More reports on: Telecom Regulatory Authority of India

Telcos can afford call drop penalty, insists Trai

13 November 2015

Rebutting the claims of telecom service providers that the proposed call drop compensation will have huge financial implications for them and may not be technically possible to implement, the Telecom Regulatory Authority of India (Trai) on Thursday said the total financial implications would not be more than Rs200 crore per quarter, which is less than one per cent of total revenues of the operators.

''Based on data of the telecom service providers (TSPs), the authority had conducted a detailed analysis of the call data and call drops data ... as per the regulation, there is a ceiling on relief of Rs3 per subscriber a day, thus the likely financial implications would be even less than Rs200 crore per quarter,'' Trai said in a note.

''It is technically possible for the TSPs to implement the regulation, and sufficient time has been given to them to make suitable provisions regarding the same,'' it added.

On 14 October, Trai had mandated telecommunication companies (telcos) to pay subscribers Rs1 for every call drop on their network, subject to a cap of three call drops a day, starting from 1 January 2016.

According to the norms, telcos must intimate prepaid customers through SMS or unstructured supplementary service data within four hours of a call drop, and mention the amount credited. For post-paid customers, details of the credit should be provided in the next bill.

A few weeks ago, operators had asked Trai to withdraw the regulation for mandatory compensation for call drops (See: Telcos up in arms against call drop penalt).

However, the Cellular Operators Association of India (COAI) and the Association of Unified Telecom Service Providers of India (AUSPI) wrote to Trai saying the regulator's order would force them to increase rates to recover costs.

For the sector, the annual compensation due to dropped calls might range from Rs10,000 crore (in case 10 per cent of subscribers claim compensation) to Rs54,000 crore (50 per cent of subscribers claiming compensation).

Also, according to independent estimates, the regulation for compensation on call drops would lead to a three per cent hit on revenue and seven-eight per cent hit on the mobile earnings before interest, tax, depreciation and amortisation of telecom entities, the letter had said.

''The compensation policy would also increase disputes, consumer mistrust and costs,'' the letter said, adding, ''It would result in a sharp increase in call drops, as countless customers will cause the calls to drop to obtain Rs 3 a day as compensation,'' it said.

Also, Trai said the reports that compensation was not feasible were based on wrong inputs and the regulation was issued after a transparent consultation with all the stakeholders and a detailed analysis of the facts and figures.

Also, the reports about financial implications of Rs 54,000 crore a year on account of call drop compensation are exaggerated and appear to be based on COAI / AUSPI's apprehension that 50 per cent of the consumers would manipulate and misuse the regulation to get Rs3 every day from the TSPs. ''Such a sweeping presumption about the consumers is certainly not correct,'' Trai noted.

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