Call drop compensation unlikely in near term: UBS Securities

Telecom regulator Trai's order making it mandatory to compensate customers for up to three call drops in a day is not likely to be implemented in the near term, brokerage firm UBS Securities has said.

Telecom Regulatory Authority of India (Trai) last month mandated that telecom companies from January 1 should compensate users at the rate of Re 1 per dropped call, with a ceiling of three dropped calls per day (or, Rs 3 per day).

"... We expect operators to take the legal route and challenge the Trai order. Given the practical difficulty in implementation as well as prevention of misuse, we do not think this regulation will be implemented in the near term," UBS said in a report on India's mobile sector.

The brokerage firm said there have been a lot of investor concerns around Trai's proposal and implementation of this idea is likely to be "fairly difficult".

Elaborating, UBS said Trai allows 2 per cent call drops in its quality of service (QoS) requirement and as per licence agreement, Indian mobile operators need not have 100 per cent geographical coverage. "So, the compensation leaves room for customers to manipulate and collect maximum compensation of Rs 3 per day from operators," it added.

"For example, a customer may walk into an elevator or inner part of a building knowing that the call is likely to get dropped."

It added that battery going down and balance reaching zero in a pre-paid account can also result in call drops and the terminating network may be at fault, but the proposed regulation demands that originating operator pay Rs 1 per dropped call.

"Therefore, we expect operators to take the legal route and challenge the Trai order," UBS said.

Under new rules announced by Trai, the operator will have to send a message to the customer within four hours of a dropped call with details of the amount credited to his or her account.

For post-paid customers, the details of the credit will have to be provided in the next bill.

A call drop has been defined as "a voice call, which after being successfully established, is interrupted prior to its normal completion (and) the cause of early termination is within the network of the service provider".

The compensation will have to be paid to the calling customer who initiates such a voice call, Trai had said.