Trai Must Act

[kesav 127]

I felt the following article to be interesting and worth reading.

India's telecom market continues to be one of the most baffling ones in the world. Youd think, as the Telecom Regulatory Authority of India (Trai) does, that having 8-10 service providers would ensure the market works, so it doesnt really need to regulate tariffs. And yet that isnt really so. Sure, India has the lowest telecom tariffs in the world and that shows markets are working and Trai is correct in keeping tariffs under whats called forbearance. But, at the same time, the new players that have just begun offering their services argue the interconnection agreements being signed between them and dominant players, like Bharti Airtel, are one-sided. This is where Trai needs to come in, since it is mandated by law to set out interconnection agreements which, in turn, are cost-based and help prevent dominant behaviour if Trai doesnt come in, its likely that someone will approach the Competition Commission. If incumbents like BSNL and MTNL were allowed to abuse their dominance in the mid- and late-1990s when the likes of Bharti and Vodafone came in, the private operators would never have grown to the size they have today.

Bharti Airtel is asking new players to give it 10 paise each time its network receives an SMS from their networks. Its argument is that new players are wooing subscribers by offering very cheap SMS facilities, but since these SMSs are necessarily being sent to subscribers of existing firms like Bharti Airtel, they need to be paid for their networks being used. This, of course, is the basis for the Interconnect Usage Charges (IUC) till March, when a voice call came from one network to another, the calling network paid 30 paise per minute to the network being called; this termination charge was lowered to 20 paise in March 2009.

The question is whether this 10 paise SMS-termination charge is too high. Since the IUC, for voice calls or SMSs, is based on the amount of the network that is being used, the size of the file being transmitted is critical. Well, a 160-character SMS has a size of around 1kb, while a voice call is around 16kb per second. Today, with voice calls priced at 1 paisa a second, this means that instead of the current 50 paise to a rupee, SMS tariffs should be a fraction of 1 paisa, and the IUC on them even less.

Indeed, in August 2006, Trai had a consultation on whether or not there should be IUC on SMSs and concluded that telcos were free to charge what they wanted from each other, it added the costs of terminating SMSs were negligible and SMSs got sent only when the network was not being used for voice calls Moreover, there is no supplementary cost for the terminating and transiting traffic. Primary resources utilised for SMS, i.e. the signalling channel (TS-16), are a necessary provision for handling the signalling for the voice traffic and are used for SMS only during the period when it is not used for voice traffic signalling or any other service.

On March 9, 2009, when Trai reviewed the IUC, it re-looked the issue of termination charges on SMS and said, The cost involved with the handling of SMS in any of the service providers network is insignificant as compared to the cost for handling voice. So, on what basis are incumbents like Bharti charging 10 paise as IUC from the newcomers?

Several amazing issues arise, apart from the obvious one that just having more players doesnt necessarily mean the market will work telcos still charge Rs 6-7 per minute for international calls, to cite another example, despite the fact that global majors charge them just 40-50 paise to carry the call from India to the US/Europe. One, Trai doesnt know when to intervene and when not to. So, when Tata DoCoMo introduced pay-per-second billing, which reduces telephone bills by 10-20 per cent, Trai didnt think the market would work and its chief JS Sarma announced he would make a per-second billing mandatory even before he could begin the consultation process, the market responded and major players, including BSNL, came up with pay-per-second pulse plans. And when it is obvious the market is not working, whether in the case of SMS tariffs/termination charges, or in the case of international calls, Trai does precisely nothing. Indeed, in the case of value added services like ringtones and music downloads, the global practice is to give a larger share of revenues to developers, while it is the opposite in India once again, Trai needs to see if this is abuse of market power. And whether or not it regulates tariffs, Trai needs to keep a tab on the difference between costs and tariffs of various services being offered.

