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Split wide open: telcos, TRAI at war

A new tariff war has begun in the telecom sector, this time between the telecom companies and the regulator. Manoj Gairola reports. Who’s talking sense?

india Updated: May 09, 2012 23:18 IST
Manoj Gairola
Manoj Gairola
Hindustan Times

A new tariff war has begun in the telecom sector, this time between the telecom companies and the regulator.

Mobile operators find the new spectrum charges proposed by the Telecom regulatory Authority of India (TRAI) too high, and are claiming it will send call rates soaring.

TRAI calculates that the new spectrum prices, which are about 10 times higher than what the incumbent operators paid, will lead to a rise of at the most 3.6 paise per minute in tariffs.

The industry body, Cellular Operators Association of India (COAI), sees the impact at 30 paise per minute.

COAI represents GSM-based mobile telecom service providers including Bharti Airtel, Vodafone, Idea, Unitech Wireless and Videocon.

TRAI has, however, rejected COAI claim. "A look at COAI calculations shows that it has major anomalies," a TRAI official said.

The impact on tariff is calculated by the total projected minutes of usage, divided by the additional cost of spectrum. Telcos have taken TRAI's price of 3.6 paise as base and tried to modify it.

Operators will use spectrum for both voice and data. TRAI has taken this into account. "COAI has considered that there will be only revenue from voice and not data," the official said.

The industry has also pegged the total cost of spectrum at three times of TRAI's calculations. "We are basically considering only that spectrum that the companies will pay for now," the TRAI official said. "If licence renewal of a company is after 10 years, it cannot be considered now."

COAI says that only outgoing calls are charged, hence only half the number of minutes would be bearing the impact of spectrum charges - effectively doubling the impact on the user tariff.

"As an industry, what is incoming for one company is outgoing for another. When we consider its impact on tariff, we have to calculate for total number of minutes," said the official.

"We have provided justification for our claim that the prices will go up by 30 paise per minute," said Rajan Mathews, chairman of COAI.

Independent analysts support TRAI calculations. A Citi group report said that the impact of new spectrum prices on tariff will not be more than four paise per minute.

First Published: May 09, 2012 23:07 IST

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