Trai makes radical changes to the tariff structure, slashes 30% amount for inter-network calls

NEW DELHI: The telecom regulator made radical changes to the industry’s tariff structure, slashing by 30% the amount that mobile operators pay to each other for calls made from one network to another and scrapping similar charges for wireline operators --moves that may lower call rates.
A mobile phone operator now needs to pay 14 paise a minute for each call terminating on a rival’s network, compared with 20 paise earlier, the Telecom Regulatory Authority of India said in an order on Monday.

Calls made from landlines to a landline or a mobile phone won’t include any such interconnection usage charge (IUC), which was 20 paise earlier.

Rajan Mathews, director general of GSM industry body, COAI, welcomed the regulator’s decision, saying it was very balanced. “Nobody loses too much or gains as much,” he said. He added that smaller operators, which stand to benefit the most from the cut in IUC charges as their costs would do down, may pass on part of the benefit to subscribers. Bharti Airtel, Vodafone India and Idea Cellular, which hold over 70% of the market share, have the maximum calls emanating and ending on their networks. The rest is made up of smaller operators such as Uninor, Aircel, Tata Teleservices and Videocon, whose call rates are typically much lower than the big three.

IUC makes up about 20% of mobile call tariff that a user pays. However, Hemant Joshi, partner at Deloitte Haskins & Sells, wasn’t too sure about gains for customers. “Since the tariffs in India are lowest in the world and in view of high spectrum costs and taxes faced by the telecom operators, they may not be able to pass on the benefit of reduced termination charges to the consumer,” he said.

IUC, which has historically been revised every two to three years, was last amended in 2009 and the matter has been pending in apex court. “As a significant amount of time has lapsed since the last review, the Authority initiated this review of IUC regime in November 2014,” Trai said.

Trai increased interconnect charges for international calls terminating on a local network to 53 paise from 40 paise earlier. These are charges foreign operators need to pay to local players.

As a result, cost of making an overseas call from India would be comparable with international calls terminating in the country, which could encourage more outbound calls.

“To promote investment in, and adoption of, wireline networks, so that they may become an effective vehicle for the delivery of high-speed Internet in the country, the Authority has decided to prescribe FTC (fixed termination) as well as MTC (mobile termination charge) for wireline to wireless calls as zero,” TRAI said in the new IUC rule.

Landline connections have been declining since incoming calls on mobiles were made free.

While the mobile subscriber base at the end of 2014 reached an alltime high at 94.39 crore, landline connections were only 2.7 crore.