THE STATEMENT OF REVENUE LICENSE FEEFig. in Rs.
Sl. Item Amount1. Gross Revenue (Item No. AA)2. Deduction claimed in
Statement of Revenue &License Fee (item no. BB)
A PSTN relatedB Roaming charges
C Service TaxD Sales Tax
E ADC3. Adjusted Gross Revenue (item no. CC): As per the Quarterly Statement of
Rev. & LF submitted by the license. (1-2)4. Inadmissible deductions A PSTN related
B Roaming Charges
C Service taxD Sales TaxE ADC
5. Revised Adjusted GrossRevenue (3-4)
6. Revenue share payable for
46
the quarter (AGR Rate ofLicensee Fee)
7. Revenue share actually paidfor the quarter
8. Short payment of RevenueShare/LF (6-7)
Reasons for inadmissibility of deductions:
Signature of the officer
DOT No. 16-7/2007-BS- I dated 09.07.2007
Sub: Minutes of Meeting regarding “No dues” Process and “Extension of LOI” in theMatter of Grant of License to Applicant Company
A meeting was held on 04.07.2007 at 2:00 P.M. by Member (T) DOT regarding delay in obtaining
“No dues” from LF cell and WPC Wing prior to signing of license agreement. The meeting was
attended by Wireless Adviser (DOT), DDG (LF), DDG (AS), DDG (CS), DDG (DS), JWA and Dir,
(LF-I)
Member (T) expressed his concern about Inordinate delay in signing of license agreement after
issue i f LOI. This is mainly because of delay in "No Dues Clearances" required from the
respective units. When the license is not granted within the validity period of LOI, approval of
Hon'ble MOC&IT is required for the extension of LOl. It was desired that the extension of LOl must
be avoided to the maximum possible extent.
47
As per present procedure, LOI is issued to the applicant company with a validity period of threemonths for signing of license agreement. Before signing of the agreement, “No dues" certificate isrequired from LF and WPC Unit. Sometimes, due to delay in the Issue of "No dues", the LOl getsexpired and the extension of LOI is required from Hon'ble MOC&IT. To reduce the delay andstreamline the procedure, following decisions were taken.
1. After issue of LOI, the licensing Cell shall forward a request, within a period of one week toLF & WPC Cell to provide No Dues Outstanding Dues status of the applicant company. Therequest letter shall also Include the information about the sister concerns of the applicantcompany.
2. Details of excess payment, outstanding dues, if given by the company to licensing cell, shallalso be forwarded to LF/WPC Cell along with the request letter.
3. After receipt of request for "No Dues" from Licensing Cell, LF/ WPC Cell shall provide NoDues/ Outstanding Dues status of the applicant company within a period of one month to thelicensing cell without fail. If any difficulty is foreseen to calculate outstanding dues, it shouldbe Immediately discussed with licensing cell.
4. After receipt of the outstanding dues status from LF/ WPC units, intimation will be given tothe applicant company by licensing cell to c lear the outstanding dues and execute thelicense agreement within the validity period of LOI. Intimated Outstanding dues are to bepaid by the applicant company if they are Interested in signing the license agreement.
5. LF/WPC Cell shall intimate the licensing cell about the receipt of the payment of outstandingdues by the applicant company immediately, within a period of one week from date ofpayment.
6. In general, the LOl extension should not be resorted to. However, if at all LOI extension isrequired in any exceptional case, the extension of LOI, contrary to the present practice, shallbe sought up to a period of three months from the date of approval of extension of LOI byHon'ble MOC&IT.
This issues with the approval of Secretary (T).
******
48
1-6/2001 - LFMINISTRY OF COMMUNICATIONS & IT
DEPARTMENT OF TELECOMMUNICATIONSNO 1300, SANCHAR BHAWAN, 20 ASHOKA RD., NEW DELHI 110001
(Licensing Finance Cell)
OFFICE MEMORANDUM
Dated 8th December 2003
To,The Controller of Communication Accounts,Assam, Bihar, Madhya Pradesh, Gujarat, Haryana, Himachal Pradesh, Andaman &Nicobar, Maharashtra, North East, Punjab and UP(West).
Sub: Transfer of Work Related to Licensing Finance Functions in respect ofCellular and Basic Services to the Office of Controller of CommunicationAccounts (O/o CCA) - Reg.
Ref: O.M. Dated 34-31/2000-SEA dated 30.01.2001
1. Attention is invited to the orders contained in the Office Memorandum (para 8 refers)referred to above, whereby the work relating to "Collection of License Fee in the formof Revenue Sharing from various operators on behalf of the Government” has beendelegated to the O/o CCA.
2. It has been decided that the O/o CCA would handle the work relating to collection ofLicense Fee in the form of Revenue Share in respect of Cellular Basic Services inpursuance of the above-mentioned order. In this connection the discussions held at theWorkshop conducted on 25.09.2001 on the subject may kindly be recalled. A detailedschedule of activities that are proposed to be undertaken for the smooth transition of workfrom the DOT HQ to O/o CCA is summarised below for strict compliance.
3.1 The date of effect: -The actual date of effect of transition of work to O/o CCA is 01.01.2004. The
License Fee payments, which are, collected quarterly in arrears for the financial year2003-04 due on 01.7.2003, 01.10.2003 and 01.01.2004 and 25.03.2004. It is to be notedthat the LF as RS. falling due on 01.07.03, 01.10.03 & 01.01.04 are on actualbasis. However, L. F. for the quarter of January - March is due on 25.03.04 which shall bepaid on an estimated basis and the shortfall if any shall be paid by the licensee by15.04.2004. The licensees have been allowed a further period of 15 days from the duedate for payment of License Fee. Thus the last date for payment of License Fee is 15th ofthe following month of the quarter except March. The LF section at DOT HQZ has alreadycollected the License Fee for the initial two quarters of the current financial year from
49
some of the licensees and will continue to collect the payment upto 31.12.2003. However,from 01.01.2004, the O/o CCA would be collecting the License Fee pertaining to quarterending 31.12.2003 in addition to any left over payments for the current financial year. Allshort payments pertaining to period prior to 01.04.2003 shall continue to be collected bythe DOT HQ.
3.2 Submission of Returns on Collection of License Fee: - since the collection ofLicense Fee is being monitored at the highest level, instant communication of collectionsreceived by O/o CCA to the DOT HQ is of utmost importance. It is, therefore, requestedthat as soon as the collections are received, a report (Proforma at Annexure A) is sent onthe same day by FAX followed by a postal confirmation. In addition, a Monthly report onthe collections received during the month is also required to be sent. If there are nopayments received during the month, a “NIL” report is required to be sent invariably. Itmust be ensured that the amount mentioned in the monthly report tallies with the bookedfigure under the relevant head in the CAC of the month. If there are many differences, thereasons for the same is to be furnished. The due date for receipt of Monthly Report(Proforma at Annexure B) is 5th of the following month. All payment should be in the formof DD/Pay order only.
Being high-value DD/Pay order, it May be ensured that they are deposited on thesame day and also the clearance of the same watched.
3.3 Classification of Payments: - the quantum of License Fee depends on thepercentage of Adjusted Gross Revenue (AGR) as defined in the License Agreement. Therate of License Fee is 12%, 10% and 8% in respect of circles in the category of “A”, “B”and “C” respectively. The list of Circles/Metros classified under A, B and C are furnishedin Annexure C. An apportionment of Revenue Share is to be made by classifying 5% ofthe AGR under Universal Service Obligation (USO) irrespective of any category of Circlesand remaining to License Fee is to be effected. For example, in respect of category ACircle, 7% of AGR is classified under License Fee and 5% under USO. A detailedaccount head is also furnished in Annexure C.
3.4 Maintenance of FBG: - At present Financial Bank Guarantees (FBG) andPerformance Bank Guarantees (PBG) are maintained at DOT HQ to guard against defaultof any payment or breach of any license conditions as per the provisions of the licenseagreement. All the original Financial Bank Guarantees along with the annexures etc willbe handed over to the respective O/o CCA who shall be required to personally receivethe same. However, the PBGs will continue to be held at DOT HQs. A detailed instructionon the maintenance of the Bank Guarantees is placed at Annexure ‘D’. The formats of theregisters to be maintained for the maintenance of the Bank Guarantees are alsoenclosed. Since the bank guarantees are an integral part of the License Agreement,timely renewal and proper upkeep of the Guarantees is to be ensured.
3.5 Calculation of Interest/Penalty on Delayed Payment: - According to the provisionsof the amendments signed by the licensees, interest on delayed payment of License Fee
50
at the rate of PLR + 5% is leviable. The interest shall be compounded monthly and a partof the month shall be reckoned as a full month for the purpose of calculation of interest. Inaddition, in case the amount paid on the self-assessment falls short by more than 10% ofthe payable License Fee, a penalty of 150% of the entire amount of short payment isleviable. However, if such short payment is made good within 60 days from the last day ofthe Financial year, no penalty shall be imposed. This work of computation ofinterest/penalty/short payment etc shall be done by the DOT and any demands on thisaccount shall at present be raised by the DOT.
4. Maintenance of records: - the following registers are to be maintained at the O/o CCAin order to ensure timely submission of various returns as explained above.(i) Collections Register: This register is intended to record the collections from the
licensees on day-to-day basis and format for the same is enclosed at Annexure-E.(ii) Revenue Share Register: This register is intended to record the AGR as per affidavit
and the Revenue Share payment for each quarter. This register is maintainedservice-wise/license-wise. This register forms the basis for finalization of revenueshare at the year-end. The format for the same is enclosed at Annexure-F.1. Bank Guarantee Register: The details of FBG of the licensees are recorded in aregister for monitoring purposes. Any extension or replacements are recorded in theregister. The format of this register is given at Annexure-G.
5. List of documents to be handed over to the O/o CCA: - The following documentswill be handed over to the representative of O/o CCA who shall personally receive thesame under accuitance.
1. Details of Revenue Share collected pertaining to Financial Year 2003-04Circle/Licensee-wise.
2. Affidavits/quarterly statements furnished by the licensees for the 1st two quarters ofthe current financial year.
3. Copies of license agreements/amendments signed by the licensee.4. Original FBG along with extension letters, if any.
6. Revenue Share from MTNL/VSNL/VSNL: - All transactions relating to theseorganisations shall continue to be dealt at the Headquarters itself and it is not proposed todecentralize the work relating to these units at this stage.
7. Time Schedule: - The collection of revenue share from the licensees at O/o CCA is tocommence from 01.01.2004. Hence all the Heads of O/o CCA are requested to arrangefor collection of their above-mentioned documents from DOT Headquarters, NewDelhi. Doubts regarding the modalities shall also be clarified to the representativedeputed here. A separate communication in this regard shall follow.
8. License agreement & Amendments thereof: - it must be ensured that the licenseagreement and the amendments thereof are thoroughly studied. Notwithstandinganything contained in this letter, the terms and conditions as stipulated in the License
51
Agreement and amendment thereof with particular emphasis on the financial conditionsmay be adhered to scrupulously.
9. Powers to be exercised by O/o CCA vis-a-vis a week the Licensees:- No actionshall be initiated by O/o CCA in terms of the conditions of the License Agreement and itsamendments thereof except for invocation of the Financial Bank Guarantees in case of itsnon-renewal and non-payment of License Fee. Such powers shall be exercised only withthe approval of the head of the O/o CCA. However, any action for encashment of FBGsfor non-payment of License Fee may be taken after due approval of this office. Intimationregarding initiation of such action shall invariably be reported to the DOT HQ.
-s/d-(S.K.KAUL)
ASST. DIRECTOR GENERAL (LF-II)Tel: 23372251 FAX 23372044
Copy to,1. Sr PPS to Chairman Telecom Commission2. Sr PPS to Member (Finance)/ Member (P)3. Advisor (F)4. DDGs FEB/SEA/TPF/Accounts/VAS/BS5. Director (LF)/Director (TA-I) DOT HQ
52
No. 13-1/2003 Vol. IVGOVERNMENT OF INDIA
Ministry of Communications & ITDepartment of Telecommunications
Sanchar Bhawan, 20-Ashoka Road, New Delhi-110001.
Dated, the 19th January 2004
ToAll Basic/Universal Access Services Licensees
Sub: Amendment in the Licence Agreement for Basic/Unified Access Services Licenceswith respect to Licence Fee.
The undersigned is directed to convey the approval of competent authority for amendmentin the licence agreement in respect of licence fee and with effect from 01.04.2004, the licence feeshall be payable at a revised rate given below:-
Service Area Present Rate ofLicence Fee
Revised Rate ofLicence Fee
Delhi, Mumbai, Chennai, Kolkata, Andhra Pradesh,Gujarat, Karnataka, Maharashtra, Tamil Nadu
12% of AdjustedGross Revenue
10% of AdjustedGross Revenue.
Haryana, Kerala, Madhya Pradesh including Chattisgarh,Punjab, Rajasthan, UP(W) including Uttaranchal, UP(E)West Bengal
10% of AdjustedGross Revenue
8% of AdjustedGross Revenue.
Andman Nicobar, Assam, Bihar(including Jharkhand),Himachal Pradesh, Jammu & Kashmir, North East,Orissa
8 % of AdjustedGross Revenue
6 % of AdjustedGross Revenue.
Note: In respect of Basic Services, Mumbai is included in Maharashtra services area, Chennai isincluded in Tamil Nadu Services Area and Calcutta is included in West Bengal Servicearea. Further, in respect of Cellular and Unified Access services Licence, Andaman &Nicobar is a part of West Bengal Service area.
2. Other terms and conditions of the licence agreement remain unchanged.
(SUKBIR SINGH)Director (BS.II), DOT
T.No. 20306387Copy to:The Secretary, TRAI, New DelhiODG(LF), DOT, New DelhiABTO/COAI for information pl.
53
1-6/2001-LFDepartment of Telecommunication
1300 (B), Sanchar Bhawan, 20 Ashoka Road,New Delhi-110001 (Licensing Finance Cell)
Office Memorandum
Dated: 28.05.2004
To,The Controller of Communication Accounts/ Jt. Controller ofCommunication Accounts,Kerala
Sub: Transfer of work relating to licensing finance functions in respect NEW UASL to theOffice of Controller Communication Accounts (O/O CCA) and review of instruction - Reg.
Ref: (1) 1-612001-LF dated 08.10.2002(2) 1-6/2001-LF dated 06.12.2003(3) 1-G12004-FBG dated 16.02.04
1. Attention is invited to the Office Memorandum referred to at (1) and (2) above, wherebythe work relating to collection of license fee in the form of revenue share andmaintenance of Financial bank Guarantees in respect of various Basic and Cellularlicenses was decentralized to the respective offices of Controllers CommunicationAccounts (CCA)
Subsequently, all the Basic Service licenses have migrated to Unifield Access ServiceLicensing Regime (except BSNL and MTNL). Several new Unifield Access Serviceslicenses have also been issued.
It has therefore been decided that, the collection of license fee and maintenance ofFBG's in respect of new Unifield Access Service Licenses, in addition to existing Basic(now migrated to UAS) and Cellular license, will also be handled by the respective officesof the CCA or Jt. CCA with immediate effect.
2. Para 3.2 of this OM dated 8th Dec'2003 (reference 2 above) may be seen. Thelicensees have to make License Fee payments by Dem and Drat or Fay Order. Thesepayments being of high value must be deposited promptly in the concerned Bank(preferably on the same day) and the credits personally monitored by the head of theunit.
From June 2004 onwards, information about the date of receipt of license fee, dale ofdeposit to the Bank and affording of credit by the Bank in respect of each receipt of thepast month should be sent to DOT HQ. The existing proforma for the monthly statementof augmented to include the information.
