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Delay in revenue-sharing norms worries basic players

G. Rambabu

NEW DELHI, Aug 4

THE competition in national long distance (NLD) services expected over the next couple of months has basic service operators (BSO) quivering in their shoes.

While subscribers can certainly look forward to further revisions in STD tariffs across different distance slabs, the lack of clear-cut guidelines with respect to interconnection agreements for NLD services would also mean a corresponding decline in the revenues of basic operators who receive a share of these call charges for delivery to the end-subscriber in their respective circles of operation.

Until recently, with higher long distance tariffs, the revenue share of the BSOs in absolute terms was enough to cross-subsidise their loss-making core operations (local calls). However, with the decline in STD tariffs, they will no longer be able to resort to cross-subsidy and may be forced to hike rentals and local call charges.

Unless, of course, the Telecom Regulatory Authority of India (TRAI) devises suitable revenue-sharing guidelines.

According to industry sources, while the authority had taken up the issue for examination and has already finished the consultation process, the delay in announcing the guidelines has the BSOs worried. Especially, since many more NLDOs are expected to enter the sector, leading to steeper declines in STD tariffs.

They noted that for each STD call made by a subscriber, the basic operator in that circle delivers the call to NLDO, who then carries the call forward to the destination circle and hands it to BSO who, in turn, routes it to the end-subscriber. As a result, while the BSOs originate and terminate the call, the NLDO only carries the call in between.

Since TRAI has not set any specific guidelines for the exact share of revenue between the originator, carrier and terminator, BSOs fear that they will be forced to reach unfavourable interconnect agreements with NLDOs.

The sources pointed out that BSOs have petitioned the authority to plug these revenue losses and compensate them through access deficit charges (ADC) to help them recover the capex and operating expenditure. Since NLDOs are presently working on cost surplus model, the revenue share should be earmarked in such a manner that the access deficit is compensated in totality to both the originator and the terminator, they have said.

"Even after a comprehensive tariff review exercise, given the socio-economic conditions of our country, we strongly feel that there will not be a major increase in rentals and local call charges, which would continue to leave BSOs to work on a cost-minus model. Thus ADC is of paramount significance. Considerable time has already been lost ever since the reduction of NLD tariffs and thus it is time the Authority came out with its determination on ADC which could rescue the BSO projects,'' they have stated. While TRAI has already acknowledged the concept of ADC in its recommendations on basic service licences for compensating the deficit rentals and local call charges, it is yet to come out with its final order. Until it does, BSOs will continue to be worried of competition in the NLD segment.

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