Telecom tariffs will rise by 90 paise a minute in metros and 20-34 paise on an average across the country if the sector regulator's recommendations on spectrum pricing are accepted, suggests a study.
The Telecom Commission is to consider the controversial proposals of the Telecom Regulatory Authority of India (Trai) at its meeting on Thursday.
Ahead of it, the Cellular Operators Association of India (COAI), the GSM industry lobby, on Tuesday unveiled consultancy PricewaterhouseCoopers (PwC) India's assessment of the proposed spectrum pricing and its potential impact on consumers and the industry.
"Our study reveals that the impact on consumers could be very considerable and also that the industry is not ready to take any further deterioration of its financial performance," Mohammad Chowdhury, leader telecom, PwC India, told reporters.
The Trai has said the increase would be only of over four paise per minute. Currently, the operators on an average are offering call tariffs of around 75 paise per minute.
Earlier this month, COAI warned the government that if the Trai's recommendations were accepted, the tariffs would go up 100 per cent, hitting customers hard.
"Trai's calculations are fundamentally flawed. This would affect the people at the bottom of the pyramid significantly," said Rajat Mukherjee, chief corporate officer, Idea Cellular.
"On the other hand if the operators don't increase tariffs, they go out of business. The impact will be on competition - if the competition decreases, the tariffs rises," he added.
The PwC report slammed the Trai's assessment that the share of non-voice services would grow to 50 per cent of the revenue of a firm by 2020.
In 2011-12, the non-voice revenue was 14 per cent of the total revenue. Of the 14 per cent, message-based services contribute about 9 per cent and pure data services contribute nearly 5 per cent.
According to the report, the financial performance of the operators will be impacted significantly by the recommendations due to the proposed heavy spectrum costs.
The Trai has recommended, among other proposals, a reserve price of Rs 3,622 crore for 1 MHz pan-India spectrum, which is around 10 times higher than the price at which 2G licences were allocated in 2008 under former Telecom Minister A. Raja.