Mobile users to benefit as Trai plans to cut charges

In 2009, the telecom regulator had recommended a mobile termination charge at 20p a minute for all local and national calls

Network interconnection and call termination charges, paid by one cellular operator to others for connecting and completing voice calls on their networks, are likely to change very soon. These charges have a direct impact on the rates at which end-consumers pay.

The Telecom Regulatory Authority of India (Trai) plans fresh recommendations on all these charges soon, say sources here. It is likely to bring down the charges. However, it will have to start a fresh consultation before issuing new recommendations.

In its 2009 recommendations, Trai had fixed a mobile termination charge at 20p a minute for all local and national long distance charges. It had also raised the mobile termination charge for incoming international calls to 40p a minute from 30p, while capping carriage fees at 65p a minute for domestic long distance calls.

According to sector sources, 15-20 per cent of operators’ revenue comes from termination charges. “This is a very complex issue and the regulator will have to do it in consultation with the industry. Once it starts the consultation, we will give our suggestions. The regulator should keep it non-discriminatory, and it should not hurt the cellular telecom operator,” said Rajan Mathews, director general, Cellular Operators Association of India (COAI). However, there is scope for bringing it down, he added.

Due to various legal cases and implications, the issue could not be addressed properly, though Trai had started consultation on review of telecom interconnection in May 2012. However, most of the legal cases at different courts are almost settled now; the Supreme Court also gave its order last year.

Earlier when Trai gave recommendations on these charges, it faced opposition from both new and old operators over the issues and methods adopted in the consultation. Following this, it asked the Supreme Court to “grant suitable direction regarding the procedure and method to be followed”.

Meanwhile, in May 2013, it issued new norms imposing five paise as termination charge on each transactional short message service (SMS) and two paise on each normal SMS on operators from whose networks the message originates. The new regulation took effect in June 2013. Prior to the new guidelines, some operators like Bharti, Vodafone and Idea Cellular charged a termination fee of 10p an SMS, based on a bilateral agreement. However this was not accepted by Reliance Communications, Tata Teleservices and Aircel; the matter went to court.

Telcos get about 18 per cent of their revenue from value-added services, of which about 40 per cent comes from SMS. According to COAI, the bigger telcos were earning about Rs 20 crore annually as termination charge from bulk and transactional SMSes. With the new Trai norm, this will come down to Rs 10 crore. Big operators, however, did not have to pay much to each other as termination charges for individual SMSes, as these got neutralised — individual subscribers who send a message to another get a reply in 90 per cent of the cases.