Cross-talk on roaming charges

The Telecom Regulatory Authority of India (TRAI) on June 17 issued a tariff amendment that claims to lower the ceiling rates on roaming calls.

What the TRAI has left unsaid is that customers are not likely to see any real benefit in their roaming costs. This is because the ceiling charges are more or less the tariffs prevailing in the market today.

This has been acknowledged by TRAI itself. It says: “The Authority has, therefore, decided that the ceiling tariff ..should be brought down and fixed at the levels of the prevailing tariffs.”

Hence, there is no real reduction ordered through a regulatory mandate.

However, customers may still end up celebrating on account of an unintended consequence of this tariff order – all local tariffs would also now be rationalised and capped at rates not higher than the roaming ceilings set by TRAI. In fact, this amendment leaves no room for local tariff increases in the future.

There has been a lot of euphoria at the prospect of roaming charges being removed – which was envisaged in the national telecom policy (NTP) 2012.

Curious situation

But TRAI, in trying to partially pander to this objective to make roaming completely free and at the same time trying hard to justify why this cannot be done, has created a curious hybrid situation.

TRAI argues that completely removing roaming tariffs (which is essentially the charge customers pay for incoming calls when in another service area) would lead to an increase in local call rates. This is specious at best, because over the past one year local call tariffs have been creeping up steadily in any case — without any corresponding reduction in roaming tariffs.

Now, we may see these home rates being rationalised because TRAI has indirectly capped home tariffs by determining the ceilings for roaming calls.

Roaming has always been acknowledged as service that involves more work and a higher cost. This has been mentioned by TRAI in its amendment: “Service providers generally keep the tariff for national roaming at a relatively higher level than the tariff in the home service area.”

And the reason TRAI gives for not fixing roaming tariffs at the same level as home tariffs is the higher costs of roaming. To quote: “Implementation of ‘roam tariff equal to home tariff’ across-the-board may result in some costs incurred for the national roaming service, remaining unrecovered. TSPs may resort to increase in home tariffs to recover these unrecovered costs, if any.”

Hence, the assumption is: roaming involves more work and hence higher tariffs are justified (including a charge for incoming calls). Home tariffs can, therefore, never be higher than roaming prices.

The ceiling for outgoing local calls while roaming is now Re 1/minute. It would, therefore, be absurd if tariffs in the home network were higher.

This would end up creating the very situation that TRAI was hoping to avoid. Customers would rather bring in SIM cards from neighbouring service areas to pay lower rates than use the tariffs of the home network.

The 55th tariff amendment thus creates a distortion and is also a deterrent to price increases in local calls that breach the ceiling of Re 1/minute. For consumers, this is extremely good news as tariffs of local calls have been slowly inching up. TRAI now has the task of ensuring that all local tariffs are fixed at Re 1/ minute or lower.

FURTHER COMPLICATIONS

There are other contradictions. For example, an inordinately long justification has been provided for continuing to allow incoming roaming calls to be charged.

But in its rush to arrive at a ceiling tariff for incoming calls, TRAI has simply added the carriage cost (fixed 10 years ago) to the incremental cost of roaming (fixed last month).

The incremental cost of roaming in 2007 was Rs 0.75 per minute. It has now been estimated at just Rs 0.10. If costs have declined in this manner, it is then not clear why TRAI uses the carriage rates that were fixed 10 years ago — would these carriage rates not have declined in the interim? Not much serious thinking seems to have gone into this amendment.

Then there is a final dollop of confusion by way of the mandate for offering two new tariff packages. One tariff package has to offer customers the same rates when the customer is at home and while roaming, but within the overall prescribed limits.

What this will do is ensure that all outgoing rates are fixed at the ceiling rate prescribed by TRAI.

The other mandated tariff package — almost similar to the first — permits service providers to charge an extra fixed, upfront amount in return for “free” incoming calls while roaming. But then this can be achieved through special tariff vouchers (STV) which this amendment allows.

STVs have not been allowed since 2007 as they entail an upfront payment — amounting to a fixed rental. The fixed upfront charge was abolished then due to the rampant practice of charging rentals from customers who never used the roaming facility.

An STV (for a fixed upfront charge) allows customers to avail benefits on specific elements of a tariff plan (whether lower rates for STD, roaming or SMS).

In fact, service providers will soon offer STVs that allow “free” roaming for specific periods, across specific service areas or the entire country. Except that it is not really free due to the upfront charge.

The STV offers operators an additional stream of revenue — which is helpful for the financial health of the sector. The stock markets have already responded positively to this news. TRAI seems to have ignored the contradictions, though.

(The author has been associated with the Indian telecom sector since 1996. Views are personal.)

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