Telcos to pocket gains on interconnect fees

Telecom subscriber tariffs are not likely to fall with a reduction in port-in charges, or what one operator charges for terminating a call from another operator’s network, industry watchers said.

The Telecom Regulatory Authority of India (Trai) has revised the ceiling for interconnect charges between operators, fixing the the upper limit for annual per port fees for fixed line network at Rs10,000 and for mobile phone networks at Rs4,000.

Prior to this, operators had to pay port-in charges of as high as Rs39,000 to connect their subscribers to another operator’s network.

Experts said the reduction would bring down operational expenses of operators by almost a fourth.

New players are expected to benefit the most by this move as majority of their calls are to the networks of incumbent operators, to whom they invariably end up paying high interconnect fees.

However, the discounts to operators are unlikely to be passed on to subscribers, they said. “BSNL, which was pushing for higher port charges from private players, stands to lose, but there will be no sizeable impact on others. While the move comes as a relief to us, tariffs are already very low and reducing them further would increase pressure on operators. Besides, rate per minute has continued to remain relatively constant, even in times when tariffs were increased or reduced. Tariffs, in fact, are likely to increase after the 2G auctions. This is also unlikely to have any impact on mobile number portability  either,” said Rajan Matthews, director-general, Cellular Operators Association of India.

Mahesh Uppal, director, Com First (India), a firm dealing in regulatory affairs, concurred.

“While incumbent operators may lose some revenues as a result of reduction in termination charges, this will have marginal, if any, impact on subscriber tariffs,” he said.

Meanwhile, BSNL which had earlier petitioned Trai to fix the port-in charges to Rs46,500 per year, taking into account equipment and other costs, said it was planning to take the regulator to court over this latest announcement.

Earlier this month, Trai chairman Rahul Khullar had said that the telecom tariff war was expected to end within 3-5 years.