Telecom Tariffs Set to Go Down as Trai Cuts Interconnection Charges

In a bid to boost fixed line phone connections in the country, telecom regulator Trai Monday removed charges that a landline service provider has to pay to the other service providers for transmitting its customers' phone calls - a move that is likely to lead to lower tariffs.

Now, calls made from landline-to-landline or landline-to-mobiles will not include the interconnection charge, which was 20 paise.

Trai has also reduced network interconnection usage charges (IUC) on calls made from mobile phones by about 30 percent to 14 paise per call from 20 paise earlier.

"To promote investment in, and adoption of, wireline networks, so that they may become an effective vehicle for the delivery of high-speed Internet in the country, the Authority has decided to prescribe FTC (fixed termination) as well as MTC (mobile termination charge) for wireline to wireless calls as zero," Trai said in the new IUC rule issued today.

Telecom subscribers can't communicate with each other or connect with other networks unless necessary interconnection arrangements are in place.

A telecom company is required to pay interconnection charges when its subscriber make call to subscriber of other network. The charge gets added up in final price that a subscriber has to pay.

"The Authority is of the opinion that in case the MTC is set to zero for wireline to wireless calls, wireline access providers would be able to provide innovative tariff packages (e.g. flat rental plans with unlimited or a significantly large number of outgoing calls)," Trai said.

Similarly, in case the FTC for calls originating from wireless networks and terminating on wireline networks is set to zero, this "would propel wireless access providers to offer cheaper tariffs for wireless-to-wireline calls," Telecom Regulatory Authority of India said.

Landline connections in the country have been declining since the time mobile incoming calls were made free. While mobile subscriber base at the end of 2014 reached all time high at 94.39 crore, landline connections are only 2.7 crore.

State-run telecom companies BSNL dominates landline phone connections with 62.71 percent market share followed by MTNL 13.04 percent, Bharti Airtel 12.55 percent, Tata Teleservices 5.98 percent and Reliance Communications 4.39 percent.

Videocon's Quadrant, Vodafone and Sistema Shyam account for 1.2 percent market share. Landline connections of private players are mainly meant for providing broadband connections.

In mobile segment, Bharti Airtel leads market with 23.01 percent market share followed by Vodafone 18.93 percent, Idea Cellular 15.95 percent, RCom 11.26 percent, BSNL 8.62 percent, Aircel 8.33 percent, Tata Teleservices 7.01 and Uninor 4.62 percent.

Sistema Shyam, Videocon Telecom and MTNL account for about 2 percent mobile service market share.