Trai may review telcos' freedom to fix mobile rates

Tags: News
Telecom regulator Trai today warned that it will review service providers' freedom to fix mobile call and service rates if they increase tariffs beyond the current base rates.

"I do not expect headlines tariff to change. If they change, as and when they change, I have told the industry, then the regulator reserves its right to go back and look at it again if forbearance should be continued or not. I am being open, there is nothing to hide," Trai Chairman Rahul Khullar said here.

He was responding to a question on the possible changes in mobile rates following recent recommendations by the Telecom Regulatory Authority of India on issues such as spectrum sharing and lowering of maximum of rates on leased lines that could lead to cost saving for mobile operators.

Base rates or headline tariffs are the maximum call or service rates that a telecom operator can charge to its customers but normally companies charge less than these rates. At present most of the telecom operators have fixed base rate at 2 paise per second.

The regulator allows free hand to fix telecom call and service rates as it feels that competition in the market will keep control on tariffs.

"Its a separate matter, if (spectrum) sharing leads to lower cost they may be able plough it back or they may want to put that cost in to larger profits. Better yet if they can use to service debt. All telecom operators are in heavy debt and debt has to be paid otherwise what will happen to banks," Khullar said.

Trai has recommended that government should allow sharing of all categories of spectrum held by telecom companies for mobile services.

If this recommendation is approved, telecom operators will be able to bring down cost of ownership of radiowaves which has increased to about 5 times compared to its price of Rs 1,658 crore under old licencing regime.

Khullar said mobile rates were low earlier because telecom operators were having fighting to attract the customers of their competitors, and in the process they were offering calls at lower rates than their actual costs.

He said telecom operators who were in heavy debt or making losses starting cutting down on freebies and some changed their headline tariff.

"They did it at rate of something like 2 percentage," Khullar said.

Telecom companies have raised mobile base rates by about 100 per cent between 2011 to 2013 and more frequently after cancellation of 122 2G telecom permits by Supreme Court in February 2012.

On a proposal that STD call rates should be equal to local calls, Khullar said that government will have to look for solution to compensate national long distance operators - a key intermediary for transmitting calls, to bring STD call rates at par with local.

"No such reference has come to us from government. If it comes we will see what all can be done," Khullar said.

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