3. Instances have come to the notice of this office where quarterly payments from licenseeshave been refused on the plea that these were not supported by Affidavit and AGRstatement, it is clarified that under no circumstances should be license fee payments berefused . However, the license shall be immediately handed over a letter informing him of
54
his lapse and asking him to submit the required prescribed documents within a week. Asample format is enclosed herewith
4. Your attention is further invited to this office letter under reference at (3) above. Inaddition to the instructions therein you are required, for more effective controlover Financial Bank Guarantees, to ensure that the Bank Guarantee Register isreviewed periodically by yourself and other officers with at least a monthly review by youas the head of the Unit. A monthly report should be sent to DOT HQ in the from ofcertificate from the head of the CCA unit, stating that Bank guarantees have beenreviewed during the month and there have been no lapses in this regard. This reportshould invariably be sent in the first week of following month.
5. Computation of the FBG amount- Practice presently followed to compute the amountof FBG is that the highest amount of Quarterly license fees paid by a licensee in theprevious four quarters is multiplied by two and this resultant amount is enhanced by10% to provide for expected growth in gross revenue of Licensee Company in future. Ithas been decided by the competent authority that henceforth an arithmetic mean, of thequarterly amounts of license fee paid by the operator during the last four quarters, betaken as the base, (instead of the highest quarterly license fee), multiplied by two andthe resultant enhanced as usual by 10% to arrive at the quantum of FBG to bedemanded from the operator at the time of review.
The amount may be issued upwards in case the department be carried out on a halfyearly basis; This will be applicable to all licensees under the revenue- sharing regime.
With regard to reduction of FBG amounts followings the reduction of license feepercentages announced by the Government (ranging from 2% to 4% of the AGR ) for theCellular, UASL and Basic service licenses with effect from 1st April' 2004, theamounts of FBGs of these licensees are to be reviewed on the lines suggested aboveimmediately. The outcome of such review in view of the reduction in the rates of licensefee may however be implemented for a licensee only after ensuring that licensee haspaid his dues upto date.
6. The heads of the Communications Accounts Units are also required to reconcile thelicense fee collected as stated out in the monthly report with that recorded in theaccounts of the Unit. You are also requested to prepare a statement of suchreconciliation for the year 2003-04 and forward the same to HQ within a fortnight.
7. The quarterly Affidavits and the AGR statements submitted by the licensees may besent to HQ within a fortnight after retaining the original in your office. The copy sent heremay be duly authenticated.
8. All other past instructions remain unchanged except for those as stated above.
Asst. Director General (LF–III)Encl : As above.
Enclosure as referred in para 3
55
Enclosure:
Department of Telecommunications
O/O the CCA
Sub: Submission of accounting documents-
We have received an amount of Rs. ………. towards the license fee for the period
………….. in respect of the license no ……… dated ……………..
It is noted that, the affidavits and / or AGR statement as required under condition the
license agreement has not been submitted.
You are directed to submit the documents within a week, failing which the department
will take suitable action as deemed fit under the license conditions.
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Department of Telecom
Licensing Finance Branch
No. 1-6/2004-LF dated 30.01.2004
Sub: Workshop with the CCAs on the 6th February 2004.
A few important issues are stated below or enclosed
1. The programme schedule is as enclosed.
2. Accommodation, transit/travel can be organized between 5/2/04 and 7/02/04
3. A draft of important issues and queries and suggested course of action is also enclosed.
4. Officers may also indicate their main-id during the workshop.
5. Further queries may be directed at the following main-ids so that the same can be taken
up during the workshop.
The officers are accordingly requested to attend the workshop.
Surajit Mandol
Director LF II
To All CCAs
57
DRAFT
Brief for the workshop with the C C As
A. Collection of licensee fee - salient features
Quarterly in Arrears by the 15th of the following month of the particular quarter Last quarter payment has to be made on self-estimation basis in advance by the
25th of March, with the outer time limit of 15th April following the year for balance ifany. However the amount payable on 25 th of March shall not be less than theamount paid in the preceding quarter.
Affidavit shall be submitted by the operators while making L fee payments in all quarters. Submission of returns as prescribed indicating Rate of licensee fee, category of circle and
category of operators and date of payment.
(i) Daily statement in case nay payment is received.(ii) Monthly statement even if it is NIL
That reported collections through these returns should also tally with the monthly accounts.Differences if any shall be necessarily explained.
B. Maintenance of FBGs Procedure is now uniform for all cellular and BSO who have migrated to UASL. Double of highest quarter L fee + 10% Renewal of BG one month prior to the expiry. Registers have to be maintained with adequate details
(i) Revenue share register(ii) Collection register(iii) Bank Guarantee Register.
C. Introduction of UASL - a brief Option given to existing Basic operators either to continue under existing conditions or to
migrate to UASL. Entry fee paid by the BSOs migrating, no entry fee for cellular operators. Any technology can be deployed for providing limited mobility /full mobility services. The Service area for UASL will be as per existing 4th cellular licenses. This means that in
case of an operator migrating from BSO to UASL in Tamil Nadu, Maharashtra and WestBengal will have to take 2 UASL licenses.
Defined within the same service area and with existing / allocated spectrum. Roll out; licensee fee and PBGs under UASL will be same as 4th cellular. The financial conditions are as per fourth cellular. That means the FBGs, PBGs LD etc will be as per 4th cellular. The definitions of AGR or method of arriving at the correct value of FBG based on the
quarterly license fees. Henceforth new access service license will be in the category of UASL,
D. Credits available with DOT due to Supreme Court Judgment
Some credits were available as on 03.03.2003 with respect to various operators, whichwere duly intimated to the concerned CCAs, where decentralization has already been donefrom 01.01.2003. As on date no further credits are available.
E. Future Plans for decentralization
58
Decentralization of same set of functions with respect to ISP, PMRTS and CommercialVSAT.
The method of levy and procedure for Captive VSAT have to be firmed up Decentralization of PBGs Finalization of Accounts
F. Rates of licensee Fee
Category Rates of revenue share
Upto 31.03.2004 From 01.04.2004
A Cellular 12 10
A Basic 12 10
B Cellular 10 8
B Basic 10 8
C Cellular 8 6
C basic 8 6
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G. Issues raised by the CCAs’
Queries have been received from the CCA, offices regarding various aspects of license fee
collection and maintenance of FBGs. The same are tabulated below along with suggested
course of action to be followed.
Query Proposed Course of action
In view of UASL migration, several BSOsincluding Reliance have submitted BankGuarantees, which are of much less amountthan what was maintained earlier
Query received from UP, Delhi,Hyderabad, Chennai
Under UASL the conditions ofFBGs also is as per 4'r' Cellular. Incase of 4th cellular the initial FBG isfor an amount of Rs. 50/25/5 crore(for category A,B,C respectively )for the first year and thereafter is tobe reduced to 10% of the originalvalue. On a regular basis theamount of FBG shall be equal to anamount equivalent to Z quarterslicense fee+10%. For two- quarterestimate we have to take doublethe highest quarter license fee ofpast one year.
In all these cases of migration thelicensee have already crossed oneyear as all the licenses wereallotted during July / August 2001.The FBGs therefore will need to beexamined based on the aboveclarification. However, in casewhere BSO have not migrated, theconditions in the BSO) licenseagreements will prevail.
Some units have asked for DOT HQ to certify orauthenticate the AGR, such that they candetermine the correct amount of FBG.
Issued raised by Hyderabad
Under the license conditions, theoperators are to submit quarterlyAGR with an affidavit. Thusquarterly payments are receivedonly with operator certification.There is no further certificationdone on part of DOT during thecourse of the year. While theaccounts are finalized at the end ofthe year, once all necessarydocuments are received then onlyDOT can take a stand on the AGRdisclosed by the company for theyear.
Only at this stage the operatorsubmits a statement of AGR for thewhole year alongwith reconciliationstatement for the year, dulycertified by the company's auditor.
60
After receipt of a FBG fo r a particular amountand valid for next one year, it is found that theAGR of the immediate following quarter ishigher than what has been the basis for theFBG. Under what circumstances and additionalFBG is to be obtained from the operator.
Query received from Hyderabad
We shall ask for additional FBG in casethere is a quantum jump in theLicense Fee in a particular quarter.In order to have uniformity DoT willdefine what is to be deemed asquantum jump. Say 25% can beconsidered for quantum jump.
Whether penal interest is to be levid by the CCAsfrom the operators in case the quarterly licensefees have been paid beyond the stipulated dates
Query received from Hyderabad
While the CCA are receiving thequarterly payments, it is not knownwhether any earlier credit isavailable wi th the department withrespect to the particular operator.Only after knowing the factualposition of dues and settlement ofsuch dues, a view can be taken onthe issue of penal interest. At thesame time the present workdelegated to the CCAs is onlyrelating to the collection of licensefee.The issue of penal interest issettled at DOT HQ. If, howeverthe operator pays the penalinterest proper accounting has tobe done by the CCAs. CCAs neednot issue any demand for penalinterest.
Operator has disputed the amount of FBG for anamount twice of highest quarter license fee+10%.
Refereed from Chennai office
The licensor have sole right (withinthe license agreements) to decideon the amount of FBG to securitiesthe dues to the Government. Thusthe decision of DOT to have anFBG as described is within thelicense conditions and theoperator has to abide by thesame.
Thus the claim of CCA for anappropriate License Fee is in order.
Whether there can be a reduction in the quantumof FBG in view of the reduction in the rates ofrevenue share.
Raised by operator
Normally a Bank Guarantee ismaintained and reviewed on ayearly basis. As such the quantumof Bank- Guarantee is not linked tothe rates of revenue share but the
61
actual revenue share (i.e thequarterly license fee paid )
However, since the licensee feerates will be going down by 20% onan average, the FBG can be -revised accordingly, -but-afterwatching the 1st quarter Revenueshare of next financial year(Proposed )
Credits available with respect to variousoperators in view of SC judgment.
Raised by some CCAs, wheredecentralization was done earlier.
The credits available were intimatedto concerned CCAs. As on date,however no credits are available .So operator has to make regularpayments end no adjustments areenvisaged further in any circle.
Audit has raised queries on various inclusionsand exclusions in AGR and revenue share.
Raised by Karnataka
The finalization of AGR and revenueshare is done at DOT. Therefore,CCAs are to take no action and thesame can be intimated to Audit.
Credits due to refund of Liquidated Damages
Raised by Andhra
In case of some Basic operatorssome additional credit has becomeavailable due to decision to refundLD levied earlier. This is to beadjusted against the LF dues, theadjustment is in order andaccounting will be completed byDOT. The position as explained bythe operator (TATA) is acceptable.
Some queries have been received regardingclaims to be raised on captive VSAT and forOFC/microwave links.
The same is handled so far by eitherLR branch and earlier by CGMs inBSNL. Clarifications may have to beobtained from LT directly.
62
GOVERNMENT OF INDIAMinistry of Communications & IT
DEPARTMENT OF TELECOMMUNICATIONS(LICENSING FIN AN CE BRANCH)Room No. 718, Sanchar Bhawan,
2 0 - As h o k a R o a d , New Delhi – 110 001.
No. 17-20/2003/LF Dated: 9-3-2005
T oThe Chairman & Managing Director,BSNL, Corporate office, Statesman House, : .New Delhi – 110 001.
Sub:-Payment of License fees for the 4th quarter of financial year 2004-2005.Ref: DOT letters of even number dated 29.12.2004 and 28.02.2005
Sir,I am directed to reiterate that II future payments of License Fee, including the
payment for 4th quarter of financial year 2004-05, be made only through Demand Draft/Payorder, as per licence conditions, to concerned CCAs (as per list attached). This decisionalready stands communicated vide Secretary, DOT's DO No. 17-20/2003-LF (BSNL)(Pt.l)dated 29.12.2004.
As regards the revenues generated by units other than those corresponding tos e rv ic e Areas (for example, project circles, maintenance circles, corporate office, etc.)andwhich revenues form part of the AGR of the access services as per the Licence Agreements,you may designate the Service Area ,(Territorial Circles) who shall be responsible toincorporate the same in their AGR statements and pay Licence fee accordingly. A copy ofyour circle in this regards may also be endoresed to the CCAs as well as this office forinformation. The basis of calculation of AGR and licence fee shall be distinctively furnished inrespect of each Licence (Service Area).
For services other than Basic and Cellular (for example, NLD, ILD, VSAT, etc.) forwhich the Service Area is all-India, the payment of Licence Fee shall be made in the office ofCCA (Delhi) at prescribed rates, together with the prescribed statements.
A consolidated statement of payments (with Service Area/Licence wise break-up)indicating the CCA where payment is being made/has been made may also be furnished bythe end of the month, in which the quarterly licence fees fall due.
Director (LF-II)Phone: 23717111
Fax: 2337244
Copy to: -
1. DDG (Accounts) BSNL, Corporate Office, New Delhi2. All Controllers of Communication Accounts for information and necessary action
63
Department of TelecomL F Branch
15-7/22/LF (BG)/Vol I I dated 14.3.2005
To,All Controller / Jt. Controller of Communication Accounts.Department of Telecom, Orissa Telecom Circle
Sub: Review of payments and Bank Guarantee-reg.
This is regarding review of Financial Bank Guarantees and License fee collections inrespect of Basic, UASL (Unified Access Service License) and Cellular Licenses. In thisregard you are requested to refer to the list of these license as in Annexure I and AnnexureII to this letter. At present the license fees collection in respect of these license; (except BSNLand MTNL) as also the maintenance of the Financial Bank Guarantees are handled by therespective CCAs.
2. Member (Finance), Telecom Commission, in a review meeting taken in February2005 have expressed his concern about the mechanism of and control over the work ofobtaining, appropriately reviewing and reviewing of the Bank Guarantees (both Financial aswell a performance Guarantees) in DOT headquarters as also as also in the CCA units ofDOT. While he has been informed that clear instructions exist in respect of each of theseactivities in terms of the instructions issued from DOT Hq. and the terms and conditions ofthe licenses, he has directed to carry out a complete review of the Bank Guarantees.
3. The CCA offices (which are collecting the license fees and maintaining theFinancial Bank Guarantees) shall therefore carry out a complete review, which shall coverthe following three aspects--.
a. Whether valid financial Bank Guarantees are available in respect of each of thelicensees in a particular service area, for which the CCAs are entrusted with the work ofcollection of license fees and also indicating any instance of lapse/default and correctiveaction taken thereof.
b. Whether the bank Guarantees furnished are in the prescribed format and Whetherthese have been furnished from Scheduled Banks, indicating corrective action taken in casedeviation. (NB : The prescribed proforma are available-in the License Agreement itself)
c. The adequacy of the amount of BG vis-a-vis the prescribed norms and extantinstruction and indicating corrective action taken in the event of any default and/or deviation.
d. Apart from the above, you are also directed to carry out a compilation -Month-wiseand license-wise, of amounts of fee received from the operators since the beginning of 2004-05 and the amount as available in your monthly cash Account Current.
5. As regards the review of FBGs maintained by your office, the report shall be furnishedin the proforma as annexed to this letter as annexure III, together with suitable comments
64
and explanatory statements wherever required. The report with regard to license feecollection shall be prepared as per the proforma annexed to this letter as Annexure IV. Thefirst report (i.e. regarding FBGs) shall be furnished without fail be submitted by 31st of March2005.
Director LF
Encl.: as above
65
A BASIC SERVICE LICENCES MIGRATED TO UASLM/S Tata Teleservices Ltd. Tamil Nadu 10-17/2004-BSLL/TTSL/T.N. A
Karnataka 10-9/2004-BSLL/TTSL/KTK AAndhra Pradesh 10-2/2004-BSLL/TTSL/A.P. AGujarat 10-5/2004-BSLL/TTSL/Delhi ADelhi 10-21/2004-
BSLL/TTSL/ChennaiMetro
Chennai (New) 10-20/2004-BSLL/TTSL/Chennai
Metro
Bharti Infitel Ltd. Madhya Pradesh(UASL)
10-11/2003-BSLL/BITL/MP B
M/S Shyam Telelink Ltd. Rajasthan 10-16/2004-BSLL/STL/Raj. BM/S Tata Teleservices (Maharashtra)Ltd.
