New Delhi, Sept. 23: The Telecom Regulatory Authority of India (Trai) will review fixed-line tariffs, since it feels that the decline in long-distance tariffs and low monthly rentals, which are far below actual costs, have substantially reduced operators’ margins.
Trai today released a consultation paper on ‘'Tariffs for Basic Services,’ which presents a framework and possible approaches for regulating basic service tariffs and interconnect usage charges. The regulator plans to look into several issues, such as network elements whose costs should be taken into account for fixing cost-based rentals; whether only the non-traffic sensitive portion of the network such as local loop be taken into account, or other traffic-sensitive elements such as local exchange, junction network should also be accounted for, as in the previous tariff exercise. It will also look into the level of rental is considered affordable such that it will not adversely affect demand.
Trai conducted its first review of basic service tariffs in 1998-1999. The Telecommunication Tariff Order (TTO) 1999 notified in March 1999 prepared the ground for introducing competition in basic services by initiating tariff rebalancing, which was to be implemented in three phases ending in March 2002.
However, the market for basic services has undergone significant changes since 1998-99. With the opening up of both national long distance (NLD) and international long distance (ILD) markets, Trai is of the view that there has been a major decline in long-distance tariffs.