Trai warns telcos on call rates, may intervene

In a stern warning to telecom operators, Telecom Regulatory Authority of India chairman J S Sarma on Wednesday said mobile operators could not increase rates at will and the regulator would have to "intervene" to protect the interest of consumers.

"We will not allow operators to increase their tariffs at will. We are investigating the matter and if necessary will intervene on the issue," Sarma told Business Standard.

This means the regulator can bring rates under regulation once again. Currently, the rates are determined by market forces.

Sarma's warning came a day after Sunil Mittal, chairman of the country's largest telecom company, Bharti Airtel, said a further increase in rates was inevitable as costs were rising.

"The pressure on the industry will be acute, as operators will have to serve rural markets, as well as low-end customers,

who use only voice calls and SMSes." Mittal had said in an industry conference in Delhi.

The correction in rates was required to compensate the company's rural operations, as the cost of operations had gone up exponentially, Mittal had said.

Bharti Airtel has raised rates by over 20 per cent since July across most key circles. Other telecom operators like Tata Teleservices, Vodafone, Idea Cellular and Reliance Communications have followed suit.

Trai has asked operators to give details justifying the increase in rates. Currently, operators have to notify Trai for any change in the rate plan, introduction of new plans and changes in prices within 30 days.

This is not the first time that the regulator is closely scrutinising rates.

It had sought details from operators in August 2010, when rates hit a rock bottom low to 1 paise per second, amid allegations that new telecom operators were resorting to predatory rates.