Maharashtra 10-12/2004-BSLL/TTSL/MHA AMumbai (New) 10-23/2004-
BSLL/TTSL/MumbaiMetro
M/S HFCL Infotel Ltd. Punjab 10-15/2004-BSLL/HFCL/Punjab
B
M/S Reliance Infocomm Ltd. Gujarat 10-5/2004-BSII/RIL/Gujarat AAndhra Pradesh 10-2/2004-BSII/RIL/A.P. AKarnataka 10-9/2004-BSII/RIL/KTK AMaharashtra 10-12/2004-BSII/RIL/MHA AMumbai 10-23/2004-BSII/RIL/Mumbai MetroPunjab 10-15/2004-BSII/RIL/Punjab BRajasthan 10-16/2004-BSII/RIL/RAJ BOrissa 10-14/2004-BSII/RIL/Orissa CMadhya Pradesh 10-11/2004-BSII/RIL/MP BTamil Nadu 10-17/2004-BSII/RIL/TN AChennai (New) 10-20/2004-BSII/RIL/Chennai MetroBihar 10-4/2004-BSII/RIL/Bihar CWest Bengal 10-1/2004-BSII/RIL/WB BKolkata (New) 10-22/2004-BSII/RIL/Kolkata MetroKerala 10-10/2004-BSII/RIL/Kerala BUP(East) 10-20/2004-BSII/RIL/UP(E) BH.P. 10-7/2004-BSII/RIL/HP CUP(West) 10-1/2004-BSII/RIL/UP(W) BHaryana 10-6/2004-BSII/RIL/Haryana BDelhi 10-21/2004-BSII/RIL/Delhi Metro
B. Ne UASL LicencesM/S Tata Teleservices Ltd. West Bengal 20-201/2003-TATA/BSIII B
Kolkata (New) 20-222/2003-TATA/BSIII MetroBihar 20-204/2003-TATA/BSIII CHaryana 20-206/2003-TATA/BSIII BHimachal Pradesh 20-207/2003-TATA/BSIII CKerala 20-210/2003-TATA/BSIII BMadhya Pradesh 20-211/2003-TATA/BSIII BOrissa 20-214/2003-TATA/BSIII BPunjab 20-215/2003-TATA/BSIII BRajasthan 20-216/2003-TATA/BSIII BUP(East) 20-219/2003-TATA/BSIII BUP(West) 20-218/2003-TATA/BSIII B
66
M/S Bharati Cellular Ltd. West Bengal 20-201/2003-BHARAT/BSIII BBihar 20-204/2003-BHARAT/BSIII CJammu & Kashmir 20-208/2003-BHARAT/BSIII CUP(East) 20-219/2003-TATA/BSIII BOrissa 20-214/2003-TATA/BSIII B
M/S Bharati Televentures Ltd. Assam 20-203/2004-TATA/BSIII CM/S Reliance Infocomm Ltd. Jammu & Kashmir 20-208/2004-Reliance/BSIII CM/S Dishnet DCL Ltd. West Bengal 20-201/2004-Dishnet/BSIII B
Assam 20-203/2004-Dishnet/BSIII CBihar 20-204/2004-Dishnet/BSIII CHP 20-207/2004-Dishnet/BSIII CJ&K 20-208/2004-Dishnet/BSIII CNE 20-223/2004-Dishnet/BSIII COrissa 20-214/2004-Dishnet/BSIII C
M/S Hutchison Essar South Ltd. WB 20-201/2003-HUTCH/BSIII BUP(W) 20-218/2003-HUTCH/BSIII B
26 Existing Basic service Licences migrated to Unified Access Service Licence RegimeBasic licence of A&N service area is being treated as a part of West Bengal Licence.Mumbai, Chennai & Kolkata is treated as separate licence from Maharashtra, Tamil Nadu& Chennai respectively under the new UASL licence regime. All UASL licences areeffective from 21st Nov. 2003.
4 Old basic service licences (Haryana, Delhi, Karnataka and Tamil Nadu) of M/S BharatiInfotel Ltd. Have not been norrated to UASL and the same have been surrendered by thecompany.
For all the above licences, the licence fee 10%, 8% and 6% of AGR for Metro & CategoryA, Category B & Category C of Service Areas respectively.
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A list of Licence fee payable by different licensees for their CMTS Licence AgreementS.
No.Name of licensee Service Area (Mero
City/Telecom Circle)Cate-gory
Revenueshare
1. Aircel Digilink India Ltd. Haryana B 6%2. Aircel Digilink India Ltd. Rajasthan B 6%3. Aircel Digilink India Ltd. UP(E) B 6%4. Aircel Ltd. Tamilnadu A 8%5. Bharat Sanchar Nigam Ltd. AP A 10%6. Bharat Sanchar Nigam Ltd. A.N. & W.B. B 8%7. Bharat Sanchar Nigam Ltd. Assam C 6%8. Bharat Sanchar Nigam Ltd. Bihar C 6%9. Bharat Sanchar Nigam Ltd. Chennai A 10%10. Bharat Sanchar Nigam Ltd. Gujarat A 10%11. Bharat Sanchar Nigam Ltd. Haryana B 8%12. Bharat Sanchar Nigam Ltd. HP C 6%13. Bharat Sanchar Nigam Ltd. J&K C 6%14. Bharat Sanchar Nigam Ltd. Karnataka A 10%15. Bharat Sanchar Nigam Ltd. Kerala B 8%16. Bharat Sanchar Nigam Ltd. Kolkata A 10%17. Bharat Sanchar Nigam Ltd. MP B 8%18. Bharat Sanchar Nigam Ltd. Maharashtra A 10%19. Bharat Sanchar Nigam Ltd. NE C 6%20. Bharat Sanchar Nigam Ltd. Orissa C 6%21. Bharat Sanchar Nigam Ltd. Punjab B 8%22. Bharat Sanchar Nigam Ltd. Rajasthan B 8%23. Bharat Sanchar Nigam Ltd. Tamilnadu A 10%24. Bharat Sanchar Nigam Ltd. UP(E) B 8%25. Bharat Sanchar Nigam Ltd. UP(W) B 8%26. ** Bharati Cellular Ltd. Chennai A 10%27. ** Bharati Cellular Ltd. Gujarat A 10%28. ** Bharati Cellular Ltd. Haryana B 8%29. ** Bharati Cellular Ltd. HP C 5%30. ** Bharati Cellular Ltd. Kerala B 8%31. ** Bharati Cellular Ltd. Kolkata A 10%32. ** Bharati Cellular Ltd. MP B 8%33. ** Bharati Cellular Ltd. Maharashtra A 10%34. ** Bharati Cellular Ltd. Mumbai A 10%35. ** Bharati Cellular Ltd. Tamilnadu A 10%36. ** Bharati Cellular Ltd. UP(W) B 8%37. ** Bharati Cellular Ltd. Delhi A 10%38. Bharati Mobile Ltd. AP A 8%39. Bharati Mobile Ltd. Karnataka A 8%40. Bharati Mobile Ltd. Punjab B 6%41. BPL Mobile Cellular Ltd. Kerala B 6%42. BPL Mobile Cellular Ltd. Maharashtra A 8%43. BPL Mobile Cellular Ltd. Tamilnadu A 8%44. BPL Mobile Cellular Ltd. Mumbai A 10%45. BTA Cellcom Ltd. MP B 6%46. Escorts Telecommunications Ltd. HP C 8%
68
47. Escorts Telecommunications Ltd. Rajasthan B 8%48. Escorts Telecommunications Ltd. UP(E) B 6%49. Escorts Telecommunications Ltd. Haryana B 6%50. Escorts Telecommunications Ltd. Kerala B 6%51. Escorts Telecommunications Ltd. UP(W) B 8%52. Fascel Ltd. Gujarat A 5%53. Hexacom India Ltd. NE C 6%54. Hexacom India Ltd. Rajasthan B 10%55. Hutchinson telecom East Ltd. Kolkata A 10%56. Hutchison Essar South Ltd. AP A 10%57. Hutchison Essar South Ltd. Chennai A 10%58. Hutchison Essar South Ltd. Karnataka A 8%59. Hutchison Essar Telecom Ltd. Punjab B 10%60. Hutchison Essar Telecom Ltd. Delhi A 10%61. Hutchison Essar Telecom Ltd. Mumbai A 8%62. Idea Cellular Ltd. AP A 10%63. Idea Cellular Ltd. Delhi A 8%64. Idea Cellular Ltd. Gujarat A 8%65. Idea Cellular Ltd. Maharashtra A 10%66. Mahanagar Telephone Nigam Ltd. Delhi A 10%67. Mahanagar Telephone Nigam Ltd. Mumbai A 10%68. Reliance Telecom (P) Ltd. Kolkata A 5%69. Reliance Telecom (P) Ltd. A.N. &W.B. C 5%70. Reliance Telecom (P) Ltd. Bihar C 5%71. Reliance Telecom (P) Ltd. HP C 6%72. Reliance Telecom (P) Ltd. MP B 5%73. Reliance Telecom (P) Ltd. NE C 5%74. Reliance Telecom (P) Ltd. Orissa C 5%75. Reliance Telecom (P) Ltd. Assam C 10%76. RPG Cellular Services Ltd. Chennai A 8%77. Spice Communications Ltd. Karnataka A 6%78. **Spice Communications Ltd. Punjab B
69
Annexure-IIICCA Office
S.No.
LicenseName
LicenseNo.
ServiceArea
Categoryof Service
Bank Guarantee Details Case ofDefault/Lapse ofBank Guarantee
Remarks
Amount Bank Periodof
Validity
Note: One Licensee would have furnished more than one instrument totalling to the requiredamount, such cases should be indicated distinctly.
70
Annexure-IVCCA Office
Licensee Details Month Apr-04
May-04
Jun-04
Jul-04
Aug-04
Sep-04
Oct-04
Nov-04
Dec-04
Jan-05
Feb-05
Mar-05
License Name(say XXX)/Service
Area/Type of Service
Amount Paid
Date of PaymentDescription of
PaymentLicense Name
(say XXX)/ServiceArea/Type of Service
Amount Paid
Date of PaymentDescription of
Payment**
**
**
Total amount for themonth
Amount as in thecash book/monthly
cash account currentDifference if any
Reasons fordifference
71
1 - 6 / 2 0 0 1 / L F ( V o l . I I )M I N I S T R Y O F C OM M U N IC AT IO N S & I T
DEPARTMENT OF TELECOMMUNICATIONSSANCHAR BHAWAN, 20 ASHOK ROAD, NEW DELHI – 110 001
(Licensing Finance Cell)
OFFICE MEMORANDUM
Dated – 24th September, 2008
To,The Sr. Controller/Controller/Jt. Controller,Jt. Controller of Communications Accounts
Sub: Transfer of work relating to Licensing Finance functions in respect ofcertain NLD, ILD, PMRTS, CMRTS, and VSAT Commercial S e r v ices to theOffice of Sr. Controller/ Controller of Communication Accounts – Reg.
Ref: O.M No. 34-31/2000-SEA dated 30.01.2001O.M No: 1-6/2001-LF dated 8.10.2002O.M No. 1-6/2001-LF dated 8.12.2003O.M No. 1-6/2004/FBG dated 16.2.2004O.M No. 1-6/2001-LF (Vol. II) dated 21.11.2005O.M No. 15-10/2006/LF dated 20.3.2006O.M No. 1-28/2006/LF dated 21.9.2006
Attention is invited to the above-mentioned memorandas wherein various worksof Licensing Finance have been transferred to the Sr. CCA/ CCA/Jt.CCA offices. It hasbeen decided by competent authority to further transfer the following items of workrelating to Licensing Finance.
A. Assessment and Collection of License Fee in respect of those licensees providingonly NLD and/or ILD, PMRTS, CMRTS, VSAT Commercial Services, and ISP Services.The list of such licensees and the Sr. CCA/ CCA/Jt.CCA office to whom the work has beenassigned is at Annexure-I.
The work relating to Assessment and collection of Licence Fee in respect ofabove-mentioned licences will be effective from the Financial Year 2008-09. The detailsof Licence Fee collected by the LF Branch at DOT (HQ), for the year 2008-09, in respectof the above-mentioned licences will be handed over to the concerned CCA office at thetime of handing over of other relevant records including BGs and respective LicenceAgreements.
72
The definition of Gross Revenue/Adjusted Gross Revenue has been specified for eachlicence separately since the revenue s t reams and applicable deductions may vary.Therefore, each Licence Agreement may he carefully examined to arrive at the correctassessment of the Licence Fee payable by a Licensee. In the case of CMRTS, theLicence Fee is based on fixed charges per terminal on per annum basis.
A.1 Check list of Annual Assessment of License Fee
A.1.1 Licensees are required to submit the following documents in support of the
Licence Fee paid by them.
(i) Audited Annual Accounts
(ii) Quarterly audited AGR statements(iii) Audited Reconciliation statements reconciling the revenue reported in
the quarterly statement of revenue and license fee and audited
annual accounts.
(iv) Audited Operator-wise details of pass through and roaming charges
claimed as deductions.
(v) Audited Details of service tax, sales tax billed collected and paid etc.
its defined in the license agreements.
A.1.2 The `Gross Revenue' reported (defined in the concerned License Agreement)
is to be first reconciled with the Revenue appearing in the P&L Account of
the company. While reconciling revenue figures appearing in the Audited
Balance Sheet/ P&L Accounts of the company with the Audited AGR
statements submitted by the licensees, the following schedules/reports
attached with the accounts should be reviewed at least with reference to
revenue/income recognition of the company:(a) Accounting Policies.
(b) Notes on Accounts.
(c) Auditors Reports and Management's reply thereto.(d) Schedule relating to Other Income.
(e) Schedule relating to Finance Expenses from where related items of income
have been netted off.
73
It should be seen(i) Whether as per the accounting policy, sales/ services, etc. are net of rebates/ discounts
or not.
(ii) Whether there is any other policy, which affect the revenue of the licensee.
(iii) Whether there is any adverse comment in the Auditors report, which is in contravention
of accounting policies/ Companies Act and affect the revenue of the company, if so the
effect of such accounting treatments be considered and added to the Gross Revenue.
A.1.3 Prior Period Adjustments (PPA)
(i) Since this schedule contains entries of both debits and credits, and there may be a net
debit balance, we have to examine the credit entries and include in the AGR.
(ii) Some companies show PPA as net; in such case we have to ask for the details from
the company in order to know the credit amounts.
A.1.4 Schedule of "Other Income"
It should be ensured that all income, which relates to the revenue of the company as per the
definition of 'Gross Revenue' in the license agreement, is added.
A.1.5 Schedule of Income from various Services:
In case where a single company has multiple license of multiple service categories, it shouldbe ensured that the separate Gross Revenue/ AGR are computed for each type of license andalso for each circle and revenue which is not attributable to any specific service is distributed/allocated in the 'ratio of revenue from each service. This is required to arrive at the correctlicense fee as the license fee rates vary from license to license and Service Area to ServiceArea for different type of services
74
A. 1.6 Installation chargesIt should be checked that installation charges, if any, received from the subscriber are
accounted for as `Income' and not adjusted against cost thereof
A.1.7 Netting of expenses against income/ or netting of income against expenditureSince, as per agreement set off or netting of any expenditure is not allowed, it should be
seen that no netting of any expenditure/ income in any of the revenue head is done.
