The Telecom Regulatory Authority of India (TRAI) on Friday released a consultation paper on license fee and policy matters relating to DTH services in the country.

License fee is a non-tax fee levied on a service provider against the privilege of being permitted to carry out a licensed activity, the regulator said in a statement.

In India, currently, the DTH operators are required to pay a license fee of 8 percent of adjusted gross revenue (AGR) on a quarterly basis to the Ministry of Information & Broadcasting (MIB). AGR is calculated by excluding goods and services tax (GST) from gross revenue.

The Department of Telecommunications (DoT), on October 25, 2022, carried out amendments in the Unified License (UL) agreement for AGR. As per the amendment, applicable gross revenue shall be equal to GR of the licensee by reducing certain revenue components as mentioned in the amendment.

Further, the definition of AGR is also amended and shall be arrived at by excluding some components from applied GR.

The extant DTH guidelines prescribe a bank guarantee of Rs 5 crore for the first two quarters, and, thereafter, for an amount equivalent to the license fee for two quarters and other dues not otherwise securitized.

DoT has also carried out certain amendments for rationalization of bank guarantees in October 2021.

In view of the amendments carried out by DoT and on the request of the DTH association and operators, MIB sent a reference to TRAI on February 2, 2022, requesting the regulator to examine the issues from a policy angle and furnish its recommendations.

An issue mentioned in the consultation paper is about exclusion of non-licensed activities from definition of gross revenue in respect of DTH license fee as in case of recent amendments carried out for telcos.

However, TRAI has asked the DTH operators about mechanisms to ensure that the revenue excluded from the gross revenue reflect the true value without compromising the revenue streams that entail payment of license fee.

The paper also seeks inputs on methods of verification to be adopted by the licensor to verify the deductions claimed, if any, for the purpose of calculation of the license fee payable by the DTH operators.

Alternatively, the regulator has put a poser: should the license fee be levied on gross revenue in place of AGR, or any other base is to be used.