Postscript: There is no doubt the new operators like Unitech/Swan got their licence/spectrum dirt cheap, but Bharti/Vodafone charging them a high SMS IUC isnt going to bring money back into the government coffers, so its best not to confuse the sweetheart deal they swung with the government with the IUC agreements they need to make amongst themselves.

source :: http://www.business-standard.com/india/news/trai%5Cing-times/375741/

If TRAI doesn't act the competition will be stifled by anti-competitive measures of big players.

TRAI must change the termination charge from per-minute basis to per-second basis

TRAI must reduce the current termination charge from 20p/min to 0.2p/sec (works out to be 12p/min)

TRAI should intervene in case of SMS termination and should be made in proportion to the load carried on the n/w.

Current termination charged by big players against new comers is exhorbitant and defies any logic.

I sincerely pray TRAI should help new players to settle in smoothly so that competition in Telecom sector is maintained.

Edited November 10, 2009 by kesav

[Himanshu Singh 19]

Airtel is a big thug,we all know. They tried every trick in the book to stifle competition earlier by opposing Dual technology regime and now this. I am proud of the fact that I have never been their customer even when I HAVE USED EVERY OTHER OPERATOR IN NCR.

[kesav 127]

Stand-alone operator, Loop Telecom alleged that incumbent operators are resorting to cartelization tactics and thereby charging exorbitant termination charges for SMSes. It has approached the regulator, TRAI which has now sought details from incumbents.

Loop has alleged that incumbents work on a ‘bill and keep’ mechanism.

source :: http://telecomtiger.com/PolicyNRegulation_fullstory.aspx?storyid=7657&section=S174

[kesav 127]

Some more articles on the same subject

NEW DELHI: Telecom regulator Trai has been besieged with representations from several quarters, including

consumer activists and members of

Parliament, asking it to abandon its policy of forbearance with regard to SMS

tariffs.

This follows a ToI story on November 5 revealing that the cost of terminating SMS's on a network is a fraction of a paise while operators are charging between 50 paise to Re 1 per SMS from the consumer. This means that the current tariffs are between 50 to 100 times higher than the cost, which allows operators a huge margin.

Additionally, there are reports that existing operators may be preventing new operators from passing on the cost benefit to consumers by forcing them to sign interconnection agreements, which make their cost structures of new entrants higher than their own.

Referring to the ToI article, Rajeev Chandrashekhar, member of Parliament has written to Trai chairman J S Sarma, pointing out that the forbearance policy of Trai is self-imposed, and it is under no obligation to continue with the policy if there is a clear demonstration that there is not only a market failure, but in fact, operators are working in concert to charge 50 to 100 times higher rates.

“Consumer deserves a lower tariff and there is sufficient evidence that the current SMS tariffs can go down by a large magnitude," he adds.

Bejon Misra, chairman of Centre for Consumer Education & Advocacy, has made a similar plea to the Trai chairman. He writes, "This latest outcry against the cartelization of incumbents to derail efforts to bring fair competition into the market place and make it unsustainable for new players to offer competitive prices to consumers urges you to abandon your policy of forbearance. India will appreciate your immediate intervention to protect the interest of consumers by enforcing a level playing field for all the operators."

Acknowledging that letters and representations were pouring in, Trai chairman J S Sarma said, “we are examining the issue.”

source :: http://timesofindia.indiatimes.com/biz/india-business/SMS-tariff-Activists-MPs-tell-Trai-to-take-action/articleshow/5210080.cms

NEW DELHI: Telecom regulator TRAI has sought details from established operators

on allegations of cartel formation and exorbitant fee to

provide inter-connectivity

network. Loop Telecom, a new entrant, has alleged that incumbent operators with significant market power are demanding as high as Rs 0.10 per SMS as termination charge.

Loop said the charges are discriminatory as the old operators do not have a system of termination charge on SMS among themselves and they work on ‘bill and keep’ mechanism.

A senior TRAI official said comments from the operators have been sought over the issues raised by Loop Telecom and a decision can be taken only after getting the response.

The official said there are two issues under the regulator’s disposal: whether the termination charge needs to be equal for every player for which Loop has approached TRAI and the overall issue of SMS tariffs being high.

