Indian Telecos not Happy with TRAI’s Per-Second Tariff Suggestion

Telecom regulatory Authority of India, TRAI’s decision to propel telecom operators towards a tariff system that charges consumers per second of usage as against the prevailing pulse system is facing stiff opposition from the telecom industry, according to the ToI Report. In the pulse system that India presently follows, consumers are charged for a full minute of airtime even if the call terminates before this.

In order to complete with Tata Docomo’s ‘pay per second‘ tariff model, other new entrants in the GSM market also expected to launch services with competitive packages that will likely put pressure on existing players to follow suit. The report says that, Reliance is planning to move to reduce all national call and SMS rates to 50 paise to be competent in the market.

TRAI is required to engage in a consultation with telecos before arriving at any decision which will change pricing and it is obvious that several players will oppose any move to make ‘per second’ billing mandatory.

According to the mobile companies, “There is more than adequate competition in the market. Mobile tariffs in India are already amongst the lowest in the world and competitive pressures continue to push them lower still. The market has evolved well past the stage of micro regulation. There is no compelling reason to intervene with competitive forces”.

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“Bharti Airtel with 100,000 cellsites is already one of the lowest producers of mobile airtime in the world at a cost of 42 or 43 paise/minute. By engaging in predatory pricing and targeting the subscribers of other telcos, Tata Docomo is trying to get big operators to bleed by selling below cost. This is bad for the country as a whole because it will create bankruptcy in the telecom sector,” another leading operator said on condition of anonymity. “Trai needs to examine if this is a sustainable tariff proposal. Consumer interest in the long term is not always served by lower tariffs. Tariffs must be cost plus. Operators cannot sell below cost,” said a telco.

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