A.1.8 Revenue from unlicensed activitiesIf a company is engaged in multi-business activities/ multi-license activities, they exhibit
details of income derived from various activities separately in a schedule. For multi-
business activities, non-telecom business revenue is kept outside the purview of AGR and
revenue, which is not attributable to any specific activity, is allocated in the ratio of earning
of telecom business.
1.1.9 Revenue from sales/ servicesIt should be ensured that services/sales etc. is not net of rebates, discounts, etc. If a
company has given the net figures, the derails of rebate/ discounts allowed should be
asked for and the amount of such discount/rebates not approved by TRAI be added to
Gross Revenue.
A.1.10 It should be ensured that due credit of following items, which are normally left out,
is taken in to account for arriving at the AGR.
(i) Gains from foreign exchange credited in P&L account.
(ii) Proceeds from insurance credited to P&L account.
(iii) Liquidated damages.
(iv) Miscellaneous income including interest, dividend, rent, profit on sale of
Assets/investments etc.
75
(v) Interest/ dividend or any other income set off through expenditure
schedule.
(vi) Interest on income tax refund.
(vii) Discount and waivers which are at the post billing stage and not
covered under the TRAI approved tariff plans.
(viii) Prior period credits (only income/ revenues) are to be taken as revenue.
(ix) Unreconciled amounts of such income classified to be part of corporate
income.
(x) Profit on sale of assets.
(xi) Profit on redemption of units.
(xii) Unreconciled pass through charges.
(xiii) Fixed roaming signaling charges.
(xiv) Amount of Security Deposit credited to P&L Account.
The above guidelines have been prepared based on the experience at DOT (HQ). Theseare subject to review based on changes in regulatory standards ofaccounting/licensing and various judgments of the courts that are accepted by theDepartment. The assessing officer shall keep abreast of these developments in orderto make correct assessment of Licence Fee.
A.2. InterestInterest is to be charged on delayed/ unpaid/ short payments of licence Fee. Till 2004-05, the
interest was payable at the rate defined as Prime Landing Rate (PLR) of State Bank of India
plus 5% on the date when the amount fell due. However, from 1st April 2005, the rate has
been reduced to SBI PLR prevailing as on 1st April of that year plus 2 percent and is
applicable through out that financial year. Interest is compounded monthly and part of the
month is treated as full year.
A.3 PenaltyPenalty is charged, if shortfall in Licence fee is more than 10 per cent of Licence Fee andthe same is not made good within 60 days from the close of the year (i.e. 30th May). Thepenalty was 150 per cent of the shortfall upto 31st March 2005, which was reduced to 50per cent from 1st April 2005
If penalty is not paid within 15 days from the signing of Audited Annual Report it attracts
interest at the rates mentioned at para A.2 above.
The interest is levied as detailed below.(a) The Licence Fee is to be remitted by the Service providers on or before the
dates as prescribed in the Licence Agreement, and interest is levied if there is a
delay/ short payment.
76
(b) Interest for each quarter is computed separately and charged till the date, the
dues is cleared/ paid by the service provider.
(c) Interest is compounded monthly and part of the month is treated as full
month, for example, if payment due on 15th July is paid on 3rd September, it will
attract interest for three months (i.e. July to September).
(d) If there is short payment of principal amount of Licence Fee in the previous
quarter, the same is first made good from the payment received in next quarter.
(e) Interest is liquidated only when there is a surplus after clearing the dues of
Licence Fee.
(f) Since interest is charged for full month, for compounding purpose the later part,
of the month is ignored i.e. the interest is compounded from next month.
(g) If there is a holiday on the last day of prescribed period, the payment is to bereceived before the last day, as the holiday shall not result in extension of thespecified period of payment.
A.4 Interest on Delayed Payments - Fourth Quarter
As per the terms of payment under Licence Agreement, due date for the payment of
licence fee of last quarter shall be by 25th march on the basis of expected revenue
for the quarter, subject to 'a minimum payment equal to the actual payment made
for the previous quarter (i.e. 3rd quarter). However, the licensee shall adjust and pay
the difference if any, between the payments made and actual amount due for the
last quarter of financial year within 15 days of the end of quarter. If payment is not
made within 15 days, it shall attract interest at the rate of SBI PLR (applicable for
the relevant Financial Year) plus 2%. If the payment made on 25 th March falls short
of the payments made for 3rd quarter then the Interest will be charged on the
shortfall from 26th march.
Bank Guarantees
As per the terms of Licence Agreement, operators are required to submit two types of
Bank guarantees (BGs) namely Performance Bank Guarantee.(PBG) and Financial
Bank Guarantee (FBG)
The amount and the time for which these guarantees are to be obtained from the
service providers under various Licence Agreements are indicated in concerned
77
Licence Agreement. The approved formats of both types of Bank Guarantees are given
in concerned Licence Agreement.
Consequent on the decentralization of FBGs' safe custody and. maintenance, bulk of
the FBG has been transferred to concerned Sr. CCA/CCA/Jt.CCA offices. It has now
been decided that the work of safe custody of PBGs_ and_ their maintenance is also to
be carried out by the concerned Sr. CCA/CCA/Jt.CCA offices. Details of Licences
against which the PBGs and FBGs (in respect of ILD & ILD Licences) have been
assigned to Sr. CCA/CCA/Jt. CCA offices is as given in Annexure-I
The FBGs and PBGs will be transferred to the concerned CCA office w.e.f. 01.11.2008.
Separate communication will be sent to the CCA offices requesting concerned CCA office
to depute a representative on the date mentioned in the communication to collect the BGs
alongwith other relevant records.
Instructions have been issued from time to time to CCA offices regarding acceptance
maintenance, review and custody of the FBGs. All the BGs received, are to be recorded in the
Bank Guarantee register, entries of which are authenticated by Dy. Director/Controller of
Accounts. Validity of the guarantees are reviewed every month and of the amount, in case of
FBGs, is reviewed half yearly.
Validity of the BGs should be watched through a Bank Guarantee register to be maintained in
the prescribed Proforma and submitted to the DOT (HQ) in the first week of every month.
If extension of BG is not received before one month of its expiry, a letter may be issued to the
Bank with the stipulation that in case in the BG is not extended before the stipulated date, the
letter issued by DOT be treated as claim for encashment from the DOT and proceeds, through
a Banker's cheque/Bank Draft, be sent to the concerned CCA office. A copy of such letter is
also to be sent to the Licensee concerned.
A list of scheduled Banks and Financial Institutions, who can issue the BGs should be
collected from RBI or downloaded from RBI's web site http:rbi.org.in and kept in record for
watching that the BGs received are genuine one.
78
As soon the BG/ extension of BG/ renewal of BG is received, the issuing bank may be asked
to confirm that BG received by the DOT is issued by that Bank and is valid one so as to
ascertain its genuineness.
CCA offices to submit a monthly/quarterly return in the prescribed format regarding review ofamount/ validity of BGs.
B. .9 All the BGs maintained in Sr. CCA/ CCA/Jt.CCA office should be physically verified at the
end of each year by CCA/Jt. CCA and a certificate to be recorded in the Bank Guarantee
Register, that all the BG's indicated in the BG register are in actual possession of the Sr. CCA/
CCA/Jt.CCA office.
B.10 Check list in respect of Bank Guarantees
(i) As soon as the BG is received from the operator/ bank or operator replaces the BG with
the existing one, the same should be compared with the approved format given in the
Licence Agreement. Even if there a slight deviation the issuing bankers/ operator may be
asked to rectify the same within a reasonable time.
(ii) It is to be ensured that the BGs received are issued by the Scheduled bank or Financial
Institutions as required as per Licence Agreements.
(iii) If guarantee received is in the approved format and as per the conditions of the Licence
Agreement (i.e. amount and validity), the issuing bankers may be asked to confirm that
the BG issued by that bank is a valid guarantee. The letter for confirmation should be sent
by Registered Post and not by FAX/ Courier.
(iv) All the BGs received in Sr. CCA/ CCA/Jt.CCA office should be kept in a safe custody.
(v) As soon as the BG is received its details are to be recorded in the BG register under
dated signature of concerned officer.
(vi) The entry in the register should be authenticated by an officer in-charge who, before
authentication must ensure that the guarantees received are in proper form and there is
no lacuna.
B. 11 Review of Bank Guarantees
B.11.1 Review of validity of Bank Guarantees.
(i) Register of BG should be reviewed monthly. As per the terms of Licence
Agreement the operator/ issuing bank is required to renew the Bank Guarantee
one/two months prior to expiry of validity period.
79
(ii) In case of renewals/extension of BGs it should be ensured that there is change
only in the amount and validity to an existing one. If there is any other change,
the same should not be accepted and bankers/ licensee may be asked to set right
the deviations immediately or within a reasonable time and in case of failure, the
existing BG may be invoked. In no case, the Bank 'Guarantee be allowed to
expire.
(iii) If extension/ renewal of BG is not received before one/two months (as per terms of
Licence Agreement) prior to its expiry; a letter to the issuing bank with a copy to
the concerned operator must be issued with the stipulation that if BG is not
renewed/ extended/ amended within the stipulated date, the letter issued is to be
treated as DOTs claim for encashment and remittance of proceeds remitted to
DOT.
(iv) A notice of the extension/ renewal/ invocation of BG should be faxed and original
one should be sent by Registered Post. The receipt of fax should also be got
confirmed from the issuing bankers or telephone.
(v) Sr. CCA/CCA/Jt.CCA office should submit a certificate regarding review; of validity
of BGs in the prescribed format.
B 112. Review of amount of Financial Bank Guarantees
(i) Review of adequacy of amount of FBGs may be carried out once in six
month. The required amount of FBG shall be arithmetic mean of the quarterly
amounts of Licence Fee payable by the operator during the last 4 quarters (as
per Statements of Revenue and Licence Fee submitted alongwith quarterly
Licence Fee), multiplied by two and the resultant enhanced by 10 per cent. If
there is an increase in the amount, the operator may be asked to submit the
additional FBG.
(ii) If there is a quantum jump (at least 25 per cent) in the Licence Fee in a
particular quarter, the operator may be asked for an additional BG.
(iii) Sr. CCA/CCA/Jt.CCA offices should submit a certificate regarding review of
amount in the prescribed format.
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B.11.3 Invocation of Bank Guarantees
Sr. CCA/CCA/Jt.CCA office can invoke Financial Bank Guarantees under the
following circumstances:
(i) BG is not in the prescribed Proforma and the licensee is failing to rectify the default
within a reasonable period.
(ii) The amount of BG falls short of the amount required and licensee fails to submit the
additional BG.
(iii) The licensee fails to make the quarterly payments even while he has submitted the AGR
statements and Affidavit indicating the LF payable on self-assessment. A reminder to the
demand letter and a final notice may be issued to the Licensee asking to deposit the
required quarterly Licence Fee within a reasonable period. In spite of final notice if
Licensee fails to pay the demanded dues alongwith upto date interest, action as per terms
of concerned Licence Agreement including invocation of the BG be initiated.
(iv) If licensees have neither made payment nor submitted the documents like AGR
statements/ affidavits or these are not in the prescribed format and fail to rectify the default
even after a reasonable notice period action as detailed above in para (iii) may be taken.
(v) In case of non-payment of amounts demanded upon annual assessment of License Fees
even after a notice period of 15 days, if the Licensee has not disputed the assessment.
B.11.4 Invocation of Performance Bank GuaranteesInvocation of PBG is to be carried out on intimation from the concerned Licensing
Branch of DOT Headquarters.
B.11.5 Treatment of Bank Guarantee proceedsI. If BG has been invoked for realizing the amount due, which relates to a quarterly
unpaid sum on the demand issued by the Department pursuant to Annual Licence
Fee assessment, the equivalent portion of the proceeds shall be credited to
‘Revenue Head' and balance to Security Deposit (SD) head (in the concerned
Accounting head). A letter may also t o be written to Licensee for replenishment of
BG to restore the level of security.
II. In other cases, the proceeds shall be credited to the SD Account.
III. Subsequently when amount of SD are adjusted to outstanding amounts, proper
journal entries (with narration) should be passed. An example is given below:
(-) Cr.
To Security Deposit A/c (to the extent dues credited to Revenue)
IV. Credit of proceeds should be taken through challan.
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C Appellate Authority
In case there is a dispute between a Sr. CCA/CCA/Jt.CCA office and an operator in
consequence of any additional demand made by the Sr. CCA/CCA/Jt.CCA office, the
dispute will be examined at the Headquarters by competent authority.
D No Dues Certificate
Whenever the concerned Licensing Branch of DOT Headquarters requires a No
Dues Certificate, it would address the concerned Sr. CCA/ CCA/Jt.CCA office for the same
directly. The concerned Sr. CCA/CCA/Jt.CCA office will provide the No Dues Certificate after
due examination to the Licensing Branch with a copy to the LF Branch.
E Redistribution of work of Collection of LF dues and Maintenance of BGs
Safe custody and maintenance of Bank Guarantees and collection of Licence Fee
dues in respect of Basic /UASL/CMTS licenses in UP (West), Uttarakhand, Bihar,
Jharkhand, Madhya Pradesh and Chhattisgarh CCA/Jt.CCA offices has been reorganised
as per Annexure - II.
Director (LF-III)
82
SALIENT FEATURES
OF
VARIOUS TYPES
OF
LICENSES
83
Basic Telephone Service License
Salient features – Roll out obligation
9.3 (a) The Licensee undertakes to fulfill the following minimum network roll outobligations:
Phase Time period forcompletion fromeffective date of
license agreement
Cumulative % of coverage interms of Point of Presence tobe achieved at SDCA level at
the end of each phase
% of performance guaranteethat can be released onfulfillment of obligationsshown under column 3
1 2 3 4I 2 years 15% --II 3 years 40% 20%III 5 years 80% 30%IV 7 years 100% 50%
9.3 (b) Each phase specified above shall be taken as an independent of obligationunconnected with another. Any shortfall below the percentage of network coverage inPhase II, III & IV will result in encashment & forfeiture of the PBG relating to that phase.There will be no carry forward of the unfulfilled network obligation from one phase toanother. However, coverage beyond 80% SDCAs in a service area may be done jointly withanother LICENSEE excluding BSNL/MTNL.
Provided always, it will be the obligation of all LICENSEEs to ensure coverage of 100%SDCAs and bank guarantees after 4th phase will be released only after ensuring fulfillmentof this condition. The decision of the LICENSOR on roll out obligation shall be final andbinding. The category-wise names of short distance charging areas (SDCAs) to becovered in each of the 4 phases, as network rollout obligations of the LICENSEE, aregiven in ANNEXURE-II (as provided by the LICENSEE).
9.3 (c) The roll out obligations specify the list of SDCAs category wise in terms of (a) rural;(b) semi urban & (c) urban, and LICENSEE has to fully ensure that each of the namedcategories is covered in equal proportion during each phase of the roll out obligations.
Provided always that LICENSOR may modify the list of SDCAs and their category on thebasis of reorganization/bifurcations of States/SDCAs/Districts etc.
9.4 POINT OF PRESENCE (hereinafter called POP) is switching and transmission systemsof adequate capacity to be provided by the LICENSEE at SDCA level, so as to provideservices of prescribed quality and grade as stipulated in QUALITY OF SERVICE regulationof TRAI, in a non-discriminatory manner.
84
Cellular Mobile Telephone Service License
Salient features – Roll out obligation
8.Delivery of Service
8.1 The LICENSEE shall commission the Applicable Systems within one year from the
effective date of the Licence. The date of Test Certificate issued by Telecom Engineering
Centre of DOT will be reckoned as the date of commissioning the service for the purpose
of calculating liquidated damage charges in terms of Condition 37 Part V. However, the
licensee may start providing service to customers at any time without the need of specific
approval of the Licensor.