“Whether the issues should be looked at entirely or in isolation, we will take a call in the next seven days,” said the official.

Consumer activists and members of parliament have also sought TRAI’s role in regulating the SMS tariff which, they say, otherwise would lead to difficult situation for new operators where they would not be able to offer competitive tariffs.

Another TRAI official said it is high time for the regulator to re-examine SMS tariffs, which have not fallen as steeply as voice calls. SMS tariffs are around 50 paisa where as voice calls have come to the level of one paise per second.

source :: http://economictimes.indiatimes.com/news/news-by-industry/telecom/Cartel-formation-TRAI-seeks-details/articleshow/5213992.cms

[kesav 127]

Airtel is already seeing fire in its backyard.

It has lot of flap in its belly. Its time that it starts trimming itself to survive.

The articulation that "lowering termination will not lower tariff" is just foolish.

Whenever TRAI reduced termination or ADC, the industry had witnessed tariff reduction.

Another articulation saying that "its too early to reduce the termination again" is anti-regulatory.

TRAI has its own competence to know when to intervene and certainly not necessary to get advice from anti-competitive organization like Airtel.

I've seen recently several articulations from Cartel (Airtel,Vodafone and Idea) indicating businesses of new players will collapse. These articulations are irritant in the industry and aimed at scaring new players.

If they believe that they can drive-away competition by rhetoric, they are in for rude shock.

Bharti Airtel spokesperson has mentioned that the tariffs in the telecom sector will be consolidated over a period of 1 or 2 years since the business models adopted by the service providers are almost unrealistic.

"I feel consolidation in terms of tariffs will happen in one-two years, which should lead to some stabilisation," said the Bharti Airtel chief executive and joint managing director Manoj Kohli, while addressing the World Economic Forum's India Economic Summit.

"Business case of many of these operators is not viable. Price is a short term situation as many new operators will not be able to continue for long," he mentioned.

When asked about mobile termination charge, he mentioned that "TRAI changed MTC in five years on April 1. It is too recent for it to consider revising it again”. MTC or mobile termination charge is something which has to be paid by one operator to the other on whose network the call gets completed.

TRAI or the Telecom Regulatory Authority of India is the watchdog for telecom sector.

He mentioned that the stabilization of rates will happen on its own and MTC had nothing to do with lower tariffs. "I don't see a reason to lower or change it again."

Bharti has joined hands with State Bank of India to enable mobile payments in certain regions in India. According to Kohli, Bharti is in talks with Reserve Bank of India for launching the service in a full-fledged fashion.

"The details will be worked out by RBI," Kohli said.

When asked about the amount of revenue which the firm will be generating via this initiative, he said that Bharti has rolled out this function as a social initiative rather than as a source of revenue.

"We see it as a huge social opportunity instead of a revenue opportunity. We will be open to all the banks as it is a partnership model and not just an individual effort."

Kohli also said the service would be launched "only when policy issues are resolved"

source :: http://www.india-server.com/news/telecom-rates-to-consolidate-in-medium-15561.html

[KanagaDeepan 1,084]

SO AIRTEL is getting ready to go downhill.... Its WORDS show its fear upon drastically reducing margins due to competition... TO be precise, this is exactly WHAT WE ALL WANT....

Soon TRAI should interfere in this SMS case and hope it will charge interconnect for SMS as Re0.01 or FREE... Then we will see revolution in SMS charges of new operators say 5k SMS for Rs50... And BIGGIES will :'( CRY inorder to give interconnection charges to SMALL ONES too...

Hope it will come very soon....

[sougatadc 358]

Then we will see revolution in SMS charges of new operators say 5k SMS for Rs50.

Hope it will come very soon....

What will the common people do with 5000 SMSs? It would be far better should a thousand SMSs be charged Rs. 5 to Rs. 10.

[kesav 127]

Raja calls for cut in SMS charges

Union Communications Minister, A Raja on Thursday called mobile operators to reduce the tariffs for SMS on the lines of tariff cuts for voice services.

