A recent proposal, championed by India’s Department of Telecommunications (DOT), which envisions the imposition of fees upon wireless operators in exchange for “liberalized” usage of their second-generation (2G) airwaves has prompted the ire of Vodafone, which warned that the plan raises “deep concern for the industry.” The DOT proposal forms the latest issue of contention in the Indian market for Vodafone, which benefitted from a January India Supreme Court ruling that barred the collection of $2.5 billion in taxes that the government claimed was owed from Vodafone’s US$11.1 billion acquisition of Hutchison Essar in 2007. (Since then, legislators have proposed changes to the nation’s tax code that would enable the government to tax retroactively offshore transactions between Indian and foreign firms that date back to 1962.) The fee plan was unveiled earlier this month as part of the DOT’s proposed rules for the reauction of wireless licenses that India’s Supreme Court had revoked earlier this year as a result of corruption during the original 2008 allotment process. In accordance with the recommendations of the Telecom Regulatory Authority of India, the DOT has proposed allowing carriers to use their existing 2G spectrum in the 1800 MHz band for third- and fourth-generation wireless broadband services for a period of 20 years in exchange for a one-time payment to be based on market prices set during the court-ordered reauction. The DOT is expected to finalize its rules in time for the auction, which is slated for completion by August 31. Maintaining that “technology neutrality is enshrined in our licenses,” an official of Vodafone India proclaimed: “there is simply no justification to require us to pay an auction-discovered price for the permission to do what we are already entitled to.”
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Vodafone objects to India proposal for liberalized spectrum use
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