29. Quality of Performance:
29.1 The LICENSEE shall ensure the Quality of Service (QoS) as prescribed by theLICENSOR or TRAI. The LICENSEE shall adhere to such QoS standards and providetimely information as required therein.
29.2 The LICENSEE shall be responsible for: -i) Maintaining the performance and quality of service standards.
ii) Maintaining the MTTR (Mean Time To Restore) within the specified limits ofthe quality of service as given below in respect of normal failures excludingcatastrophes:
a) 90% of fault resulting due to subscriber's complaints should be rectified within24 hours and 99% within 3 Calendar days.
b) The Licensee will keep a record of number of faults and rectification reports inrespect of the service, which will be produced before the LICENSOR/TRAI as andwhen and in whatever form desired.
29.3 The Licensee shall be responsive to the complaints lodged by his subscribers. Heshall rectify the anomalies within the MTTR specified and maintain the history sheets foreach installation, statistics and analysis on the overall maintenance status.
29.4 The LICENSOR or TRAI shall carry out performance tests on Licensee's networkand also evaluate quality of Service parameters in licensee's network prior to grant ofpermission for commercial launch of the service after successful completion of
85
interconnection tests and/or at any time during the currency of the Licence to ascertainthat the network meets the specified standards on Quality Of Service (QOS). The licenseeshall provide ingress and other support including instruments, equipment etc., for suchtests.
30.Emergency and Public Utility Services:
30.1 Licensee shall independently provide all emergency and public utilityservices to its subscribers, including directory information services withnames and address of subscribers.
36. Coverage Criteria:
36.1 The LICENSEE shall endeavour to cover the entire Service Area at an early date andnotify on quarterly basis the areas not covered by the licensee's System. In Metros, 90% ofthe service area shall be covered within one year of the effective date. In Telecom Circles,atleast 10% of the District Headquarters (DHQs) will be covered in the first year and 50%of the District Headquarters will be covered within three years of effective date of Licence.The licensee shall also be permitted to cover any other town in a District in lieu of theDistrict Headquarters. Coverage of a DHQ/town would mean that at least 90% of the areabounded by the Municipal limits should get the required street as well as inbuildingcoverage. The District Headquarters shall be taken as on the effective date of Licence. Thechoice of District Headquarters/towns to be covered and further expansion beyond 50%District Headquarters/towns shall lie with the Licensee depending on their businessdecision. There is no requirement of mandatory coverage of rural areas.
37. Liquidated damages:
37.1 The time period of delivery of the Service stipulated in this Licence shall be deemedas the essence of the contract and the service must be brought into commission not laterthan such specified time period. No extension in delivery date will be granted. If theService is brought into commission after the expiry of the due date of commissioning,without prior written concurrence of the licensor and is accepted, such commissioning willentail recovery of Liquidated Damages (LD) under this Condition. Provided further that ifthe commissioning of service is effected within 15 calendar days of the expiry of the duecommissioning date then the Licensor shall accept the services without levy of LDcharges.
37.2 In case the Licensee fails to bring the Service or any part thereof into commission(i.e., fails to 'deliver the service or to meet the required coverage criteria) within the periodprescribed for the commissioning, the Licensor shall be entitled to recover Rs. 5 Lakh(Rupees: Five Lakhs) for each week of the delay or part thereof, subject to maximum Rs.100 Lakhs (Rupees: One Hundred Lakhs). For delay of more than 20 weeks the Licenceshall be terminated under the terms and conditions of the Licence agreement. The weekshall means 7 Calendar days from (from midnight) Monday to Sunday; both days inclusiveand any extra day shall be counted as full week for the purposes of recovery of liquidateddamages.
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Un i f i e d Ac c e s s S er v i c es L i ce n s e
Salient features :
8. Delivery of Service
8.1 The LICENSEE shall commission the Applicable Systems within one year from theeffective date of the Licence. The date of Test Certificate issued by Telecom EngineeringCentre of DOT will be reckoned a s the date of commissioning the service for the purposeof calculating liquidated damage charges in terms of Condition 35 Part V. However, theLICENSEE may start providing service to customers at any time without the need of specificapproval of the Licensor.
28 Quality of Performance:
28.1 The LICENSEE shall ensure the Quality of Service (QoS) as prescribed by theLICENSOR or TRAI. The LICENSEE shall adhere to such QoS standards and providetimely information as required therein.
28.2 The LICENSEE shall be responsible for:
i) Maintaining the performance and quality of service standards.
ii) Maintaining the MTTR (Mean Time To Restore) within the specified limits ofthe quality of service.
The LICENSEE will keep a record of number of faults and rectification reports in respect ofthe service, which will be produced before the LICENSOR/TRAI as and when and inwhatever form desired.
28.3 The LICENSEE shall be responsive to the complaints lodged by his subscribers. TheLicensee shall rectify the anomalies within the MTTR specified and maintain the historysheets for each installation, statistics and analysis o n the overall maintenance status.
28.4 The LICENSOR or TRAI may carry out performance tests on LICENSEE's networkand also evaluate Quality of Service parameters in LICENSEE's network prior to grant ofpermission for commercial launch of the service after successful completion ofinterconnection tests and/ or at any time during the currency of the Licence to ascertain thatthe network meets the specified standards on Quality Of Service (QOS). The LICENSEEshall provide ingress and other support including instruments, equipment etc., for suchtests.
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28.5 The LICENSEE shall enforce and ensure QOS, as prescribed by theLICENSOR/TRAI, from the INFRASTRUCTURE PROVIDER (s) with whom it may enterinto agreement / contract for leasing / hiring / buying or any such instrument, for provisionof infrastructure or provision of bandwidth. The responsibility of ensuring QOS shall bethat of LICENSEE.
29. Emergency and Public Utility Services:
29.1 The licensee shall provide independently or through mutually agreed commercialarrangements with other Service Providers all public utility services including TOLL FREEservices such as police, fire, ambulance, railways/road/air accident enquiry, police control,disaster management etc. While providing emergency services such as police, fire,ambulance etc. it shall be ensured that such calls originated shall be delivered to thecontrol room of the concerned authority for the area from where call is originated.
34. Roll-out Obligations
34.1 LICENSEE shall be solely responsible for installation, networking and operation ofnecessary equipment and systems for provision of SERVICE, treatment of SUBSCRIBERcomplaints, issue of bills to its subscribers, collection of its component of revenue, attendingto claims and damages arising out of his operations.
34.2 LICENSEE shall ensure that
(i) Atleast 10% of the District Headquarters (DHQs) will be covered in the first yearand 50% of the District Headquarters will be covered within three years ofeffective date of Licence.
(ii) The licensee shall also be permitted to cover any other town in a District in lieu ofthe District Headquarters.
(iii) Coverage of a DHQ/town would mean that at least 90% of the area bounded bythe Municipal limits should get the required street as well as in-building coverage.
(iv) The District Headquarters shall be taken as on the effective date ofLicence.
(v) The choice of District Headquarters/towns to be covered and further expansionbeyond 50% District Headquarters/towns shall lie with the Licensee depending ontheir business decision.
(vi) There is no requirement of mandatory coverage of rural areas.
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35. Liquidated damages:35.1 The time period for provision of the Service stipulated in this Licence shall be deemedas the essence of the contract and the service must be brought into commission not laterthan such specified time period. No extension in prescribed due date will be granted. Ifthe Service is brought into commission after the expiry of the due date ofcommissioning, without prior written concurrence of the licensor and is accepted, suchcommissioning will entail recovery of Liquidated Damages (LD) under this Condition.Provided further that if the commissioning of service is effected within 15 calendardays of the expiry of the due commissioning date then the Licensor shall accept theservices without levy of LD charges.
35.2 In case the LICENSEE fails to bring the Service or any part thereof into commission(i.e., fails to deliver the service or to meet the required coverage criteria/ network roll outobligations) within the period prescribed for the commissioning, the Licensor shall beentitled to recover LD charges@ Rs. 5 Lakh (Rupees: Five Lakhs) per week for first 13weeks; @ Rs 10 lakhs for the next 13 weeks and thereafter @ Rs. 20 lakhs for 26 weekssubject to a maximum of Rs. 7.00 crores. Part of the week is to be considered as a fullweek for the purpose of calculating the LD charges. For delay of, more than 52 weeks theLicence may be terminated under the terms and conditions of the Licence agreement. Theweek shall means 7 Calendar days from (from midnight) Monday to Sunday; both daysinclusive and any extra day shall be counted as full week for the purposes of recovery ofliquidated damages.
10. Suspension, revocation or Termination of Licence.10.1 The LICENSOR reserves the right to suspend the operation of this LICENCE in wholeor in part, at any time, if, in the opinion of the LICENSOR, it is necessary or expedient todo so in public interest or in the interest of the security of the State or for the properconduct of the TELEGRAPH. Licence Fee payable to the LICENSOR will not be required tobe paid for the period for which the operation of this LICENCE remains suspended inwhole. If situation so warrant, it shall not be necessary for Licensor to issue a notice forseeking comments of the LICENSEE for this purpose and the decision of the Licensor shallbe final and binding.
Provided that the LICENSOR shall not be responsible for any damage or loss caused orarisen out of aforesaid action. Provided further that the suspension of the LICENCE will notbe a cause or ground for extension of the period of the LICENCE and suspension periodwill be taken as period spent.
10.2(i) The LICENSOR may, without prejudice to any other remedy available for thebreach of any conditions of LICENCE, by a written notice of 60 Calendar days from thedate of issue of such notice to the LICENCEE at its registered office, terminate thisLICENCE under any of the following circumstances :
If the LICENSEE:
a) fails to perform any obligation(s) under the LICENCE including timelypayments of fee and other charges due to the LICENSOR;
b) fails to rectify, within the time prescribed, any defect/deficiency/correction inservice/equipment as may he pointed out by the LICENSOR.
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c) goes into liquidation or ordered to be wound up.
d) is recommended by TRAI for termination of LICENCE for noncompliance ofthe terms and conditions of the LICENCE.
10.2(ii) The Licensor may also impose a financial penalty not exceeding Rs. 50 crores forviolation of terms and conditions of licence agreement. This penalty is exclusive ofLiquidated Damages as prescribed under clause 35 of this Licence Agreement.
10.3 LICENSEE may surrender the LICENSE, by giving notice of at least 60 Calendardays in advance. In that case it shall also notify all its customer of consequentialwithdrawal of SERVICE by sending a 30 Calendar days notice to each of them. TheLICENSEE shall pay all fees payable by it till the date on which the surrender of theLICENCE becomes effective. The effective date of surrender of Licence will be 60Calendar days counted from the date of receipt of such notice by the licensor.
10.4 It shall be the responsibility of the LICENSEE to maintain the Quality of Service evenduring the period when notice for surrender of LICENCE is pending and if the Quality ofService is not maintained during the said notice period, it shall be treated as materialbreach liable for termination at risk and consequent of the LICENSEE.
10.5 The LICENSOR reserves the right to revoke the LICENCE at any time in the interestof public by giving a notice of 60 Calendar days from the date of issue of such notice.
10.6 The LICENSOR reserves the right to take over the entire services, equipments andnetworks of the LICENSEE or revoke/terminate/suspend the LICENCE in the interest ofpublic or national security or in the event of national emergency/war or low intensityconflict or similar type of situations. Further the LICENSOR reserves the right to keep anyarea out of the operation zone of the SERVICE if implications of security so require.
10.7 Breach of non-fulfillment of Licence conditions may come to the notice of theLICENSOR through complaints or as a result of the regular monitoring. Whereverconsidered appropriate LICENSOR may conduct an inquiry either suomoto or oncomplaint to determine whether there has been any breach in compliance of the termsand conditions of the LICENCE by the LICENSEE and upon such inquiry the LICENSEEshall extend all reasonable facilities and shall endeavor to remove the hindrance of everytype.
10.8 It shall be the responsibility of the LICENSEE to maintain the Quality of Service,even during the period when the notice for surrender/ termination of LICENSE is pendingand if the Quality of Service is not maintained, during the said notice period, it shall beliable to pay damages. The quantum of damages and to whom payable shall bedetermined by the TRAI. The LICENSEE shall also be liable to pay the Licence Fee tillthe end of the notice period and more specifically till the date on which thesurrender/termination becomes effective.
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20. Schedule of payment of ANNUAL LICENCE FEE and other dues:
20.1 For the purposes of the Licence Fee, the 1st year shall end on 31st March followingthe date of commencement of the Licence Agreement and the Licence fee for the First yearshall be determined on a pro-rata basis for the actual duration of the "year". From secondyear onwards, the year shall be of Twelve English calendar months from 1st of April tothe 31st March for payment of Licence Fee.
EXPLANATION: The Licence fee for the last quarter of the first year and last quarter ofthe last year of the Licence will be computed with reference to the actual number of daysafter excluding the other quarters, each being of three months.
20.2 Licence Fee shall be payable in four quarterly installments during each financial year(FY). Quarterly installment of licence fee for the first three quarters of a financial year shallbe paid within 15 days of the completion of the relevant quarter. This Fee shall be paid bythe LICENSEE on the basis of actual revenue (on accrual basis) for the quarter, dulycertified with an affidavit by a representative of the LICENSEE, authorized by the BoardResolution coupled with General Power of Attorney. However, for the last quarter of thefinancial year, the LICENSEE shall pay the Licence Fee by 25 th March on the basis ofexpected revenue for the quarter, subject to a minimum payment equal to the actualrevenue share paid of the previous quarter.
20.3 The LICENSEE shall adjust and pay the difference between the payment made andactual amount duly payable (on accrual basis) for the last quarter of financial year within15 days of the end of the quarter.
20.4 The quarterly payment shall be made together with a STATEMENT in the prescribedform as annexure-II, showing the computation of revenue and Licence fee payable. Theaforesaid quarterly STATEMENTS of each year shall be required to be audited by theAuditors (hereinafter called LICENSEE'S Auditors) of the LICENSEE appointed underSection 224 of the Companies' Act, 1956. The report of the Auditor should be in prescribedform as annexure-ll.
20.5 Any delay in payment of Licence Fee payable, or any other dues payable under theLICENCE beyond the stipulated period will attract interest at a rate which will be 5%above the Prime Lending Rate (PLR) of State Bank of India prevalent on the day thepayment became due. The interest shall be compounded monthly and a part of the monthshall be reckoned as a full month for the purposes of calculation of interest. A month shallbe reckoned as an English calendar month.
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20.6 Final adjustment of the Licence fee for the year shall be made based on the grossrevenue figures duly certified by the AUDITORS of the LICENSEE in accordance with theprovision of Companies' Act, 1956.
20.7 A reconciliation between the figures appearing in the quarterly statements submittedin terms of the clause 20.4 of the agreement with those appearing in annual accounts shallbe submitted along with a copy of the published annual accounts audit report and dulyaudited quarterly statements, within 7 (seven) Calendar days of the date of signing of theaudit report. The annual financial account and the statement as prescribed above shall beprepared following the norms as prescribed in Annexure.
20.8 In case, the total amount paid as quarterly Licence Fee for the 4 (four) quarters of thefinancial year, falls short by more than 10% of the payable Licence Fee, it shall attract apenalty of 150% of the entire amount of short payment. However, if such short payment ismade good within 60 days from the last day of the financial year, no penalty shall beimposed. This amount of penalty shall be payable within 15 days of the date of signing theaudit report on the annual accounts, failing which interest shall be further charged perterms of Condition 20.5.
20.9 The Fee/royalty payable towards WPC Charges shall be payable at such time(s) andin such manner as the WPC Wing of the DOT may prescribe from time to time.
