Telcos warn of tariff hike after Trai's call drop order

Telecom companies warned on Tuesday that they would hike tariffs if they are forced to pay compensation for dropped calls in accordance with the directive of the Telecom Authority of India (Trai).

The regulator has mandated operators to compensate consumers from January 1 if they continue to face the call drop problem. The compensation will be limited to only three call drops a day meaning the telco will have to shell out Rs 3 in a day to the consumer. In a joint letter sent to Trai, the Cellular Operators Association of India (COAI) and the Association Of Unified Telecom Service Providers Of India (AUSPI) have said that countless customers will cause calls to drop to obtain the daily com-pensation of Rs 3.

To recover this cost of compensation, telecom operators will have to increase tariffs leading to customer spending more to purchase telecom services, the letter stated. The two industry bodies, which represent all operators, said that the regulation is an invitation for limitless misuse and gaming of the system that as per estimates will lead to a three-per cent hit on revenues and seven-toeight per cent hit on mobile EBITDA. The market is already agog with talks that all a consumer has to do is to engineer three call drops every day and get Rs 90 reduction in the monthly bill.

In a country where the average average revenue per user is Rs 125, the impact of such a regulation is frightening, the industry bodies said. To recover this cost of compensation, telecom operators will have to increase tariffs leading to customers spending more for services, the letter further stated. The operators have also stated in the letter that it is not possible to make a wireless network completely free of call drops.

"The regulation on compensation assumes ideal conditions with a possibility of zero call drop, which is impossible to achieve," the letter stated. COAI, which represents GSM players like Bharti Airtel, Idea Cellular and Vodafone India, and AUSPI, which represents CDMA players such as Reliance Communications and Tata Teleservices, have serious differences among themselves on other issues but have joined hands to protest against the Trai's directive.