Telecom tariffs set to go down as Trai cuts call connect charges for landlines

The Telecom Regulatory Authority of India (Trai) on Monday waived off charges that a landline service provider has to pay to other service providers for transmitting calls. Calls made from landline to landline or landline to mobiles will not include the interconnection charge of 20 paise. The move is expected to lead to lower phone tariffs especially for fixed line users.

The regulator has also reduced network interconnection usage charges (IUC) on calls made from mobile phones by about 30 per cent to 14 paise per call from 20 paise earlier.

"To promote investment in, and adoption of, wireline networks, so that they may become an effective vehicle for the delivery of high-speed Internet in the country, the Authority has decided to prescribe FTC (fixed termination) as well as MTC (mobile termination charge) for wireline to wireless calls as zero," Trai said in the new IUC rule.

A telecom company is required to pay interconnection charges when its subscribers call subscribers of other networks. The charge gets added up in final price that a subscriber has to pay.

"The Authority is of the opinion that in case the MTC is set to zero for wireline to wireless calls, wireline access providers would be able to provide innovative tariff packages (e.g. flat rental plans with unlimited or a significantly large number of outgoing calls)," Trai said.

Similarly, in case the FTC for calls originating from wireless networks and terminating on wireline networks is set to zero, this would propel wireless access providers to offer cheaper tariffs for wireless to wireline calls, Trai said. Landline connections in the country have been declining since the time mobile incoming calls were made free.

While the mobile subscriber base at the end of 2014 reached all time high at 94.39 crore, landline connections are only 2.7 crore.

State-run telecom company Bharat Sanchar Nigam Limited (BSNL) dominates landline phone connections with 62.71-per cent market share followed by Mahanagar Telephone Nigam Limited (MTNL) 13.04 per cent, Bharti Airtel 12.55 per cent, Tata Teleservices 5.98 per cent and Reliance Communications 4.39 per cent.

Videocon's Quadrant, Vodafone and Sistema Shyam account for the remaining 1.2-per cent market share. Landline connections of private players are mainly meant for providing broadband connections.

In the past, revision of the IUC regime has been undertaken on a regular basis with an interval of two to three years.

However, since the matter was pending in the Supreme Court since 2010, the IUC review could not be conducted though it was due. As over five years had elapsed since the last review, Trai initiated this review in November 2014 to go through the due procedure, which has now been completed.