Financial Daily from THE HINDU group of publications
Monday, Apr 22, 2002
Info-Tech - Telecommunications
TRAI nod unlikely for free limited mobility pricing
NEW DELHI, April 21
MUCH to the disappointment of the Department of Telecommunications (DoT), the Telecom Regulatory Authority of India (TRAI) is unlikely to give more flexibility to the basic operators in fixing tariffs for limited mobility services using wireless in local loop (WLL) technology.
According to informed sources, DoT had requested the authority to revise its tariff structure for the WLL services to make them more affordable. The basic operators, it had noted, should be given the freedom to charge whatever the market permits. However, TRAI is of the opinion that any such move would only blur the distinction between cellular mobile services and WLL services.
"The WLL operators can encroach upon the markets available to the cellular mobile service operators if some regulatory levelling of the playing field between limited mobility and cellular mobile service is not done. The distinction between the two services must be clearly maintained and the WLL services should not be used by the basic operators to offer undue and unequal competition to the cellular mobile operators," it has stated.
As per the present tariff structure, the authority has mandated that the basic operators offering these services have to charge a monthly rental of between Rs 450 and Rs 550 per month. Although the outgoing call charges as such have been pegged at Rs 1.20 for every three minutes with incoming calls free, the high rentals have been a big deterrent for anyone wishing to go in for these services.
More so, cellular mobile operators have been aggressively marketing the pre-paid card segment, which allows anyone to remain connected at a minimum cost of Rs 300 per month. For WLL services, the minimum costs per month for the subscriber at present works out to Rs 450 plus call charges.
DoT, which has been campaigning for the WLL services as the `poor man's mobile,' has noted that this cost difference would defeat the very purpose of allowing basic operators to deploy these services - for increasing teledensity. It had, therefore, sought that the lower ceiling be abolished and the operators given more flexibility.
In its reply, TRAI has noted that the ceiling rate was stipulated to ensure that none of the operators, particularly the incumbent with its overwhelming market powers, resorts to predatory pricing which may kill all competition and eventually deny availability of choice to the consumer.
"Mobility, albeit limited, within the short distance calling area (SDCA) makes it distinctive and value-added service. It is therefore not feasible to justify extension of such services to the consumers at tariffs which are below cost," it has said.
What is more, the tariff for services/products on offer should be cost-based, unless as a matter of conscious policy, a particular product or service is required to be offered at subsidised rates. There was no such decision with respect of WLL services, it has stated.
The authority has, however, noted that it is working on revised cost-based estimates, which it should be releasing in May this year. Should a downward revision in rental be justified in the light of the latest cost figures, it will be revised suitably, it has promised.
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