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National Long Distance Service
Salient Features:
9. DELIVERY OF SERVICE
9.1 The LICENCEE shall intimate the LICENCOR of commencement of SERVICE within15 days of such commencement.
9.2 The LICENSEE undertake to fulfill the following minimum network roll our obligation:
Phase TimePeriod
(From theeffective
date)
Cumulative percentageof National Coverageat the LDCA levelwhere Point ofPresence has to be
established
Cumulative percentageof Coverage ofuneconomic and
remote areas
I 2 Years 15 2
II 3 Years 40 4
Ill 4 Years 80 7
IV 7 Years 100 All
The details of Long distance Charging Areas (LDCAs) to be covered in each phase
including the list of uneconomic and remote areas in the network roll-out of the LICENCEE
are given in Annexure-II (to be provided by the LICENCEE) whereas the list of LDCAs is
annexed at Annexure-IV and the list of remote and uneconomic areas is also annexed at
Annexure-V.
NOTE: Provided always that LICENCOR may modify the list of LDCAs on the basis of
reorganization/bifurcations of States/LDCAs/ Districts etc.
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ANNEX-IV
MINIMUM NETWORK ROLL OUT OBLIGATIONS FOR NATIONAL LONG DISTANCE
OPERATORS FOR ESTABLISHING POINT OF PRESENCE
Phase TimePeriod
(From theeffective
date)
Cumulative percentageof National Coverageat the LDCA levelwhere Point ofPresence has to be
established
Cumulative percentageof Coverage ofuneconomic and
remote areas
I 2 Years 15 2
II 3 Years 40 4
Ill 4 Years 80 7
IV 5-7 Years 100 All
Point of Presence (POP): Setting up of switching center and transmission center of
appropriate capacity by NLDO at the LDCC level to provide on demand inter-circle long
distance services of prescribed quality and grade of service in a nondiscriminatory
manner.
Amendment vide No. 10-4/2002-BS-I Dated the 18th October, 2002.
"Point of Presence (POP) means a technical arrangement made by the NationalLong Distance Service Operator (NLDO) under which it can accept outgoing callsfrom and deliver terminating calls to the area required to be served from suchPoint of Presence. It is expected that the switch capacity and bandwidth of theinterconnecting link would be dimensioned by NLDO based upon its projections ofthe traffic to be carried at the POP.”
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5. FEES PAYABLE
5.1 The LICENSEE shall pay one time Entry Fee of Rs 100 crores which shall be non-refundable, before the signing of the LICENSE. In addition thereto, four Bank Guarantees(BG) of Rs. 100 crores each shall be given, before signing of the LICENSE, which shall bereleased on completion of each phase of roll out i.e. fulfilling the network Roll outobligations by establishing Point of Presence in Long Distance Charging Areas (LDCAs)as specified in clause 9.2 of this LICENCE Agreement in the manner described below:
i. Completion of phase I Rs.100 Croresii. Completion of Phase II Rs.100 Crores
iii
.
Completion of Phase Ill Rs.100 Crores
iv
.
Completion of Phase IV Rs.100 Crores
Each phase described above shall be taken as an independent obligation unconnectedwith other. Any shortfall below the percentage of network coverage - Phase I, II, III & IVwill result in encashment & forfeiture of the particular BG relatable to that phase. Thedecision of the LICENSOR shall be final in this regard.
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International Long Distance Service License
Salient features :
7.1 Performance Bank Guarantee for Roll Out obligations
A. bank guarantee for Rs. 25.00 crores favouring the licensor guaranteeing due fulfillment
of the stipulated roll out conditions in this licence is to be submitted in the prescribed
proforma (ANNEXURE-D) before signing the Licence Agreement. The guarantee will be
released as soon as the roll out obligations are met. Nonfulfillment of the roll out conditions
within prescribed period will result in encashment of the bank guarantee by the Licensor.
This will be without any prejudice to any other action which the Licensor may consider
appropriate for failure of the LICENSEE to fulfill Licence conditions.
9. DELIVERY OF SERVICE
9.1 LICENSEE shall be solely responsible for installation, networking and operation of
necessary equipment and systems for provision of SERVICE, treatment of SUBSCRIBER
complaints, issue of bills to its subscribers, collection of its component of revenue,
attending to claims and damages arising out of his operations.
9.2 The L IC E N SE E shall intimate the LICENSOR one month prior to his intention of
commencement of service by establishing a POINT OF PRESENCE (POP). However, the
exact date of commencement of the service shall be required to be intimated to the
LICENSOR within one week from the date of such commencement along with the proof of
completion of INTERCONNECTION tests as stipulated in Clause 25 of this AGREEMENT.
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9.3 The LICENSEE undertakes to fulfill the following minimum network roll out obligations:
Time period(from the
effectivedate of
LicenceAgreement
Establishment of International(Gateway) Facility (also called POP)
Direct connectivity toInternational traffic
hubs abroad.
3 years
Receipt and Delivery of traffic from/ toall the exchanges in the country isrequired to be ensured through one ormore Gateway Switches havingappropriate interconnections with theNLDOs and meeting the TRAI's QOSRegulations and Network to NetworkInterface requirements. For thispurpose a minimum of fourPoint Presence (POPs) i.e.one in each Region of the country i.e.Eastern, Western, Northern &Southern will need to be established.There is no bar in setting up POP inremaining locations of Level I TAXs.Preferably, these POPs shouldconfirm to Open Network Architecture(ONA) i.e. should be based onInternationally accepted standards toensure seamless working with otherCarrier’s Network
Delivery of traffic to allthe countries in theWorld to be ensuredthrough at least fourDirect Routes i.e oneeach to North America,Gulf Region, Europeand any one location inSouth East Asia, FarEast and Oceania. Itshould be ensured thattraffic to remainingcountries is transitedthrough one of thesehubs abroad. It shouldbe possible toterminate traffic to anyglobal destination.
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Amendment vide No.10-19/2001-BS.l (VoI.IV) Dated 19th December 2002
9.3 The Licensee undertakes to fulfill the following minimum network roll out obligations:
Time period(from the
effectivedate of
LicenceAgreement)
Establishment of InternationalSwitching Centre(Gateway) Facility
Direct connectivity toInternational traffic
hubs abroad.
3 yearsReceipt and Delivery of traffic from/ toall the exchanges in the country isrequired to be ensured through one ormore Gateway Switches havingappropriate interconnections with theNLDOs and meeting the TRAI's QoSRegulations and Network to NetworkInterface requirements. For thispurpose a minimum of fourInternational Switching Centres i.e.one in each Region of the country i.e.Eastern, Western, Northern &Southern will need to be established.There is no bar in setting up POPs inremaining locations of Level I TAXs.Preferably, these facilities shouldconform to Open Network Architecture(ONA) i.e. should be based onInternationally accepted standards toensure seamless working with otherCarrier’s Network
Delivery of traffic to allthe countries in theWorld to be ensuredthrough at least fourDirect Routes i.e. oneeach to North America,Gulf Region, Europeand any one location inSouth East Asia, FarEast and Oceania. Itshould be ensured thattraffic to remainingcountries is transitedthrough one of thesehubs abroad. It shouldbe possible toterminate traffic to anyglobal destination.
17.1 It shall be mandatory for all NLD service providers and all ILD Service providers to provideinterconnection to each other whereby the subscribers could have a free choice to makeinternational long distance calls through any ILD service provider. International Long Distancetraffic should be routed through network of NLD service providers, to the ILD service providersgateways for onward transmission to international networks. However, the access providershall not refuse to interconnect with the LICENSEE directly in situations where POP of ILDservice licensee and Switches of Access Provider's (GMSC/Transit Switch) are located at thesame station of Level -I TAX.
Sr. No. 33 of definition and interpretation, POP is defined as Point of Presence (POP) means atechnical arrangement made by International Long Distance Service Operator under which itcan accept outgoing calls from and deliver terminating calls to the area required to be servedfrom such POP. It is expected that switch capacity and bandwidth of the interconnecting linkwould be dimensioned by International Long Distance Operator based upon its projections ofthe traffic to be carried by POP.
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Applicabilityof
Accounting Standard (AS)-9(issued by Institute
of Chartered Accountants of India)with
Reference to License Fee
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Applicability of Accounting Standard (AS)-9 (issued by Instituteof Chartered Accountants of India) with reference to License Fee
AS-9 was issued by the ICAI on "Revenue Recognition". This statement deals
with the bases for recognition of revenue in the statement of Profit and Loss of
enterprises.
This AS is mandatory for all entities. Every entity is required to follow AS-9 for
"Recognizing of Revenue. The Central Government, in consultation with National
Advisory Committee on Accounting Standards, notified "Companies(Accounting Standards) Rules, 2006 [G.S.R. 739(E) dated 07/12/2006]"
according to which every company and its auditor shall comply with the
Accounting Standards.
This AS deals with the bases for recognition of revenue in the statement of
Profit and Loss from the sale of goods, rendering of services and Interest,
royalties etc.
Revenue is the gross inflow of cash, receivables or other consideration fromthe sale of goods, from rendering of services, and interest, royalties, dividend.
License Fee is paid as a fixed percentage of revenue earned by the company.
Revenue recognition is mainly concerned with the timing of recognition of
revenue. In other words; it deals with the matter that when or in which
accounting period (Quarter or Year, as the case may be) it should be treated as
revenue.
It is very necessary to understand the timing of recognition of revenue so thatproper license fee receivable in the each quarter from the operator can beascertained.
In the case of companies, revenue is recognized on accrual basis. However, if
any Significant Uncertainty exists regarding "Measurability or Collectability",revenue recognition is postponed for subsequent accounting periods. When such
uncertainty is resolved it will be treated as revenue of that accounting period
(quarter) in which it is resolved.
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For example; if an operator assesses that certain revenues are doubtful;say under litigation or no whereabouts are available of subscriber etc.it may postpone the recognition of revenue to subsequent accountingperiod.
Rebates/discounts are allowed to be deducted from revenue. In other words,
rebates/discounts are not treated as part of revenue.
However amount of discount/rebates not approved by TRAI be added to Revenue.
In cases where installation fees are other than incidental to the sale of a product, they
should be recognized as revenue when the equipment is installed and accepted by the
customer.
If revenue recognition has been postponed pending the resolution of significant
uncertainties, an enterprises should disclose the circumstances in the notes on
accounts.
Sometimes, revenue is recognized in the financial statements, however uncertainty
arises at the time of collectability (commonly known as bad debts); a separate
provision is made for that amount instead of deducting from the revenue of subsequent
years.
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AS-9Revenue Recognition
1.0 Introduction & ObjectiveThe Institute of Chartered Accountants of India has issued AS-9 in 1985 for the purpose ofRevenue Recognition. It is mandatory in nature for all enterprises in its entirety. It deals with thebases for recognition of revenue in the statement of P&L.
2.0 Scope:
The statement is concerned with the recognition of revenue arising in the course of the ordinaryactivities:
i) Sale of Goods and receipts from rendering of services.ii) The use by the others of enterprise resources yielding interest, royalties and dividends.
3.0 Provisions:
a) It is mainly concerned with the timing of recognition of revenue in the statement of P&L.
b) Revenue is recognized when no significant uncertainty as to measurability orcollectability exists regarding the amount of the consideration that will be derived from thesale of the goods/rendering the service.
c) Revenue from service transactions is usually recognized as the service is performed.Performance is measured either by proportionate completion method or by thecompleted service contract method.
i) Proportionate completion method:
Revenue is recognized proportionately by reference to the degree of completion.
ii) Completed service contract method:
Revenue is recognized when the rendering of service under a contract is completed orsubstantially completed.
d) When revenue from foreign countries requires exchange permission and uncertainty inremittance is anticipated, revenue recognition may need to be postponed.
e) When the uncertainty relating to collectability arises subsequent to the time of sale or therendering of their services, it is more appropriate to make separate provision to reflect theuncertainty rather than to adjust the amount of revenue originally recorded.
f) When recognition of revenue is postponed due to the effect of uncertainties, it is consideredas revenue of the period in which it is properly recognized.
4.0 Disclosure:
Accounting Policy Circumstances in which revenue recognition has been postponed pending the resolution
of significant uncertainties.
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International Accounting Standard (IAS)- 18 REVENUE RECOGNITION
Objective of IAS 18
The objective of lAS 18 is to prescribe the accounting treatment for revenue arising from certain
types of transactions and events.
Key Definition
Revenue: The gross inflow of economic benefits (cash, receivables, other assets) arising from
the ordinary operating activities of an enterprise (such as sales of goods, sales of services,
interest, royalties and dividends).
Measurement of Revenue
Revenue should be measured at the fair value of the consideration receivable. For revenue
arising from the rendering of services, provided that all of the following criteria are met, revenue
should be recognized by reference to the stage of completion of the transaction at the balance
sheet date (the percentage-of-completion method).
the amount of revenue can be measured reliably;
it is probable that the economic benefits will flow;
the stage of completion at the balance sheet date can be measured reliably; and
the costs incurred, or to be incurred, in respect of the transaction can be measured
reliably.
When the above criteria are not met, revenue arising from the rendering of services should be
recognized only to the extent of the expenses recognized that are recoverable (a "cost-recovery
approach").
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NORMS FOR PREPARATION OF ANNUAL FINANCIAL STATEMENTS
Accounts shall be maintained separately for each telecom service operated by theLICENSEE company.
Any category of accrued revenue, the amount of which exceeds 5% of the totalaccrued revenue, shall be shown separately and not combined with any otheritem/category.
Accrued Revenue shall indicate:(a) All amounts billable for the period.(b) Any billings for previous years that had been omitted from the previous years' P&L
Accounts.(c) Any non-refundable deposits collected from the customers/franchisees to the
extent these are credited to P&L Account for the year. Subsidiary registers/ledgers shall be maintained for each item given above so as to
enable easy verification. Service revenue (amount billable) shall be shown gross and details of
discount/rebate indicated separately. Security or any other Deposits taken from the subscriber shall be shown separately,
for each category, and the amount that has fallen due for refund but not yet paid alsodisclosed under two categories, namely:
o Up to 45 dayso More than 45 days. Service Tax billed, collected and remitted to the Government shall be shown
separately. Sales Tax billed, collected and remitted to the Government shall be shown
separately. Details of Income from sales of goods shall be furnished indicating the income and
number of items sold under each category. Method of inventory valuation used shallalso be disclosed along with computation of cost of goods sold.
Sales shall be shown gross and details of discount/rebate allowed and of salesreturns shall be shown separately.
Income from interest and dividend shall be shown separately, without any relatedexpenses being set-off against them on the income side of the P&L Account.
Increase/decrease of stock shall be shown separately. Details of reversal of previous years' debits, if any, shall be shown component-wise,
under the miscellaneous head (eg. Bad debts recovered etc.) Item-wise details of income that has been set off against corresponding expenditure. Roaming Charges shall be shown under the following heads separately;(a) Roaming airtime charges collected for each external network from own (home)
subscribers.(b) Roaming airtime charges actually remitted to each external network.(c) Roaming commission retained (Network-wise)(d) Roaming commission paid (Network-wise)(e) Any other variable charges collected and retained/passed on to other operators,
with details.(f) Total Airtime Units (Metered Units) for home and visiting subscribers and unbilled
numbers (e.g. service connections) to be furnished separately.
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SUMMARY EXAMPLE OF ACCOUNTING POLICY
Revenue recognition
(i) Service revenues
Service revenues include amounts invoiced for airtime charges, call revenue, fixedmonthly subscription charges and VSAT/internet usage charges, roaming charges,activation fees, and fees for value added services (`VAT"). Service revenues also includerevenues associated with access and interconnection for usage of the telephone networkof the incumbent access service operator for local, domestic long distance andinternational calls.
Service revenues are recognized as the services are rendered and are stated net ofdiscounts and taxes. Revenues from pre-paid cards are recognized based on the actualusage.
