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Friday, Mar 15, 2002

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Rental hike to offset basic operator losses

G. Rambabu

NEW DELHI, March 14

THE increase in monthly rentals for commercial telephone subscribers has been greeted with a sigh of relief by basic telecom operators, who have been reeling under the impact of huge revenue losses due to the slashing of STD tariffs recently.

According to the basic operators, by allowing the service providers to differentiate between commercial and non-commercial subscribers, "TRAI has taken a step in the right direction, but much more needs to be done."

They pointed out that all along they were able to provide local call services at affordable rates as they were being cross-subsidised by the higher STD tariffs. However, following the 60-per cent decline in STD tariffs in mid-January, this leeway was no longer possible.

The lower STD tariffs, even while keeping local calls at the current rates, meant that the basic operators would have had to shut shop sooner or later. The TRAI order, therefore, comes as a breather because they will now be able to offset their losses by that much.

With more than 70 per cent of their revenues coming from around 20 per cent of the subscribers (who are commercial users), the operators have been demanding that either the local call tariffs should be increased for the commercial users or monthly rentals should be hiked for them. In a sense, TRAI has addressed part of the problem by increasing the monthly rentals for this segment.

According to Mr S.C. Khanna, Secretary-General, Association of Basic Telecom Operators (ABTO), hopefully the authority will address this issue even more comprehensively in the final tariff rebalancing exercise.

"The amendment to the tariff order is a good step. TRAI has finally accepted a separate category for commercial subscribers. It was unfair for the commercial subscribers to avail of the same benefits that the individual subscriber was getting. By allowing the basic operators to charge higher rentals from the commercial subscribers who have the ability to pay, the operators will now be able to survive," he said

He, however, noted that the tariffs for basic services were still not cost-based; they were much lower than the costs.

The only way out now is to allow operators to charge cost-plus tariffs from their subscribers, just as cellular operators do.

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