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Tuesday, Feb 03, 2004

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TRAI says no case for tariff hike

G. Rambabu

New Delhi , Feb. 2

THE Telecom Regulatory Authority of India (TRAI) is of the view that there is no justification for the hike in mobile tariffs on account of the revised interconnection usage charge (IUC) regime that has been implemented from Sunday.

According to TRAI officials, the new IUC regime which includes access deficit charges (ADC) that has been imposed on cellular companies to compensate Bharat Sanchar Nigam Ltd (BSNL) for its "below-cost" operation, is not a good enough reason for the mobile operators to charge higher rates from their customers.

"The ADC was fixed after a lengthy consultative process with all stakeholders and the present amount was decided keeping in mind the margins that the operators can enjoy. So it is not true to say that the mobile tariffs have to be raised to accommodate the ADC, the operators can make profits even if the rates are not raised", they said.

The officials, however, ruled out any interference since all mobile and fixed line tariffs are no longer regulated. It was left to the market forces and competition would ensure that call charges would reduce again, they said.

"As of now, no negotiation or mutual agreement or any discount can be applied for the ADC. The Authority wanted to eliminate all regulatory disadvantages to any service. Under the earlier IUC regime, with ADC being levied only on calls involving fixed line, the cellular service providers had greater flexibility in offering lower tariffs in comparison to fixed line calls, especially when fixed line was involved at both ends. This affected the competitive possibilities available to the competing services, with the competitive ability of fixed line being restricted to a very large extent. Taking account of the regulatory disincentives encompassed in the regime under which the ADC is loaded only on calls involving fixed line, the Authority has decided to distribute the ADC load on all access services. This incorporates a more neutral regulation", they said.

In any case the Authority would consider changes at the time of the next review, they stated.

The operators, however, refused to accept these arguments and stated that by charging ADC from them, especially on cell-to-cell calls, which do not utilise BSNL's network, is just one way of subsidising BSNL's operations at the cost of private cellular operators. These additional levies have raised the cost of operation and only a small portion is passed on to the customers.

"Why should other operators pay for the inefficiencies of BSNL? What is more, the company is also not complying with the requirements of the new IUC regime on matters involving discrimination, level playing field and other operational matters. It is taking advantage of its incumbent position in doing so. We have already brought these to the notice of the Authority and expect it to issue suitable directions to BSNL", the operators said.

According to BSNL officials, the company is in need of revenues from ADC since it had single-handedly built up a telecom infrastructure in the rural areas, which are unremunerative. This amount will be used for making further inroads into the uneconomic regions to increase teledensity and make telecom services more affordable to the common man.

The company has also decided not to raise the existing mobile tariffs for its customers. The present rates, which are the lowest in the industry, will continue to be applicable, they said.

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