Rediff Logo Infotech The Rediff Music Shop Find/Feedback/Site Index
November 10, 1998


TRAI releases response to telecom tariff proposal

Email this story to a friend. The Telecom Regulatory Authority of India has released the responses of consumers, private service providers and government-owned operators to the new tariffs it proposed earlier this year.

While all responses routinely welcomed the orientation toward cost-based services, almost every tariff cut and increase was opposed by one operator or another.

Ink stinks
Birlas hunting overseas
Debate on phone tariff
RBI's Y2K strategy
The Association of Basic Telecom Operators has represented that differential regulation should be practised - that is the incumbent should be subject to more regulation until the new operators gain a 35 per cent market share.

The ABTO has therefore recommended that tariff 'caps' actually be 'floors' for the incumbent operators - the Department of Telecommunications and Mahanagar Telephone Nigam Limited.

Consumer responses are against any increase in rentals. In some cases, consumers asked for rentals to be abolished.

TRAI has suggested a peak monthly rental of Rs 310 per month while full allocation of costs would actually bloat rentals to around Rs 600.

The Association of Basic Telecom Operators has said that while they agree with the rates proposed by TRAI at present, they would like further increases over time.

The DoT has, however, pointed out that rental increases would force marginal users to surrender telephones and has therefore suggested an increase of 25-35 per cent (around Rs 250).

DoT and private basic service providers have said that the sharp 50 per cent drop in STD/ISD rates would result in a drop in investible surplus between 30-50 per cent.

DoT has also maintained that the 50 per cent reduction in STD rates would not increase usage and revenues substantially since users who would pay higher rentals would restrict use to keep their expenditure on telecom within limits.

Shrinking revenues, the operators have argued, will affect rollout plans and consequently, teledensity.

Most operators, including the Videsh Sanchar Nigam Limited, have asked for the cuts in STD/ISD rates to be spread equally over three years.

TRAI has proposed an immediate two-third reduction following equal reductions of a sixth over the two subsequent years.

The Cellular Operators Association of India has asked for different tariff structures for metros and circles while also saying that there should be no price regulation on additional services such as voice mail, calling line identification, voice mail etc.

TRAI has suggested a rate per minute ceiling of Rs 6 per minute. Cellular operators, who have pointed out that after considering peak and off peak rates, the effective realisation would only be Rs 3.75 per minute. It has suggested an alternative peak rate of Rs 8 per minute.

The TRAI has also proposed that with respect to incoming calls, the PSTN subscriber who dials a cell number should be charged Rs 3.90 per minute with the fixed operator retaining only 59 paise.

The COAI and DoT have expressed doubts about the technical ability of existing systems to implement such a regime. DoT has also said that it is against sharing revenues with cellular operators on STD/ISD calls originating from the cell network. It has argued that since long distance traffic is carried on its own network and the cell network is used only locally, there should be no revenue sharing.

With respect to leased lines, the 65-92 per cent cut suggested by TRAI has been strongly opposed by DoT.

It has argued that the new rates do not reflect real costs and has instead suggested that the rates be aligned to cost while also providing a 40 per cent profit margin since it is a "premium service''.

Private basic operators, on the other hand, have welcomed the cuts but said that the implementation should be spread over three years.

The DoT has also said a sharp reduction in leased charges may result in the STD network being bypassed. VSNL has said that since the tariff for international leased lines has not been touched, it is assumed that the prevalent tariffs would continue.

Consumers of telecom services may get compensated for faulty service and delays under a new regulation on 'quality of service' planned by TRAI.

A consultative paper on quality of service is being prepared, TRAI Chairperson Justice S S Sodhi has said.

It is also being proposed that registration of complaints against telecom service providers including the incumbent Department of Telecommunications be brought under an independent body that would also monitor the responses of the providers.

An independent body would then supply statistics on service levels, such as percentage of faults rectified within stipulated timeframes, Sodhi said.

Open-house discussions on the consultative paper on quality of service would be held simultaneously with sessions on the tariff paper at several cities over the next few weeks.

Sodhi said the new tariffs would be finalised after the open-house discussions. But there are indications that the finalisation of tariffs and a schedule for the re-balancing would happen in January. As one official pointed out, the rates would have to be notified in time for the largest operator - DoT - to prepare its budgetary revenue estimates for 1999-2000.

- Compiled from the Indian media

Tell us what you think