The Hindu Business Line : Cell operators, TRAI seek easier handset bundling norms

CELLULAR operators, backed by the Telecom Regulatory Authority of India (TRAI), plan to renew the pitch for removing the price of mobile handsets from the Adjusted Gross Revenue (AGR) criteria that acts as a disincentive for bundling.

"The operators should work out a mechanism to address the concerns of the Government regarding license fees avoidance. I feel that the Government will have no problem with it (bundling), if the mobile service providers can assure that it will not be used to avoid the license fee liabilities," the TRAI Chairman, Mr Pradip Baijal, said here on Monday.

As per the current norms, the price of the handset, if provided by the service provider, is added to the operator's AGR.

The license fee is a percentage of the AGR for each operator.

To avoid inflating their AGR, the operators simply stay away from bundling handsets with a connection as is prevalent in most developed markets.

TRAI, which had earlier recommended removal of the handset price from AGR, believes that the operators need to find a mechanism to present the correct value to the Government.

"I feel that the Government wants to avoid a situation where the operator charges very heavily for the handset and then uses it to subsidise call charges. You give a handset for Rs 10,000 and say that the service will be free for one year.

" Clearly, the Government stands to lose out on its license fee and will not be willing to provide the concession," Mr Baijal said.

In response, a section of GSM (Global System for Mobile communication) operators said that the printed price of the handset or its custom value as declared by the importer should be treated as the cost of the handset.

Mr Baijal said that the operators should work out a realistic formula and approach the Government as part of the pre-Budget exercise that is expected to be kicked off soon after the new council of ministers settles in.

Mr Baijal, who was speaking at an interactive session organised by the Federation of Indian Chambers of Commerce and Industry (FICCI), said that TRAI would come out with a consultation paper on spectrum, dealing with issues such as usage and pricing, later this week.

"In the next three or four days we will release a consultation paper on spectrum, which will look into issues like efficient use of spectrum as well as pricing," he said.

Asked why the recent recommendations on broadband were silent on bandwidth pricing, Mr Baijal said a consultation paper on domestic bandwidth pricing would also be out in the next two weeks.

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