Call rates may fall as TRAI slashes interconnection charges

Regulator believes revival of fixed lines will aid ‘Digital India’ campaign

In a move that is likely to lead to reduction in call rates — both for mobile as well as fixed line users — the Telecom Regulatory Authority of India on Monday slashed various interconnection charges that one operator pays to the other for using their network. Though it is not yet known how much the tariff reduction will be.

The regulator has done away with call termination charges paid by landline service providers with the aim of arresting the fall in the usage. TRAI believes the revival of fixed lines will complement the Modi-government’s flagship programme ‘Digital India’.

“As more and more customers are seeking high speed data [Internet] services, wireless networks are increasingly finding it tough to meet the ever-rising data demand, particularly in a spectrum-constrained sector. Wireline networks, on the other hand, can deliver much higher speeds of data transfer,” TRAI said in its new regulations.

The regulator has cut interconnection usage charges on calls made from mobile phones by about 30 per cent to 14 paise per call from 20 paise earlier in its ‘Telecommunication Interconnection Usage Charges (Eleventh Amendment) Regulations’. Additionally, calls made from landline-to-landline or landline-to- mobiles will not include the interconnection charge, which was 20 paise earlier.

“Anytime the interconnection charges are reduced, it is likely to benefit the consumer. However, it is difficult to calculate the actual benefit as the headline tariff doesn’t get affected. It is the discount tariff that gets adjusted,” Rajan Mathews, Director-General at Cellular Operators Association of India, said.

On the other hand, Hemant Joshi, Partner, Deloitte Haskins & Sells, said while the move was a healthy sign for the telecom industry, “since the tariffs in India are lowest in the world and in view of high spectrum costs and taxes faced by the telecom operators, they may not be able to pass on the benefit of reduced termination charges to the consumer in full.”

The termination charges framework plays an important role in the telecom sector, given its potential effects on capturing network externalities as well as on retail tariffs, says the regulation.