Telcos Threaten Tariff Hikes if Forced to Pay Call Drop Compensation

Upping the ante against Trai's regulation on call drops, telecom operators Tuesday warned that mobile tariff will go up if they are forced to pay compensation for dropped calls.

The operators have also asserted that it is not possible to make a network free from call drops.

Trai has mandated operators to compensate consumers from January 1 if they face call drop problem. However, the regulation limits compensation to only three call drops in a day which means maximum compensation can be of Rs. 3 in a day to a consumer.

In a joint letter to Trai, telecom industry bodies COAI and AUSPI have said that the scheme of compensation, far from reducing call drops, will result in a sharp increase in call drops as countless customers will cause the calls to drop to obtain Rs. 3 per day as compensation.

"To recover this cost of compensation, telecom operators will have to increase tariffs leading to customer spending more to purchase telecom services," the letter said.

The two industry bodies, which represent all the operators in the country, said that the regulation is an invitation for limitless misuse and gaming of the system that as per estimates will lead to a 3 percent hit on revenues and 7-8 percent hit on mobile EBITDA.

"The market is already agog with talk that all a consumer has to do is to engineer three call drops every day, and get Rs. 90 reduction in the monthly bill. In a country where the average ARPU is Rs. 125, the impact of such a regulation is frightening," the industry bodies said.

GSM telecom players body COAI had earlier said that the regulation may force the industry to shell out about Rs. 150 crores every day even if half of the consumer base in the country faces call drop problem.

The operators also said that it was not possible to make a network free from call drops.

"Wireless networks cannot be designed for zero call drops ... Therefore, in a cellular mobile radio network, having full coverage and capacity everywhere is an oxymoron. The Regulation on compensation assumes ideal conditions with a possibility of zero call drop, which is impossible to achieve," the letter said.