The Telegraph
Since 1st March, 1999
Email This PagePrint This Page
Telephone tariffs set to drop 15%

Chennai, Oct 12: Telephone tariffs are likely to plunge by 10-15 per cent across the board now that the Centre has decided to waive the requirement of advance licence fee payments by both cellular and basic operators.

The rule change—which will mark a major amendment in the telecom licence conditions since the framing of the Telecom Policy, 1999, which allowed cellular operators to migrate from a fixed licence fee regime to a revenue sharing arrangement—means that the government will lose about Rs 2.5 crore each quarter.

This amount was being deposited in the government’s coffers based on the interest earned from the six months' advance licence fee paid by telecom operators. But now the government has decided to delete the requirement for the payment of a six-month advance fee from the original licence conditions.

The Telecom Regulatory Authority of India (Trai) will now have to step in and force operators, who are getting a major monetary reprieve, to bring down the cost of telecom services. The operators, who have been griping about the additional fees that they are having to pay in advance, had told the regulator that this was one of the reasons for the high tariff structure.

With the proposed changes, the operators will need to pay the licence fee at the end of each quarter. The financial bank guarantee (FBG) amount is also being reduced to two quarters of the licence fee payable in the case of old circles.

The notification, which is expected to be issued next week, has stipulated that for new circles irrespective of whether the services are launched or not the amount of FBG has been reduced to 10 per cent of the original amount (for metros and Category A circles) and is fixed at Rs 50 crore. For Category B circles, it has been reduced to Rs 25 crore and for category C circles it has been pruned to Rs 5 crore.

If a telecom operator has launched its service and its two-quarter licence fee is more than 10 per cent of FBG amount, then it will have to provide an FBG equal to two-quarters' licence fee. The performance bank guarantee (PBG) amount will also be reduced to 25 per cent of the original amount but after completion of the roll out obligations (10 per cent for coverage of district headquarters in first year and 50 per cent coverage within three years from effective date).

In metros like Delhi, Calcutta, Chennai and Mumbai, 90 per cent radio coverage should be completed within one year.

According to a senior official in communications ministry, "The PBG reduction benefit will actually go to old circles that have completed 50 per cent coverage of district headquarters which everybody has done and got their PBG amount reduced to 50 per cent as per the old licence agreement."

A senior executive at a private telecom operator said that if the government carries out this decision, the PBG amount may go down further. "Now they will reduce the PBG amount as there will be no impact on revenue. They will only lose interest for three months and that too only once at 7 per cent per annum on Rs 150 crore which is about Rs 2.5 crore for each quarter.”

Email This PagePrint This Page