The Hindu : Reduced rentals for 'poor man's mobile phone'

Online edition of India's National Newspaper
Friday, Jul 05, 2002

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Reduced rentals for 'poor man's mobile phone'

By Our Special Correspondent

NEW DELHI JULY 4. In a move aimed at promoting the use of the ``poor man's mobile phone'', the Telecom Regulatory Authority of India (TRAI) today announced vastly reduced rentals for wireless in local loop (WiLL) based fixed phone services. Phone companies can also offer alternative tariff packages similar to other tariffs of basic services and other telecom services provided in the market.

According to the TRAI's orders, the minimum rental for WiLL-based services will now be Rs. 200. Earlier, the TRAI had specified a price band of Rs. 450 to Rs. 550. In other words, operators were barred from charging less than Rs. 450 and more than Rs. 550 as monthly rental. This had led to allegations that WiLL-based phone services would not be used by the common man.

Further, if the handset was provided by the service provider, then the payment for it could either be taken as a refundable deposit with a ceiling of Rs. 6,000 or an additional monthly rental ceiling of Rs. 50.

``In the circumstances, it would be eminently reasonable to specify standard tariffs and while examining the reported tariffs (we will) intervene only, if required, to prevent the implementation of predatory tariffs,'' said a TRAI statement.

WiLL-based services are due to be offered by private companies all over the country in a big way. The two State-owned phone companies, Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited, have already launched the services in some areas.

According to the TRAI, it had specified the Rs. 450-550 price band because of uncertainty about the underlying costs and roll-out plans. This year, there is much greater certainty regarding costs and other underlying parameters, including roll-out plans.

The basic thrust last year while introducing the much-criticised price band was to encourage efficiency and growth of service while not giving the incumbent operator the opportunity to use its market dominance and special advantages such as ability to use common infrastructure to prevent growth of competition. In the current scenario, the cost estimates of the emerging competitors are below those of the dominant operator. This limits its ability to put emerging companies at a serious disadvantage.

In this situation, the TRAI has considered it desirable not to prescribe any floor and allow the efficient competitors to battle it out effectively, especially in the context of a declining trend for costs.

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