"Increasing competition from new players and adoption of better technology have led to reduction in call charges significantly, and I feel the same can happen in case of SMS tariff also," said Raja.

source :: http://telecomtiger.com/Wireless_fullstory.aspx?storyid=7773&section=S216

Hope TRAI listens to concern of the Minister.

Current state of SMS charges has nothing to do with technology(per existing technology the cost to company for a single SMS will be less than 1p) but more to do with policy of forbearance followed by TRAI.

[kesav 127]

Telecom regulator may examine mobile tariffs

The Telecom Regulatory Authority of India may look into tariffs being offered by mobile operators based on the cost structure of the telecom companies.

The TRAI Chairman, Mr J.S. Sarma, told reporters that the exercise may be undertaken to examine the existing tariff structure keeping in view consumer affordability and operators' costs.

Mr Sarma's comments comes a day after Bharti Airtel's CEO, Mr Manoj Kohli, said that the TRAI should look at whether any operator was indulging in predatory pricing in the market. A number of new operators have launched their mobile services with tariffs as low as 1 paise for 2 seconds and Re 1 for a 10 minute call. Offers from Tata DoCoMo and other players such as MTS have forced incumbent players to also respond with lower tariffs.

But other operators, including existing GSM players, do not agree with Airtel's stance. A senior executive of a large GSM operator said that the issue of predatory pricing arises only when an incumbent offers below costs tariff.

“In this case, it is the new players who are launching their service with attractive schemes to get subscribers. How can an incumbent player accuse a new operator of being a predator?,” said the executive.

TRAI has, however, been thinking about reviewing the entire tariff structure given that the previous exercise was done in 2003. So far it has been pushed back by the GSM lobby but Mr Kohli's comments could trigger the process at TRAI.

Mr Sarma also said that he expected mobile operator to introduce mobile number portability by January 1. “Anyone who does not do it by December 31 runs the risk of being perceived as being against the consumer,” Mr Sarma said.

source :: http://www.thehindubusinessline.com/2009/12/05/stories/2009120553040400.htm

The 2 highlighted statements are very important for the industry.

TRAI is looking at reducing termination charges. That's great news.

TRAI is warning operators that if they don't make their system MNP ready by Dec 31st, they'll face consequences.

[kesav 127]

Dec 31st has come. No operator is ready with MNP. What will TRAI do now?

Will it impose penalty on the operators who are not MNP-ready?

Is TRAI ready to exhibit the might of regulator?

The following are the expectations

1) TRAI must reduce the termination charge to 0.2p/sec

2) TRAI Should provide broad roadmap(timetable) to zero termination regime

3) TRAI must provide ceiling for the retail SMS price at 5p/SMS (Current base price of 50p/SMS is well above the cost per SMS)

4) TRAI should also provide Ceiling for the retail MMS price (MMS has not seen much growth due to exhorbitant pricing by operators)

[Himanshu Singh 19]

MNP has been put on hold till April 1, 2010. To compensate for the delayed roll out, the DoT wants nationwise launch simultaneously.

[kesav 127]

TRAI brings hosts of new measures, sees great future for telecom

In tune with the huge growth of telecommunication sector, the Telecom Regulatory Authority of India (TRAI) has planned to introduce a host of new customer friendly measures, including the unique Mobile Number Portability system, by September this year.

This was stated by TRAI Chairman J S Sarma while talking to newspersons on the sidelines of an interactive session with members of the Bharat Chamber of Commerce (BCC).

Underlining a slew of new steps the TRAI was contemplating seriously or had been lying with the Union government for approval, Dr Sarma said apart from bringing in the new technology of Mobile Number Portability for the benefit of the country’s 600 million mobile customers within the next three months, they had finalised their plan to introduce a National Broadband Plan as well as the new system for building a National Optic Fibre network across the country soon.

Both of these plans were being placed before the government for scrutiny and final decision before their implementation in a big way, Dr Sarma said.

