DoT asks TRAI to review termination charges; tariffs may fall

DoT asks TRAI to review termination charges; tariffs may fall
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First Published: Mon, Jun 23 2008. 03 46 PM IST
Updated: Mon, Jun 23 2008. 03 46 PM IST
PTI
New Delhi: Expressing concern over delayed review of mobile regulations, the Department of Telecommunications (DoT) has asked Telecom regulator Trai to review termination charges on priority basis to make them cost-based, a move that may bring down mobile tariffs significantly.
Termination charges are paid by an operator from whose network a call originates, to a service provider on whose network the call is terminated.
Currently, the charges have been fixed at Re0.30 a minute and are considered too high. Moreover, the charges were fixed in 2003 and since then the cost of network and services have come down by more than 50%.
“Given the central aim of telecom policy to provide services at affordable rates, it is suggested that a review of the mobile termination charges, based on present and projected cost and traffic is undertaken by Trai on a priority in a time bound manner,” DoT said in a letter to Trai.
Some of the operators have pointed out that cost-based termination charges would be less than Re0.10 a minute. If implemented, the existing operators would have to forego a substantial portion of their revenues, while new cellular operators would find it easy to establish themselves.
“One of the major component of tariff is the termination charge, which is not under forbearance (not decided by market forces). The high termination charges have potential to stifle competition and may disturb the level playing field,” DoT feels.
The termination charge is a function of traffic and such high increase in traffic must translate into reduction in such charges, DoT said in the letter.
The argument that if mobile termination charges are reduced, then the viability and the sustainability of existing tariff plans may not be possible and this may retard growth of mobile subscribers, does not seem to be a valid reason for not reviewing it in the general interest of the public at large and telecom consumers in particular.
“Rather, the reduction in termination charges will lead to reduction in pay outs of the operators thus making the tariffs more viable and sustainable in the competitive environment,” DoT said.
One of the operators said that regulations like termination charges should be reviewed on annual basis by Trai and delayed decision on this front has enabled existing mobile operators to mint crores of rupees due to this at the cost of consumers.
Sources in the DoT said that Trai had fixed termination charges for both fixed and mobile services at the same rate of Re0.30 in 2003, whereas the cost per line of fixed line is far more high compared to that of mobile services.
“It is noted that in the subsequent years, while reviewing the spot values of Access Deficit Charge and the carriage costs, Trai has not carried out a detailed cost and traffic exercise for reviewing the termination charges for mobile as well as basic services,” DoT said.
Some of the operators have also raised the issue of SMS tariffs, saying the existing operators have been charging up to 10 times of the cost of each SMS and this needs to be rectified urgently.
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First Published: Mon, Jun 23 2008. 03 46 PM IST