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March 9, 1999


Hello to cost more: The new phone tariff has made local calls and rentals expensive and long-distance cheaper. The bottom line is bigger bills. The Telecom Regulatory Authority of India today announced new tariffs for various services.

These include a hike in the high-volume local call rates and telephone rentals and cutbacks in the number of free calls allowed.

Email this story to a friend. This must bring bad news to the country's fledgling Internet community as the total cost of access through the predominantly dial-up connections has gone up.

The silver lining is that the domestic long-distance rates have come down.

The tariffs are to be effective from April 1.

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The new tariffs mean that the government's Department of Telecommunications, that runs most of the telephone network of the country, will not be forced to borrow excessively for its expansion plans, TRAI Chairman S S Sodhi told reporters in New Delhi.

Sodhi said the tariffs have been devised to ensure that service providers remain viable and that the network expansion plans for the telecom sector are not adversely affected.

The tariffs that had not been revised since 1993 have been fixed at affordable rates, he said.

Sodhi reminded reporters that the revised tariffs are only a first step in the telecom pricing reforms that his organisation has set about.

He said, "We have a long way to go but we are confident that we will reach the objective of competitive pricing of telecom services in India."

Sodhi said the tariffs have been announced after consultation with interested parties and hoped the package is well balanced. "The rest is for public judgement and the test of time," he shrugged.

Sodhi said local call rates would now be 80 paise per metered call for rural subscribers and Re 1 for urban subscribers.

The free calls allowed for urban subscribers are 60 metered calls per month and 120 metered calls bi-monthly. For rural subscribers they are 75 metered calls per month and 150 metered calls bi-monthly.

Previously, the free calls allowed were 150 bi-monthly.

Sodhi said the telephone rental in urban areas has been increased from Rs 190 to Rs 250 a month. In the rural areas the rental ranges from Rs 70 to Rs 250, depending on the capacity of the exchange.

For rural commercial lines, the monthly rental ranges from Rs 120 to Rs 310. It will increase marginally next year and the year after.

The local long-distance, or 'subscriber trunk dialling', charges, Sodhi said, will be reduced by 40 to 45 per cent at the end of three years. The reductions in the STD charges works out to 20 per cent in the first year, 10 per cent in the second year and 10 per cent by the third year.

Over the three-year period, domestic long-distance charges will decrease by about 45 per cent and international call charges by about 50 per cent, he added.

Now an international call to any country of the South Asian Association for Regional Co-operation grouping, or any neighbouring country, should cost Rs 20 per minute up to March 31, 2000. In 2001, it will be revised to Rs 16.80 and in 2002 to Rs 14.40.

Similarly, a call per minute to countries in Africa, Europe, the Persian Gulf and Asia should cost Rs 32.80 in the first year, Rs 27.20 in the second year and Rs 21.60 in the third year.

Industry responds
in several voices

The Telecom Industry and Service Association has criticised the proposals to hike telecom tariffs, saying it would inhibit teledensity across the country.

''The telecom penetration in India is already one of the lowest in the world. The rentals for fixed lines should not have been increased,'' said TISA President P K Sandell.

For cellular operators, he said, the reduction in tariffs could prove to be counterproductive at this stage. Most are incurring heavy losses and have to pay huge licence fees.

Sandell said DoT and the Mahanagar Telephone Nigam Limited should have been asked to pass on their mounting profits to consumers.

However, the Confederation of Indian Industry has pointed out that the increase in rentals is in line with the commitment made to the World Trade Organisation.

''It is a good move,'' said Vijai Kapur, chairman of the CII National Communications Committee. He said the new tariffs are cost based and will avoid cross-subsidisation.

Essar Cellphone CEO Erich Buerkler said the tariff alterations are a step in the right direction.

''We hope the proposals will be backed up with changes in the current licence fee structure and the regulatory environment,'' he added.

A call of one minute to countries on the American continent and other places in the Western Hemisphere should cost Rs 40.80 in the first year, Rs 32.80 in the subsequent year and Rs 27.20 thereafter.

According to Sodhi, the local tariffs in the rural areas will benefit subscribers, particularly those making use of 'public call offices' and 'village public telephones'.

The TRAI tariff structure is just a standard and service providers are free to offer better packages, he clarified.

As regards the tariffs specified for cellular mobile telecommunication services, it is similar to those proposed earlier, that is Rs 600 monthly rental and air time tariff of Rs 6 per minute.

The 'calling party pays' system will be started in August this year because it is not possible to do this any earlier, Sodhi said.

Tariffs have also been specified for radio paging, except for the revenue sharing model. However, he clarified that it is an interim decision because the TRAI is examining the issue of licence fees for radio paging service providers and the tariff might be revised in that context.

For leased circuits of 64 KBPS and 2MBPS, the tariffs are almost the same. But the concept of 'basket' has been done away with.

For ISDN services, the tariff remains unchanged from those proposed, except that the call charge specified is Rs 1.20 per metered call and not Rs 1.50.

The TRAI will conduct a more detailed study on ISDN after some time, Sodhi promised.

However, the TRAI has specified a reduction in Internet leased circuit charges.


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