Trai To Suggest Phone Rent Hike
The Telecom Regulatory Authority of India (TRAI) is set to recommend a 40-80 per cent hike in telephone rental charges by the end of this month. It will also propose a hike in local call charges, while at simultaneously calling for a reduction in national and international long distance tariffs.
The proposal to increase the rental charge from Rs 360 for a bi-monthly cycle to between Rs 500 and Rs 700 is among the most important recommendations in a working paper TRAI intends to publish by end-August or the beginning of September. It also intends to reduce the charges for leased lines significantly. Sources said the TRAI recommendations would serve as tariff ceilings. "Where we have input costs, we have worked out tariffs. But since the data is difficult to come by, we have set benchmarks," a source said. The working paper will form the basis for public consultations after which the regulator will finalise telecom tariffs for a three-year period. TRAI is expected to finalise the tariffs before the end of the year.
The impact of the revision in tariffs _ if carried through as per the regulator's recommendations _ is expected to affect the revenues of the department of telecommunications (DoT) and Videsh Sanchar Nigam Ltd (VSNL, India's international carrier) in the short term while boosting the revenues of Mahanagar Telephone Nigam Ltd (MTNL, the basic telecom services provider in Delhi and Mumbai).
Some 65 per cent of DoT's revenues accrue from national domestic long distance services (popularly called subscriber trunk dialling or STD) while all of VSNL's revenues come from the country's international traffic. By virtue of being a local services provider, MTNL stands to gain immensely but officials said they "had not worked out how much" it would gain by.
The TRAI Act, 1997 vests tariff-setting powers with the telecom regulator. It had come out with a background paper on telecom tariffs in Novermber last year and held a series of public hearings on the topics in different cities over the first few months this year. It is "almost ready" with tariffs recommendations now, sources added. Refusing to reveal the exact increase in the local call charges, a source explained: "Traditionally, tariffs are structured in such a way that fixed costs are recovered through rental charges. Assuming that the fixed cost in India is Rs 40,000 per line, the current rental (of Rs 380 for two months) means a recovery period of 17 years."
Subsidy on this scale is difficult to justify, they felt. The tariff rebalancing exercise being initiated by the TRAI will also help the private basic telecom operators in the country. According to the terms of the licence they have signed with DoT, the operators are only allowed to operate within the circle (mostly analogous to states) they are licenced. Bulk of their revenues are projected to accrue from local calls. although they are allowed to offer long distance calls with the circle.