Trai Objects To Dot Tariff Structure Plans

The Telecom Regulatory Authority of India (TRAI) is opposed to the move by the department of telecom (DoT) to alter its tariff structure for leased circuits and short-distance subscriber trunk dialling (STD) calls.

TRAI is unhappy that DoT is taking such decisions unilaterally. The TRAI Act, 1997, vests the power to set telecom tariffs with the regulator that is finalising a consultative paper on telecom tariffs.

DoT plans to slash charges for its data circuits by 60-75 per cent _ the annual rent for a Delhi-Mumbai 64 kbps circuit would drop from Rs 400,000 to Rs 100,000.

On Monday, DoT reduced tariffs for short distance STD calls by treating them on par with local calls. This will apply to over 2,000 short distance charging areas in the country with immediate effect. In the short run this is expected to cut revenue but is likely to be revenue-neutral in the long run as traffic volumes increase.

Private operators claim DoT's move to change tariffs is a "classic monopoly incumbent" strategy to combat competition. In most economies that have deregulated their telecom sectors, regulators have ruled against incumbent operators' plans to reduce tariffs.

"They (incumbents) take advantage of depreciated equipment and slash user charges in an effort to undercut competition," explained a TRAI functionary. "We cannot allow this."

DoT, however, argues that the move to cut tariffs is an "ongoing process within the department to reflect costs". Telecom secretary A V Gokak has gone on record several times that telecom tariffs, both data and long-distance, have to be brought down in tune with the underlying costs of providing the services.