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Shackles off fixed phone rates

New Delhi, Nov. 5: Fixed-line phone operators have been allowed to fix their own call rates — a practice known as forbearance in telecom parlance — but industry observers saw little prospect of a sudden tweaking of the tariff structure.

The telecom regulator today removed the shackles on basic operators by clearing the forbearance principle under which fixed-line operators will not have to submit their rate card to the Telecom Regulatory Authority of India (Trai) for vetting and approval. This also means that the basic operators will not have to follow the standard tariff prescribed by the regulator.

However, the forbearance principle will not be extended to the rural subscribers. Industry observers said any change in the tariff structure would depend on Bharat Sanchar Nigam (BSNL) and Mahanagar Telephone Nigam (MTNL).

“The forbearance principle has no meaning since we will have to compete with the tariffs fixed by the large basic service operators — BSNL and MTNL. We cannot charge more and expect to survive in the market,” said a senior executive at Tata Teleservices. This will also give political forces a say in the fixing of call tariffs of the two state-owned companies.

Trai member D. P. S. Seth said, “We expect that with forbearance, the operators will be able to determine rates of their choice in a lucrative market and offer services in rural areas based on the standard tariff. It will increase the installation of phones in rural areas.”

“We have retained the standard tariff package for rural fixed line subscribers for whom access tariffs and call charges are lower than in general, for social reasons,” Seth added.

The tariff forbearance is allowed as per the amendment in the Telecom Tariff Order, 1999. It stipulates that a tariff announced by the operator would be subject to the regulatory scrutiny and could be scrapped if it deems it inappropriate for any reason.

The operator will have to follow the stated regulatory principles and Trai will closely monitor the various practices of service providers that may have an adverse impact on competition in the market and the interest of the consumers.

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