Dot To Rationalise Local Call Rates

The department of telecommunications (DoT) is planning to rationalise local call tariffs across the country. Tentative proposals include an upward revision of access charges comprising initial deposit and monthly rentals and the lowest slab of local call tariffs, which at present is 80 paise per call.

Simultaneously, a reduction in the highest slab of tariff Rs 1.40 per call is envisaged. Department sources, however, clarified that the costing exercise had not been completed yet. The tariff rationalisation move is in continuation with a recent national long-distance tariff restructuring exercise undertaken by DoT.

The need to restructure access charges has been become acute since the average cost incurred by DoT to connect a new subscriber to its network is as high as Rs 42,000. In comparison, the department charges only Rs 3,000 as a deposit and a maximum Rs 380-bimonthly rental charge.

 

On these charges, it takes the department more than 15-16 years to recover the cost of giving a subscriber a phone, a DoT official said. Therefore, ideally we would like to double the rental charges and the initial deposit, he added.

The increase in charges, however, are unlikely to be effected in one go. The initial deposit is likely to be made about Rs 5,000 and the bi-monthly rentals may be raised to about Rs 600 in the first phase.

The present deposits under the OYT (own your telephone) and tatkal (phone on demand) schemes are unlikely to be changed. DoT currently charges Rs 15,000 for an OYT connection and Rs 30,000 per tatkal line. Both categories are assured speedy phone connections.

DoT is restructuring the per minute call tariff to prepare itself and Mahanagar Telephone Nigam Ltd (MTNL) to face impending competition from private basic telecom operators. The `inverted pyramid tariff structure under which subscribers pay more as they call more is seen as a deterrent to bulk usage.

Currently, 150 calls are free for the bi-monthly period. For calls between 150 and 500, the tariff is pegged at 80 paise a call. The rate goes up to Re 1 per call for calls between 500 and 750 and Rs 1.25 for calls between 750 and 1,000; and Rs 1.40 per call for the category of consumers with more than 1,000 calls.

We have to give users incentives to use the phone more, a DoT official said while explaining the rationale for cutting the tariff for frequent phone users. Most business customers in India who account for most of DoT revenues make calls in the Rs 1.40 per call slab.

Less than 20 per cent of DoT customers account for some 70 per cent of DoT revenues (some Rs 12,000 crore in the last fiscal). The revenue profile was more skewed in the case of MTNL. About 11 per cent subscribers account for some 80 per cent of the stete-owned telecom operators turnover.

The private basic operators are likely to offer bulk users heavy discounts on tariffs as has been witnessed in the case of cellular companies.