Service revenues from the Internet and VSAT business comprise revenues fromregistration, installation and provision of internet and satellite services. Registration fee isrecognized at the time of dispatch and invoicing of start up kits. Installation charges arerecognized as revenue on satisfactory installation of hardware and service revenue isrecognized from the date of satisfactory installation of equipment and software at thecustomer site and provisioning of internet and satellite service. Revenue from prepaiddialup packs is recognized on the actual usage basis and is net of sales returns anddiscounts.
Advertisement revenues are on the advertisements displayed on the Company's websiteand also include third party promotions and advertisement on start up kits, which arerecognized on provision of services as per contract.
Revenues from national long distance operations comprise revenue from provision ofvoice services which are recognized on completion of services while revenue fromprovision of bandwidth services is recognized over the period of use. Revenue is statednet of discounts and waivers.
Revenue from international long distance operations comprises revenue from provision ofvoice services, which is recognized on completion of services.
Unbilled receivables represent revenues recognized in respect of cellular, access andnational long distance services provided from the bill cycle date to the end of each month.These are billed in subsequent periods as per the terms of the billing plans.
Unearned revenue includes unused amounts of revenue billed in respect of pre-paidcards. The related services/billing are expected to be performed within the next operatingcycle.
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(ii) Equipment sales
Equipment sales consist primarily of revenues from sale of VSAT equipment (hardware)and sim cards, access service handsets and related accessories to subscribers and arerecognized at the time when significant risks and rewards of ownership of the goods aretransferred to the buyer.
Amortised equally over the balance period of license from the date of commencement ofcommercial operations. The site restoration cost obligation capitalized is beingdepreciated over the period of the lease.
REVENUE RECOGNITION AND RECEIVABLES
Mobile Services: Service revenue is recognized on completion of provision of services.Service revenue includes income on roaming commission and access charges passedon to other operators and is net of discounts and waivers. Revenue, net of discount, fromsale of goods is recognized on transfer of all significant risks and rewards to the customerand when no significant uncertainty exists regarding realization of the consideration.
Telephone and Broadband and Long Distance Services: Service revenue is recognizedon completion of provision of services. Revenue on account of bandwidth service isrecognized on time proportion basis in accordance with the related contracts. BillingRevenue includes access charges passed on to other operators, and is net of discountsand waivers. Revenue, net of discount, from sale of goods is recognized on transfer of allsignificant risks and rewards to the customer and when no significant uncertainty existsregarding realization of consideration.
Enterprise Services: Revenue, net of discount, from sale of goods is recognized ontransfer of all significant risks and rewards to the customer and when no significantuncertainty exists regarding realization of consideration.
Service Revenues includes revenues from registration, installation and provision ofinternet and satellite services. Registration fees is recognized at the time of dispatch andinvoicing of Start up Kits. Installation charges are recognized as revenue on satisfactorycompletion of installation of hardware and service revenue is recognized from the date ofsatisfactory installation of equipment and software at the customer site and provisioningof internet and satellite services.
Revenue from prepaid dialup packs is recognized on the actual usage basis and is net ofsales return and discount.
Investing and other Activities: Income on account of interest and other activities arerecognized on an accrual basis. Dividends are accounted for when the right to receivethe payment is established.
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Provision for doubtful debts
Provision for doubtful debts is made for dues outstanding for more than 90 days in caseof active subscribers and dues from customers who have been deactivated other thanthose covered by security deposit or in specific cases where management is of the viewthat the amounts are recoverable.
Provision for doubtful debts, in case of Other Telecom Operators on account of their ILDtraffic and on account of interconnect Usage Charges (IUC) is made for dues outstandingmore than 129 days from the date of billing after considering any amount payable to thatoperator pertaining to the same period or in specific case when management is of theview that the amount is recoverable.
Accrued Billing revenue:
Accrued billing revenue represent revenues recognized in respect of Mobile, Broadbandand Telephone, and Long Distance services provided from the bill cycle date to the endof each month. These are billed in subsequent periods as per the terms of the billingplans.
TRANSLATION OF ITEMS IN FOREIGN CURRENCY
Transaction in Foreign Currency are recorded at the exchange rate prevailing at the dateof the transaction. Monetary items are restated at year end foreign exchange rates.Resultant exchange difference arising on payment or conversion of liabilities arerecognized as income or expense in the year in which they arise except in respect ofliabilities for acquisition of fixed assets, where such exchange difference is adjusted inthe carrying cost of the respective fixed asset.
T ATA INDIA G AAP
REVENUES
SERVICE REVENUES
Revenues are recognized as services rendered and net of discounts and service tax.
Unbilled revenues resulting from unified access services provided from the billing
cycle date to the end of each month are estimated and recorded. Revenues from
unified access services rendered through prepaid cards are recognized based on
actual usage by the customers. Billings made but not expected to be collected due to
significant delays in billing. If any, are estimated by the management and not
recognized as revenues in accordance with Accounting Standard on Revenue
Recognition (AS 9 ) .
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SALE OF EQUIPMENT
Revenues from sale of equipment primarily consist of sale of customer terminal
equipment and are recognized at the time of delivery of the equipment to the
customers.
INTERCONNECT REVENUES AND COSTS
The TRAI issued interconnection Usage Charges Regulation 2003 (IUC regime)
effective May 1, 2003 and subsequently amended twice with effect from February 1,
2004 and February 1, 2005. Under the IUC regime, with the objective of sharing of
call revenues across different operators involved in origination, transit and
termination of every call, the Company pays interconnection charges (prescribed as
Rs per minute of call time) for all outgoing calls originating in its network to other
operators, depending on the termination point of the call, i.e. mobile, fixed line and
distance i.e. local, national long distance and international long distance. The
company receives certain interconnection charges from other operators for all calls
terminating in its network.
FOREIGN EXCHANGE TRANSACTIONS
INITIAL RECOGNITION
Foreign currency transactions are recorded in the reporting currency, by applying to
the foreign currency amount the exchange rate between the reporting currency and
the foreign currency at the date of the transaction.
CONVERSION
Foreign currency monetary items are reported using the closing rate. Nonmonetary
items which are carried in terms of historical cost denominated in a foreign currency
are reported using the exchange rate at the date of the transaction and non-
monetary items which are carried at fair value or other similar valuation
denominated in a foreign currency are reported using the exchange rates that
existed when the values were determined.
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EXCHANGE DIFFERENCES
Exchange differences arising on the settlement of monetary items, or on restatement
of the company's monetary items at rates different from those at which they were
initially recorded during the year, or reported previous financial statements, are
recognized as income or as expenses in the year in which they arise except those
arising from investments in non-integral operations. Exchange differences in respect
of fixed assets acquired from the country outside India are capitalized as part of the
asset cost.
FORWARD EXCHANGE CONTRACTS NOT INTENDED FOR TRADING ORSPECULATION PURPOSES
The premium or discount arising at the inception of forward exchange contracts is
amortised as expense or income over the life of the contract. Exchange differences
on such contracts are recognized in the Profit and Loss account in the year in which
the exchange rates change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognized as income or as expense for the year.
PL INDIAN G AAP
REVENUE RECOGNITION
Revenue from airtime and rentals is recognized in the period in which service is
rendered except for prepaid coupons in respect of which the revenue is recognized on
activation of the same on the network (see Note 25). Activation charges are
recognized as income when the subscribers are activated on the network. Revenue
from sale of handsets/fixed cellular terminals is recognized at the time of delivery.
Revenue disclosed in the accounts is net of taxes.
Revenue from sharing of infrastructure is recognized on a time basis from the date of
commencement of sharing of infrastructure.
FOREIGN CURRENCY TRANSACTIONS
Transactions in foreign currency are recorded at the exchange rate prevailing on the
date of the transaction. Monetary assets and liabilities in foreign currency on the
balance sheet date are converted at the exchange rates prevailing on that date and
gains/losses are adjusted to the profit and loss account except in respect of foreign
currency liabilities for acquisition of imported fixed assets, where such gains/losses
are adjusted to the cost of the assets.
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BACK GROUND
READING MATERIAL
RELATED TO WPF
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ISSUES IN SPECTRUM ALLOCATION AND PRICING IN INDIA.(Deepak Ashish Kaul, Jt. CCA.)
Radio frequency spectrum is a limited natural resource. The word `Spectrum' basically refers toa collection of various types of electromagnetic radiations of different wavelengths. In India, theradio frequencies are arbitrarily confined between 9kHz and 3000 GHz and are being used for40 different types of services like fixed communication, mobile communication, broadcasting,radio navigation, radiolocation, fixed and mobile satellite service, aeronautical satellite service,radionavigational satellite service etc.Some of the important and typical characteristics of the radio frequency spectrum are as below.
1. Radio frequency spectrum does not respect international geographicalboundaries as it is spread over a large terrestrial area.
2. Use of radio frequency spectrum is susceptible to overlapping interference andrequires the application of complex engineering tools to ensure interference freeoperation of various wireless networks.
3. Unlike other natural resources, radio frequency spectrum is not consumed uponits usage. It is also liable to be wasted if it is not used optimally and efficiently.Radio frequency spectrum usage is therefore to be shared amongst the variousradio services and must be used efficiently, optimally and economically inconformity with the provisions of national and international laws.
The limitation of the radio frequency spectrum is mainly due to the following factors.1. Propagation characteristics of different types of radio waves.2. Availability of technology and equipment for different types of radio frequency
spectrum applications.3. The suitability of frequency bands for specific applications.
ALLOCATION OF SPECTRUM
The International Telecommunication Union (ITU) at the World RadiocommunicationConferences allocates spectrum frequencies for the use of various countries. Allocations aremade on a regional basis and for different types of services. It is mandatory for alladministrations to adhere to these allocations. For the purpose of spectrum allocation, eachmember country submits its proposals to ITU, based on their requirements and priorities foropening of the bands. During the conference all the proposals are discussed and decisionsare taken for opening of the bands for new services or extension of the existing bands. Thesedecisions are reflected in the International Frequency Allocation Table of radio regulation andother regulatory provisions for use of bands, which forms the basis for allotment by themember countries.
Need for spectrum allocation: Spectrum allocation is necessary in order to ensureinterference free operation for each radio service. Each frequency band is shared amongstvarious radio services but the sharing is possible only with the use of similar systems.Sharing is also possible by way of geographical separation, time-sharing and throughtechnical solutions like smart antenna and intelligent radio system.
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NATIONAL FREQUENCY ALLOCATION PLAN: 2002.The National Frequency Allocation Plan (NFAP) forms the basis for development andmanufacturing of wireless equipment and spectrum utilization in the country. It contains theservice options in various frequency bands for India and also provides the channeling plan indifferent bands. Some of the typical frequency bands allocated for certain types of radioservices in India are as given below:
Sr. Radio Service Frequency Band1 Radio Navigation 9 - 14 kHz2 Mobile (Distress & Calling) 495 – 505 kHz3 Broadcasting _535-1605.5 kHz
535 – 1605.5 kHz4 Maritime Mobile 2065 – 2107 kHz2170 – 2178.5 kHz2190.5 – 2194 kHz
5 Fixed, Mobile, Broadcasting Radio Astronomy 610 – 806 MHz6 Mobile, Fixed, Broadcasting 890 - 960 MHz7 Mobile satellite 942 – 960 MHz8 Radio Location 1350 – 1400 MHz9 Mobile, Fixed, Space operation, space research 1710 -1930 MHz
Spectrum and Mobile telephone services:
Mobile telephone service providers in India use GSM and CDMA technologies. GSMtechnology works in the frequency bands of 900 and 1800 MHz in India and CDMAtechnology works in the 800 MHz band. 800, 900 and 1800 MHz bands were earlierallotted to the defence services for their mobile communication usage. However, uponthe launch of mobile communication services for public, coordination was sought fromthe defence department to make the spectrum available for mobile services. Since themobile communication technologies provide international roaming facilities, it is essentialto allocate spectrum in the common bands which are being used the world over. Also,the mobile handsets being used are imported hence conform to the GSM 900/1800bands. If radio frequencies are allotted in other bands then handsets will not becompatible with it and new handsets will have to be developed which will be costlier andtherefore the cost of mobile communication services will also increase.
Presently, 25 MHz spectrum in 900 MHz band (890 – 915 / 935 – 960 MHz) and 75 MHzin the 1800 MHz band (1710 -1785 / 1805 – 1880 MHz) is earmarked for GSM services.However, out of this total 100 MHz, only 15 MHz in GSM 1800 band is available for use asthe remaining 60 MHz is still to be vacated by the defence department. Also out of thetotal 25 MHz in GSM 900 band, a total of 20.2 MHz is available for GSM networks andRailways' train safety systems. The minimum amount of spectrum required for launchingGSM services is 2 x 4.4 MHz. Presently, the government has allotted a cumulativemaximum spectrum of upto 4.4 MHz in GSM 900 and 1800 MHz band to mobileoperators.
For CDMA services, 20 MHz spectrum in the 800 MHz band (824 – 844 / 869 -- 889 MHz)is available. In this 20 + 20 MHz spectrum, 14 CDMA carriers of nominal 1.25 MHz eachare possible for assignment to service providers.
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Spectrum for the roll out of 3G services (voice, data and video) will be allotted through eauction in the 2.1 GHz (1920 – 1980 / 2110 – 2170 MHz) band. However, the spectrumrequired for the launch of 3G services is yet to be vacated by the defence department.
SPECTRUM ALLOTMENT PROCEDURE:
In the case of licensed telecom service providers spectrum was initially allotted inaccordance with the relevant provisions of the service license agreements. However,due to an exponential increase in the number of mobile subscribers additional spectrumis required by the mobile operators. Serving a larger number of subscribers requires,either a larger amount of spectrum or an increase in the number of base stations.Therefore, additional spectrum is required at some stage as a techno economic solutionto meet the growth of mobile services. Department of Telecommunications has evolvedguidelines for the allotment of extra .spectrum, based on the justification and fulfillment ofthe prescribed criteria. The subscriber-based criteria have been formulated taking intoaccount demographic characteristics of different categories of service areas, averagetraffic per subscriber, number of base stations in a specified area etc. Spectrum isallotted subject to completion of coordination and availability at a particular location.
As spectrum is a scarce resource, its equitable allotment for systems usingdifferent technologies seems to be the solution. The government while formulating itsspectrum policy should try to create a flexible and technology neutral regime to allow newtechnologies equal access to spectrum. It should also enable market mechanisms topromote efficient use of spectrum by developing market incentives and differential pricingof spectrum in congested areas. Also auctions or fixed fee access can ensure thatspectrum ‘owners' will want to minimize the quantum of spectrum. The government mayalso permit public and private users to trade spectrum to allow new users access tospectrum and to provide them with possibilities to move to another non-wireless media orother frequency bands if possible. It can also mark off specific public and private usesegments of spectrum and try to bring about transparency and openness in the spectrumallotment process so that this scarce natural resource is put to it optimal use in a moreefficient manner.
(The views expressed herein are those of the writer and may not be taken as those of theGovernment.)
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Overview of Frequency Spectrum Management(RJS Kushvaha, Joint Wireless Adviser to the Government of India)
1. R.F. Spectrum:
1.1 Radio frequency spectrum is a limited natural resource. It is part of theelectromagnetic spectrum, usually up to about 3000 GHz. With present technology, it is notyet practical to use spectrum above 100 GHz. Radio waves are governed by laws of physicsand travel with the speed of light. Radio waves cannot be confined to national boundaries orspecific areas and are susceptible to harmful interference. Propagation of radio waves hasdifferent characteristics in different frequency bands and is influenced by differentphenomenon, including inter-alia, cosmic noise, manmade radio noise, geographical terrainand climatic conditions. Like any other natural resource, it cannot be owned but can only beshared amongst various countries, services, users, technologies etc.
