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TRAI may review telcos’ freedom to fix call rates, moots extension of DTH licences

By PTI
23 July, 2014

Telecom regulator Trai today warned that it will review service providers’ freedom to fix mobile call and service rates if they increase tariffs beyond the current base rates.

“I do not expect headlines tariff to change. If they change, as and when they change, I have told the industry, then the regulator reserves its right to go back and look at it again if forbearance should be continued or not. I am being open, there is nothing to hide,” Trai Chairman Rahul Khullar said here.

He was responding to a question on the possible changes in mobile rates following recent recommendations by the Telecom Regulatory Authority of India on issues such as spectrum sharing and lowering of maximum of rates on leased lines that could lead to cost saving for mobile operators.

Base rates or headline tariffs are the maximum call or service rates that a telecom operator can charge to its customers but normally companies charge less than these rates.

At present most of the telecom operators have fixed base rate at 2 paise per second.

The regulator allows free hand to fix telecom call and service rates as it feels that competition in the market will keep control on tariffs.

“Its a separate matter, if (spectrum) sharing leads to lower cost they may be able plough it back or they may want to put that cost in to larger profits. Better yet if they can use to service debt. All telecom operators are in heavy debt and debt has to be paid otherwise what will happen to banks,” Khullar said.

Trai has recommended that government should allow sharing of all categories of spectrum held by telecom companies for mobile services.

If this recommendation is approved, telecom operators will be able to bring down cost of ownership of radiowaves which has increased to about 5 times compared to its price of Rs 1,658 crore under old licencing regime.

Khullar said mobile rates were low earlier because telecom operators were having fighting to attract the customers of their competitors, and in the process they were offering calls at lower rates than their actual costs.

He said telecom operators who were in heavy debt or making losses starting cutting down on freebies and some changed their headline tariff.

“They did it at rate of something like 2 percentage,” Khullar said.

Telecom companies have raised mobile base rates by about 100 per cent between 2011 to 2013 and more frequently after cancellation of 122 2G telecom permits by Supreme Court in February 2012.

On a proposal that STD call rates should be equal to local calls, Khullar said that government will have to look for solution to compensate national long distance operators – a key intermediary for transmitting calls, to bring STD call rates at par with local.

“No such reference has come to us from government. If it comes we will see what all can be done,” Khullar said.

Broadcast regulator TRAI today recommended extension of licence period of direct-to-home (DTH) operators to 20 years, while proposing bringing down fees to 8 per cent of the adjusted gross revenue.

In its recommendations on a new DTH licensing regime, the Telecom Regulatory Authority of India (TRAI) said vertically integrated broadcasters must be subjected to a set of additional regulations, allowing them to control only one distribution platform operators (DPOs).

Vertically integrated broadcasters are entities which run TV channels as well as distribution platforms as MSO and DTH.

On the tenure of DTH licence, TRAI suggested that it to be increased from 10 years to 20 years, renewable by 10 years at a time.

To bring parity with telecom operators in terms of licence fee with the DTH operators, TRAI also recommended a reduction in existing licence fee from 10 per cent of gross revenue (GR) to 8 per cent of the adjusted gross revenue (AGR).

The sectoral regulator also recommended a one-time entry fee of Rs 10 crore for the DTH industry.

Moreover, TRAI has also suggested giving liberty to the existing DTH operators to “migrate to the new regime at any time during their currency of their existing licenses”.

The DTH operators are paying 10 per cent of their GR, while the telecom operators pay only 8 per cent of their AGR.

Under AGR, revenues arising out from other activities like interest on savings, dividends, bundling of handsets and others are excluded for calculating the licence fee.

TRAI has also suggested BIS (Bureau of Indian Standards) to come out with updated specifications for the set-top-boxes (STBs) in consultation with the regulator.

On the issue of cross holdings in the broadcasting and the distribution sectors, TRAI said there was a need to bring “uniformity” in the sector.

“Comprehensive definition of ‘control’ to be uniformly adopted in all segments of broadcasting and distribution sectors,” it recommended.

It has also suggested for additional set of regulations for vertically integrated broadcasters and DPO. Moreover, it also said that a vertically integrated broadcaster should be permitted to take control of only one DPO.

TRAI also said that a “vertically integrated DPO to be restricted from controlling any other DPO of other category in the relevant market” and “not to be permitted to acquire more than 33 per cent of the market share”.

The sectoral regulator has also suggested that a vertically integrated DPO should declare its channel carrying capacity and not to reserve more than 15 per cent of its capacity for channels of its vertically integrated broadcaster.

Over the carriage fee charged by the DPOs from broadcasters to put their channels on their network, TRAI has suggested them to publish the access fees for it.

“The charging of the access fee should be on non- discriminatory basis,” said TRAI.

It also called for distinguishing between the DTH and cable TV providers, Multi System Operators (MSOs) and Headend in the Sky (HITS). It suggested DTH would have a national market, while the latter would have state wise.

“Relevant market for DTH would be the entire country and for MSI/HITS – state,” TRAI said, adding that broadcasters and distribution platform operators (DPOs) as MSOs and HITS which are also now providing digitised cable TV feed would have a separate legal entity.

Under the additional regulation suggested by the TRAI for the integrated broadcasters, the regulator said all agreements with DPOs should be ‘non-discriminatory’ and ‘on charge per subscriber basis’.

It also suggested that such integrated broadcasters should “file the reference interconnect offer (RIO) for approval by the authority. All interconnection agreements to be only on the terms specified by RIO”.

RIO specifies commercial terms for operators to get signals from broadcasters.


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TRAI may review telcos’ freedom to fix call rates, moots extension of DTH licences

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