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Rediff News  All News  » Business » Mobile tariffs not be slashed

Mobile tariffs not be slashed

February 03, 2007 15:05 IST
Even though the Telecom Regulatory Authority of India on Friday cut port charges paid to BSNL by 23-29 per cent, phone tariffs are not expected to come down. Port is the point where two exchanges connect calls.

While private operators do not pay for connecting their calls between each others' exchanges, they have to pay BSNL for connecting to their exchanges.

The annual charges are around Rs 55,000 for a connection. At present, around 30-40 per cent of the calls made by the operators are to BSNL subscribers.

While Trai expects the port charge cuts to be passed on to subscribers in terms of lower tariffs, operators are not willing to oblige.

They say the savings due to the cut are only Rs 40-50 crore (Rs 400-500 million). But BSNL is crying foul and says the impact to their bottom line would be around Rs 400 crore (Rs 4 billion).

"We provide around 40,000 port connections to private operators and the reduction would have a Rs 400 crore impact on our revenues," said SD Saxena, director, finance, BSNL. The firm might challenge the Trai decision in the Telecom Disputes Settlement and Appellate Tribunal.

Operators have a different story to say. "The savings are too minimal to be passed on to customers and they will not even compensate for the hit in the bottom line that we have taken due to a fall in roaming charges (Rs 900 crore) and an increase in microwave charges (Rs 500 crore). We are still in the negative," said TV Ramachandran, director general, Cellular Operators' Association of India.

"It is a welcome move but we believe BSNL should not charge any port charges at all, just like all the other operators," said SC Khanna, secretary general, Association of Unified Telecom Service Providers of India, which represents CDMA operators.

A CDMA operator said while their savings would be around Rs 12 crore (Rs 120 million) a year, this was too minimal to impact consumer tariffs at all. "It will have no impact on tariffs. Also, this is an annual cost and not a cost saving on every minute," he said.

But Trai, which expects operators to reduce tariffs, is not too pleased with the operators' response.

BS Reporter in New Delhi