The rationale for continuing to collect spectrum usage charges on legacy holdings deserves fresh scrutiny  | Photo Credit: Andrey Suslov

The Bombay High Court’s decision to strike down the Centre’s one-time spectrum charge (OTSC) demand on Bharti Airtel and Vodafone Idea is a welcome affirmation that governments, no less than private parties, are bound by the contracts they sign. The judgment, coming after more than 13 years of litigation, sets aside a retrospective levy that lacked a clear statutory or contractual basis.

The dispute traces its roots to the evolution of India’s telecom licensing regime. Until 2001, GSM operators were contractually entitled to 4.4 MHz of spectrum. Thereafter, the contracted allocation was increased to 6.2 MHz. Yet, between 1999 and 2008, the Wireless Planning and Coordination (WPC) wing of the Department of Telecommunications repeatedly issued administrative orders prescribing criteria for the assignment of spectrum beyond these contractual limits, eventually allowing GSM operators to receive up to 15 MHz. If the licence itself capped contractual spectrum at 6.2 MHz for GSM operators, under what authority did the WPC continue to assign spectrum far beyond that limit? Conversely, if the government intended such assignments to be made under the same licence framework, why did it never amend the licence conditions? Operators receiving larger assignments were subject to progressively higher spectrum usage charges (SUC), with increased revenue-sharing obligations linked to the quantum of spectrum held. The Department effectively evolved a mechanism for allocating additional spectrum while collecting higher revenues from operators, without formally aligning the licence framework with that practice.

The 2012 decision to impose OTSC on holdings above 6.2 MHz, retrospectively from July 2008, came in the aftermath of the 2G spectrum scandal. It looked very much like an attempt by a government on the defensive to retrospectively monetise decisions that had been administratively sanctioned for years. The Bombay High Court promptly stayed enforcement in January 2013 and barred coercive action against operators. The High Court has now held that while spectrum is undoubtedly a scarce natural resource held by the government in trust for the public, that principle cannot be used to disregard contractual commitments or impose new liabilities without legal authority. The OTSC levy amounted to an executive order without legal backing. The ruling is significant because it could save Bharti Airtel and Vodafone Idea an estimated ₹25,000 crore. Both operators continue to grapple with the financial burden of the AGR judgment. Removing a decade-old contingent liability provides much-needed relief.

The matter is before the Supreme Court, but the broader lesson extends beyond this case. The rationale for continuing to collect spectrum usage charges on legacy holdings deserves fresh scrutiny. The government itself recognised this reality when it abolished spectrum usage charges on spectrum acquired after 2021. The Centre should complete the unfinished task of rationalising telecom levies.

Published on June 10, 2026