Referring to the huge success of the latest bidding of 3G Spectrum bringing in more than Rs 1,000 crore to the national exchequer, Dr Sarma emphasised that it would bring about a new revolution to the country’s telecom sector in many ways.

Further elaborating, he said during the next five years India needed at least 300 to 500 Megaherts of spectrum from various agencies to place itself among the frontrunners of those in the developed world in terms of growth in telecom sector.

At present, Dr Sarma regretted, India use only about 200 to 240 Mh spectrum, which was very low in the global standard.

Moreover, the TRAI Chairman said the country required a much higher bandwidth not only for the introduction of 3G mobile phones but also for the 4G spectrum and the system of Long Term Evolution (LTE) soon.

source :: http://www.indlawnews.com/Newsdisplay.aspx?b3cf7d01-bf48-4621-b56c-d9e9ad14b3c5

Let us wait and watch on the highlighted points on what TRAI has in store for us.

Efficient use: Trai plans to audit spectrum

KOLKATA: Telecom Regulatory Authority of India (Trai) is planning to introduce spectrum audit to ensure efficient use of spectrum by telecom operators. Trai chairman J S Sarma said on Tuesday that the spectrum audit is likely to start in four months.

He has also defended the pricing of 2G and 3G spectrum, which is widely criticised by a section of operators as too high. Trai chairman made it clear that India would require additional 300-500 MHz spectrum in next 3-5 years. "Now spectrum is a scarce commodity, so we have to use it efficiently. So the pricing should be such that the operators use it efficiently," he added. Sarma pointed out that 6.2 MHz spectrum is available in 2G in most of the cities while in metro cities 10 MHz is available.

"In some cities only 58 MHz is available while the number of operators is more than six. So pricing should be such that it becomes a guiding factor for spectrum use," he added.

It may be noted that Telecom Regulatory Authority of India on May 11 recommended that firms with spectrum beyond the floor entitlement of 6.2MHz should be made to pay for the additional spectrum at an equivalent price to the 3G licence.

However, some operators argued that 2G should be priced at one-third of 3G as the later is three time more efficient. Commenting on the pricing, Sarma added that Trai is reviewing 2G pricing and will take a call by mid July. "If the additional 2G spectrum is priced at par with 3G then the total cost incurred by telecom operators would be Rs 18,000 crore. This is nothing considering a subscriber base of 600 million in our country," he said.

Trai chairman argued that considering a five-year licensing period, it would cost only Rs 5 per customer per month and for some it could be as low as Rs 2 per customer per month.

source :: http://timesofindia.indiatimes.com/biz/india-business/Efficient-use-Trai-plans-to-audit-spectrum/articleshow/6025730.cms

This is much awaited audit. Atleast it's happening now.

TRAI, we're eager to know the results of this audit and the actions taken by you against the operators who would be found using spectrum inefficiently.

[SUDYEcaZ 67]

It seems Vodafone is also now doing the same stuff as AirHell

http://economictimes...ow/17243985.cms

NEW DELHI: Tata Teleservices has approached telecom tribunal TDSAT against Vodafone's notice threatening to disconnect termination of SMSes on its network over a dispute on certain fees. Vodafone had issued termination notice to Tata Teleservices Ltd (TTSL) asking it to pay Rs 188 crore as SMS termination fee by November 17, failing which it would disconnect the Tata group firm SMSes from its network.

TTSL's petition was put today before a special vacation bench of Telecom Disputes Settlement and Appellate Tribunal (TDSAT).

During the proceedings, both the parties agreed to put the matter on November 20 for next hearing. Meanwhile, Vodafone has also assured the tribunal that it would not stop interconnection of TTSL SMSes from its network till the next date of hearing."As agreed by both the parties, this matter may be put up on November 20, 2012 under the same heading," said TDSAT member P K Rastogi in his short order. Vodafone is demanding termination fee from TTSL at the rate of 10 paise per SMS from April 2011.

Termination charges are paid by an operator from whose network calls or SMSes originate to the one on whose network these communications end. These charges impact tariffs.

Edited November 16, 2012 by SUDYEcaZ