Telecommunications

March 8, 2007
TRAI order on roaming charges: Operators are unhappy

NEW DELHI -- A new regime in roaming charges for mobile phone users comes into effect from 15th February that reduces these charges by 22 to 56 percent. In addition, users do not have to pay roaming rentals. Users are naturally happy but operators are sullen over the cost to them.

Though the operator associations have not said anything against the order, it is claimed by them that loss to each operator might be to the extent of Rs. 1,000 crores. The users of roaming services are largely from the corporate sector that is the high-paying ones.

Operators say on the sidelines that the regulator’s order comes into effect at a time of falling ARPUs and rising per customer user minutes. Also this calendar year, all the operators have to invest heavily in expanding their services and coverage of more towns and suburban areas. The usage of mobile is penetrating into lower and lower middle class and naturally ARPUs would be lower. An additional fall in the ARPU would disturb their business plans while they have to make new investments.

The TRAI has, however, claimed that it had “taken into account all capital costs associated with access to roaming facility, in addition to the operating costs relevant for provision of roaming services.”

The new charges move the roaming service charges to a “usage based composite roaming tariff, thereby removing the rental component from the charging pattern and at the same time ensuring full recovery of costs to the mobile service providers.”

TRAI has also pointed out that what has prompted it to order such reduction was the finding that despite the forbearance on these charges it exercised in 2002, the expectation of greater competition and thereby reduction in charges has not materialised.

Another innovation in fixing the new regime is doing away with the concept of a separate PSTN charge and the 15 percent surcharge on airtime component. The PSTN component of costs is covered in the fixation of usage based ceiling tariff, the TRAI claims.

The regulator has quoted the reduction in access deficit charge, license fees and bank guarantees that operators have to pay after 2002 as yet another reason for its reduction of the roaming tariff. Besides, the steep reduction in roaming charges would also lead to a boost to the volume of roaming usage that would more than compensate for any immediate loss in revenue, the TRAI has said.

The operators on the other hand are apprehensive. They do not buy the argument about volumes in roaming rising sharply as the business class mostly uses the roaming. The operators also fear that with the DoT all set to impose number portability on the operators, their costs would go up substantially. There has also been not much of a progress in infrastructure sharing that was supposed to sharply reduce costs. The DoT is also stated to be against sharing of spectrum or retailing of it. For the 3G, the regulator has recommended auction of spectrum that would lead to rise in the cost of providing the service. They fear that all these might have a cascading effect.

The impact of the new tariffs on roaming call charges as determined by the TRAI is: