Call rates may fall as Trai cuts interconnection
usage charges Interconnection usage charges reduced to 14 paise per minute from
the current 20 paise Older operators with more subscribers and bigger networks
tended to make money from this charge, while smaller operators ended up paying
a charge, on a net basis. Photo: Mint New Delhi:
In a move that could lead to lower call rates, the Telecom Regulatory Authority
of India
(Trai) on Monday reduced interconnection usage charges to 14 paise per minute
from the current 20 paise. Interconnection usage charges are payable by a telco
whose subscriber makes a call, to the telco whose subscriber receives the call.
The charge is essentially payable by the first telco for using the second
telco’s network. This means older operators with more subscribers and bigger
networks tend to make money from this charge, while smaller operators end up
paying a charge, on a net basis. The move is likely to be welcomed by smaller
and newer operators, while the larger telcos are likely to contest the new
tariff. Analysts had mixed reactions on the decision. “This move of Trai is
very positive and healthy sign for the telecom industry. However, 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 in full,” said Hemant
Joshi, partner at Deloitte Haskins and Sells. A Mumbai-based telecom analyst
with a multinational brokerage firm said, “The operators will have to pass on
the reduction, as smaller operators will have room to reduce tariffs and eat
into customer market share. It is difficult to say that there could be a tariff
war again as the overall debt of the sector is a little high.” Calls
originating from and ending in land phones will not have any interconnection
charges, Trai added. “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 charge) as well as MTC (mobile termination charge) for
wireline to wireless calls as zero,” Trai said in a statement on the new
interconnection charges. Termination charges for international incoming calls
have been increased to 53 paise per minute, from the current 40 paise. The
number of fixed line connections in the country has been falling for several
years now. The mobile subscriber base at the end of 2014 reached an all-time
high of 943.9 million, while landline connections are only 27 million.
State-run Bharat Sanchar Nigam Ltd (BSNL) has the most landline phone
subscribers with 62.71% market share, followed by state-owned Mahanagar
Telephone Nigam Ltd (MTNL) with 13.04%. Others with fixed line services include
Bharti Airtel Ltd with 12.55% market share, Tata Teleservices Ltd with 5.98%
and Reliance Communications Ltd (R-Com) with 4.39% market share. Videocon’s
Quadrant, Vodafone India Ltd and Sistema Shyam TeleServices Ltd together
account for 1.2% market share. In the mobile services segment, Bharti Airtel is
leader with a 23.01% market share followed by Vodafone with 18.93%, Idea
Cellular Ltd 15.95%, R-Com 11.26%, BSNL 8.62%, Aircel 8.33%, Tata Teleservices
7.01% and Uninor 4.62%. Sistema Shyam, Videocon Telecom and MTNL together
account for about 2% mobile services market share. Trai reviews the
interconnection charges every two-three years, but was unable to do it since
the current interconnection regime came into place in April 2009, as the issue
was pending in the Supreme Court. The new charges are a consequence of the
consultation process started by the telecom regulator in November 2014.
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