Trai, firms lock horns over tariffs

Regulator terms hike in tariffs unjustified

The Telecom Regulatory Authority of India (Trai) and mobile operators are headed for a collision course, with the regulator today terming the hike in mobile and long-distance tariffs because of the imposition of access deficit charges (ADCs) unjustified.

Although Trai officials said mobile operators were free to set tariffs, they added that the regulator could intervene if it found the tariff hikes to be unreasonable.

Trai member D P S Seth told Business Standard: "We examined the IUC regime and have concluded that there are enough margins in the existing tariff structure for the operators to adjust the access deficit charge amount. To put the blame on ADC is a lame excuse given by cellular operators."

Seth added that even in the long distance segment, the interconnect usage charges specified by Trai had left scope for only a downward revision in tariffs instead of an increase.

Cellular operators like Bharti yesterday hiked the rates about 20 per cent in local call charges following a levy of Rs 5,000 crore as ADC on all operators. Cell-to-cell STD rates have been increased from Rs 1.99 a minute to Rs 2.99.

"We will take up the matter with Trai. As per our estimate, the ADC is an additional burden on cellular operators, which has to be passed on to the consumers. There is no way we can absorb the ADC without an increase in tariff," Cellular Operators Association of India Director General T V Ramachandran said. He, however, ruled out any litigation on the matter.

Seth said Trai hoped the tariff increase was only a temporary phase as competition between operators would force them to cut tariff.

"Not all operators have increased their tariffs. So, when there are companies offering a cheaper option in the market, others will also have to bring it down to survive," Seth said.

Seth said the regulator at this juncture might not intervene since the mobile tariffs was under forbearance.

"If the market forces do not come into play to stabilise the tariffs, we may intervene at that stage," Trai sources said.