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Telecom stocks fall as Trai asks telcos to start compensating subscribers for call drops

04 January 2016

Telecom stocks dropped after the Telecom Regulatory Authority of India (Trai) wrote to service providers reminding them about payment of compensation for call drops that subscribers experienced recently.

The telcom regulator has asked operators to ensure compliance with call drop regulations, effective 1 January, even as service providers remained defiant saying compensation to subscribers will be paid only after court orders them to do so.

Trai also wanted to know if the telecom companies have put in place all mechanisms to comply with them.

In October, Trai had amended the Telecom Consumers Protection Regulations, 2015, to mandate Re1 compensation per call drop to consumers with a cap of three call drops a day.

Trai issued amendment in Telecom Consumers Protection Regulations on 16 October 2015 in which it added a rule mandating mobile service providers to compensate their subscribers for call dropped or automatically disconnected due to technical glitches in their network.

The rules mandate telecom operators to provider Re1 compensation for each call dropped, with a compensation cap of Rs3 per day.

Telecom operators have approached the Delhi High Court against this regulation.

''The matter is sub-judice and we will compensate consumers when court directs us to do so,'' Association of Unified Telecom Service Providers of India Secretary General Ashok Sud said.

He, however, said the industry is aware that there is no stay on the regulation.

Trai has submitted before the court that it will not take coercive action against telecom operators till the next date of hearing on 6 January.

''Any coercive action for us means to even comply with the regulation. As of today our telecom operators are not ready to implement it because of various complexities that we brought to the notice of the Court,'' COAI director general Rajan S Mathews said.

Cellular Operators Association of India, AUSPI and 21 telecom operators including Vodafone, Bharti Airtel and Reliance have said that the decision has been taken knowing fully well that laws of physics make it impossible to provide 100 per cent call drop-free network.

Telecom operators have submitted before court if the penalty is levied, the companies will end up paying around Rs1,000-1,500 crore.

Trai, however, said the maximum outgo under the rule in a year would be around Rs800 crore even if networks are not improved.

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