Dropping the ball

Trai must consider durable remedies for call drops

Even as the problem of dropped calls refuses to go away, the Telecom Regulatory Authority of India's (Trai's) decision to penalise the telecom companies is not the right solution. Trai has said that from January 1, companies will have to pay Rs 1 for every dropped call, subject to a daily ceiling of Rs 3. Unfortunately, the regulator is barking up the wrong tree. The order could result in several disputes. To begin with, what stops a rogue subscriber from claiming that a disconnected call was a dropped call? Or from moving into a lift, where the call breaks, and demanding compensation? This could open the floodgates for disputes between telecom companies and their subscribers. The telecom companies will have to deploy sizeable managerial bandwidth to handle these issues. The ceiling of Rs 3 a day on the penalty may look small but an unscrupulous subscriber can make up to Rs 93 every month by abusing the system. This is two-thirds of the industry's average revenue per user of about Rs 130 a month. The telecom companies have said that the annual compensation due to dropped calls might range from Rs 10,000 crore (in case 10 per cent of their subscribers claim compensation) to Rs 54,000 crore (if 50 per cent claim compensation).

That apart, there are other issues that need to be sorted out before the penalty can come into effect. For one, the licence agreement requires 98 per cent call throughput; in other words, there is space for two per cent call drops. The new penalty comes into force from the first dropped call and is therefore in conflict with the agreement. The telecom companies are required to provide 90 per cent coverage at the level of the district headquarters and 30 per cent at the level of the block headquarters; will the penalty be valid if the telecom companies are meeting this guideline? There could be disputes of other kinds as well. If the dropped call emanates and ends within one network, there will be no problem in identifying the culprit and levying the penalty. But consider a situation where the call emanates in one network and terminates in another - is it right to penalise the network of origin in case of every dropped call? It is possible that the call may have dropped because of a snag in the other network? Situations like this will lead to a minefield of disputes and litigation.

The problem can be addressed if the telecom companies improve the efficiency of their spectrum, which requires investments in equipment, technology and towers. In this, the telecom companies are constrained by India's low tariffs. So, unless tariffs improve significantly, the problem of call drops will persist. The penalty is not the way out. Instead, the regulator must ask itself: what is preventing the action of competition in the sector? Why are some companies not competing on quality, offering customers fewer dropped calls at higher tariffs? Competition in the sector is in fact constrained by past regulatory action. Once those hurdles are removed, the problem will begin to resolve itself speedily.