1.2 The usage of RF Spectrum can be optimised by technological means, taking intoaccount natural phenomenon of its capabilities and its constraints. The spectrum is used andnot consumed and it is wasted if not used or not optimally and efficiently used. Optimal andefficient use of the spectrum is achieved by, among others, extensive frequency sharing withantenna directivity, geographical spacing, time sharing, etc. Use of Spectrum can also beoptimised by employing better technologies, including Spectrum efficient modulationtechniques. With a view to catering for the gigantic demand on the spectrum, the world over,it is essential that they spectrum be used efficiently, economically, rationally and optimally.
1.3 The limitation of RF Spectrum is on account of availability of equipment, technology,propagation and operational constraints, suitability of different frequencies for specificapplications, etc. Yet another factor, which is causing complexity in Spectrum managementand frequency assignments process, is the deployment of equipment procured from differentsources/countries in the certain frequency bands where new systems/technologies are beingdeveloped, thereby requiring dislocation of existing systems from the band. It is pertinent tomention that the technologies and equipment being developed taking into account theSpectrum availability in those countries and not as per our situation.
1.4 Regulation of radio is the mechanism, entirely different from regulation of otheractivities of the term ‘regulation’ in general parlance. It is predominantly governed by thespecific features and physical laws of nature. It is the use of spectrum, which can beregulated so as to multiply and optimize its usage by technological means, taking intoaccount natural phenomenon of its capabilities and its constraints.
1.5 An evaluation of the interference potentiality to and from a new station is an integralpart of Spectrum management and radio regulatory mechanism requiring an in-depthanalysis of technical characteristics of the station and its environment. More are the numberof stations, more is the pollution of electromagnetic environment; more are the types ofservices and applications, more are the complexities of coexistence; more are the diversetechnologies, more are the problems of regulation. Situation is somewhat analogous to roadtraffic. More is the number and variety of vehicles on the road, more is the chaos and theneed and complexity of regulation.
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2. Spectrum Management Process:
2.1 management of spectrum is the combination of administrative and technicalprocedures with legal connotations necessary to ensure efficient operation of radiocommunication services without causing harmful interference. Efficient and effectiveSpectrum management, therefore, needs to be the garden signs of carefully planningspectrum allocation in a co-ordinated manner without compromising national interests andefficiently assigning frequencies for the benefit of users at large with minimum scope ofharmful interference.
2.2 There are forty different kinds of radiocommunication services, including safetyservices like aeronautical, maritime, radionavigation, radiolocation, radioastronomy,meteorological, broadcasting, satellite broadcasting, fixed, fixed-satellite, mobile, mobile-satellite, space services, etc. In accordance with international treaties, all the frequencybands are shared amongst different types of radio communication services for variety ofapplications and technologies by different countries. The basic tools of radio frequencysharing require application of principles of time sharing, technical sharing and geographicalsharing. No user can work in isolation, no service can work in isolation and no country canwork in isolation. It is a collective Spectrum management exercise and radio regulatorymechanism which alone can ensure the interference free operation of various networks. It isthe individual frequency, which is assigned to a user or a service provider and not a frequencyband. No wireless user or service provider, be it a government of private, has ownershipclaim on any part of the frequency band, only frequency assignments are made in a particularfrequency band, as per national and international plans and regulations, for operation of radionetworks owned by an agency.
2.3 National and international coordination, sharing, coexistence and protection are keyelements of Spectrum management process. National and international aspects of radioregulatory process are completely interlinked. Radio regulatory process has multifariousactivities, which include, among others, interaction with International TelecommunicationUnion (ITU), with administrations of other countries, national and international frequencyplanning and coordination, formulation of legislation, tools and regulations, implementation ofnational and international rules, formulation of channeling plans, etc.
2.4 Electromagnetic compatibility (EMC) is consensus solution for efficient andeconomically utilisation of radio frequency spectrum. Society’s increasing use of radio basedtechnologies for various telecommunication applications, and the tremendous opportunitiesprovided by these technologies for socio-economic development, highlight importance of theelectromagnetic compatibility among various radiocommunication systems. Advances intechnology have made it practicable to implement new sharing schemes that offer possibilitiesfor increasing the efficiency of Spectrum sharing and frequency utilisation.
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3. Spectrum Planning:
3.1 International Radio Regulations, which contained, inter-alia, international Table ofFrequency Allocations and radioregulatory processes, as well as other treaty instruments areadopted under the aegis of International Telecommunication Union (ITU) through worldradiocommunication conferences. Within the framework of the ITU Constitution, the Asia-Pacific Telecommunication (APT) deals with these issues at the regional level and providesforum to prepare for world radiocommunication conferences of the ITU. National preparationsare undertaken to formulate the national proposals and positions in consultation with allconcerned ministries/departments of government as well as different agencies in privatesector for such conferences and meetings.
3.2 Based on these international treaties, national frequency allocation plans are evolvedtaking into account natural requirements and priorities. Formulation of National Plans is oneof the key elements of Spectrum planning. Accordingly, the National Frequency AllocationPlan -- 2002 (NFAP -- 2002) has been evolved in line with the Radio Regulations of the ITUwith a view to catering for conflicting demands of spectrum, including those of new emergingtechnologies without unduly constraining the existing usages. The NFAP -- 2002, effectivefrom 1 Jan 2002, has been formulated with full participation from government and privatesectors taking into account Spectrum requirement of all users in a very transparentmanner. The NFAP -- 2002 has been made a public document, which forms the basis fordevelopment, manufacturing and Spectrum utilisation activities in the country. It has alsobeen notified on the website www.dotindia.com to facilitate access by all concerned. TheIndia Remarks, besides other details, have been incorporated in the NFAP -- 2002 to earmarkcertain frequency bands for the specific usage in the country.
4. Frequency Assignment Process:
4.1 The international Radio Regulations of the ITU define the assignment of a radiofrequency of radio frequency channel as authorisation given by an administration for a radiostation to use a radio frequency or radio frequency channels under specified conditions.Frequency assignment process, therefore, involves examination of requirements for spectrumfrom national as well as international radio regulatory procedures.
4.2 Whenever a person wishes to establish and operate a wireless station, applicationis required to be made in appropriate pro forma with associated technical details. Theapplication, as and when received, is processed and examined with respect to governmentpolicies and guidelines in consultation with concerned Ministries and Departments. Further,the assignment of frequency and effective utilisation of the same is being ensured in anobjective, transparent and non-discriminatory manner ensuring no objection from concernedadministrative Ministries, as appropriate, wherever, policies issues are in their respectivedomain. Application are also processed for technical examination/evaluation in accordancewith international Radio Regulations and national regulations as well as coordination withother wireless networks, nationally and internationally, as the case maybe, for establishingelectromagnetic compatibility and for assessing availability of spectrum.
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4.3 It may be borne in mind that same frequency is repeated several times within thecountry as well as by different countries depending on electromagnetic analysis forcoexistence. Further, a particular frequency can be assigned to one user for one type ofservices and the same frequency can be assigned to another user for different type ofservices and for different type of application. Even the same frequency can be assigned todifferent type of services in the same area of operation if electromagnetic compatibility isestablished. Frequency assignment for one type of service has impact on other types ofservices in the same frequency band as well as in different frequency bands, based ontechnical parameters of different networks.
4.4 Frequencies with associated technical parameters are assigned to all wirelessnetworks in the country to the Government as well as to the private sectors and licences forestablishment and operation of wireless stations are granted under the Indian Telecom Act,1885, exercising statutory functions of the Central government.
5. Emerging Complexities in the Spectrum Management:
5.1 Demands on spectrum are increasing manifold for variety of applications both byprivate and government sectors. Private sector participation in the field of telecommunicationsfor basic service, cellular Mobile, radio trunking, radio paging, VSAT, etc as well as increase innumber of players for providing these services with a view to having competition andconsumer satisfaction has significantly increased the demand of the Spectrum. MTNL/BSNL,as public telecommunication service provider also has massive plans. Various other sectorslike Police, electricity, transport, oil and natural gas and other utility services have alsoextensive plans for wireless networks and considerable requirements on spectrum.
5.2 Requirement of spectrum by Information Technology (IT) sector has increasedmanifold for variety of applications in view of Government’s initiative to promote the sector.
5.3 Broadcasting sector has been opened up for private sector for various applicationsresulting in complexities and enhanced demands on spectrum. TV uplinking and FM radiobroadcasting by the private sector have been permitted. Besides these, the Prasar Bharti hasalso extensive plans for expansion.
5.4 Department of space has extensive plans for satellite based networks for variety ofapplications. Tremendous efforts are needed for coordination of orbital slots and Spectrum forthe satellite networks.
5.5 Defence and other security agencies have tremendous demand on spectrum forvariety of systems. Many other uses like oil sector, transport sector, public utility services,paramilitary agencies, etc also have requirements for variety of networks.
5.6 Many new technologies are emerging internationally and nationally. While there is aneed to find ways and means to introduce new technologies and to meet gigantic demands ofvarious users, existing networks cannot be shut down and need to be protected. Spectrummanagement process has, thus, become extremely complex and electromagneticcompatibility analysis highly involved.
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6. Processes Involved in Licensing: Examination of application with respect your national and international plans/regulations
Coordination with existing wireless users to ensure interference free operationSiting clearance by SACFA.Consultation with concerned Ministries/DepartmentsPayment of the Spectrum chargesGrant of license
7. SACFA Procedures:
7.1 The Standing Advisory Committee on Radio Frequency Allocations (SACFA) is ahigh-power Committee, which was established in 1966 in the Ministry ofCommunications. The SACFA is chaired by Secretary, Department of Telecommunicationsand its membership is open to all major wireless users, ministries, administrative departmentsof Government of India. WPC wing provides the Secretariat for smooth and effectivefunctioning of the SACFA. SACFA members examine the cases from electromagneticcompatibility, line-of-sight obstruction and aviation hazard point of view. With a view toenhancing participation of the industry in the Spectrum management process, meetings ofSACFA have also been opened up to the private sector, while considering agenda items oftheir interest. Broad functions of SACFA are given below:
To recommend on major frequency allocation issues requiring coordination amongstthe various wireless users in the country;
To formulate/review the National Frequency Allocation Plans (NFAP); To formulate national proposals for international conferences/meetings and to
coordinate nationally all activities pertaining to the ITU, APT, etc; To deal with frequency coordination problems referred to the Committee by the
administrative Ministries/Departments; To clear sites of all wireless installations in the country; To finalise guidelines regarding provision of day and night obstruction markings on
radio masts and towers; To evolve technical criteria, equipment standards, channeling plans,
developmental/manufacturing activities, introduction of new technologies etc; To explore feasibility of sharing of an antenna mast by more than one wireless users; To evolve/develop special site clearance procedures like procedure for clearance of
radio masts of foreign missions/embassies for their radiocommunication links.
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Frequency Management or CDMA based mobile telephone service and Spectrum charges(R. J. S. Kushwaha , joint wireless adviser to the government of India)
1. Spectrum issues for CDMA based systems:
1.1 In accordance with the National Frequency Allocation Plan, 2002 (N. F. A. P. -- 2002),the frequency bands 824-844 MHz paired with 869-889 MHz have been earmarked for WLLsystems. These bands have now been allowed to implement CDMA based mobile telephoneservice under Unified Access Service License (UASL). Nevertheless, coordination offrequency for such application is to be done on case-by-case basis to ensure protection toexisting users. Further, NFAP -- 2002 also stipulates that requirements of micro cellular WLLsystems based on TDD access techniques, especially indigenously developed technologies,capable of coexistence with multiple operators will be considered in the frequency band 1880-1900 MHz on a case-by-case basis.
1.2 Frequency assignments for implementation of basic services (CDMA based mobiletelephone service) have been made to several service providers, viz., BSNL, MTNL, M/sReliance Infocom Ltd, M/s Tata Teleservices, M/s Bharti Telenet, M/s Shyam telelink, M/sHFCL Infotel, etc. these assignments have been made in 800 MHz/1880-1900 MHz bands forwireless access and also in the microwave frequency bands for point-to-point links.
1.3 Under UASL regime, subject to availability and as per guidelines issued from time totime, the following what a life of frequency and marking to UASL operators:
Frequencies will be assigned from within the bands earmarked in National FrequencyAllocation Plan for such application and in coordination with existing users.
Initially accumulated maximum of up to 4.4MHz + 4.4MHz will be earmarked in that TDMAbased systems or a maximum of 2.5MHz + 2.5MHz in cases of CDMA based systems oncase-by-case basis and subject to availability of frequencies. The frequencies May not becontinuous and may not be same in all cases or within the whole service area.
Additional Spectrum beyond the above the stipulation may also be considered forallocation after insuring optimal and efficient utilisation of the already allocated Spectrumtaking into account all types of traffic and guidelines/criteria prescribed from time to time.
However, Spectrum not more than 5 + 5 MHz in respect of CDMA systems or 6.2 + 6.2MHz in respect of TDMA based systems will be allowed to any UASL operator.
In the event, a dedicated carrier for micro cellular architecture based systems (in otherwords Cor-DECT-based networks) is assign the in 1880-1900 MHz band, the Spectrumnot more than 3.75 + 3.75MHz in respect of CDMA based systems or 4.4 + 4.4MHz inrespect of TDMA based systems will be permitted to any UASL operator.
2. Spectrum charges for use of frequencies for CDMA based networks:
2.1 the revenue share of 2% of Adjusted Gross Revenue (AGR) earned from wirelesssubscribers shall be levied as Spectrum charges for use of wireless access frequencies (inboth the bands i.e. 824-844MHz paired with 869-889 MHz and 1880-1900MHz) in thecomplete service area (not city wise) for wireless access system. This will include the royaltyfor Spectrum upto 5+5 MHz as well as the license fee for base stations and subscriberterminals (handheld or fixed). This is effective from 25 January 2001.
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2.2 The government has decided that Spectrum charges for the GSM based systems andCDMA based systems will be same. Accordingly, proposal is under consideration to LadySpectrum charges as 3% of AGR for Spectrum beyond 5+5 MHZ and upto 6.25+6.25MHz and4% of AGR for Spectrum beyond 6.25+ 6.25MHz and upto 10+10MHz or CDMA basedsystems. It may be noted that Spectrum charge for the GSM based systems is already beinglevied on above pattern.
2.3 In light of permission by government entrance Circle merger and acquisition,Spectrum charges for wireless access Spectrum beyond 10+10 MHz and upto 15+15 MHzhave been decided. The charges for Spectrum beyond 10 MHz for mobile services in900MHz, 1800MHz bands or any other band, would be as below:
For additional Spectrum of 2.5MHz or part thereof, beyond 10 + 10MHz, if assigned(GSM or CDMA/ Cor-DECT based) in metro/the telecom circles, an additional chargeof 1% of AGR will be levied. Thus, the total Spectrum charges to be paid by suchoperators would be 5 % of AGR earned from wireless access subscribers.
Further, additional Spectrum of 2.5MHz or part thereof, beyond 12.5+ 12.5MHz, ifassigned (GSM or CDMA/ Cor-DECT based) in metro/the telecom circles, anadditional charge of 1% of AGR will be levied. Thus, the total Spectrum charges to bepaid by such operators would be 6% of AGR earned from wireless access subscribers.
3. Spectrum charges for microwave links (access, backbone, etc):
3.1 Spectrum charges for microwave point-to-point and points to multipoint links forCDMA based systems are being levied as per orders No.R-11014/4/87-LR (Pt) dated 20 July1995 and No.R-11014/26/2002-LR/1452 dated 01.4.2003.
3.2 These orders stipulate specific for mothers for calculating Spectrum royalty andlicense fee, which are based on constant multiplier, distance, bandwidth, number of channels,number of wireless stations, etc. It would be pertinent to note that Spectrum charges formicrowave frequencies in respect of GSM based systems are based on revenue sharing.
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