TRAI to reduce Call Charges by reducing Interconnect Charge

TRAI is proposing a decrease in the charges paid by operators to each other which will prove out to lower tariffs for consumers but can create a divide between the mobile operator industry. The Telecom Regulatory Authority of India on Thursday reviewed the “interconnect charges”; seeking comments from mobile operators with some proposals that even included one to banish call termination charges.
Interconnect charges are fees mobile operators pay one another for using their networks for originating, carrying and terminating calls. These charges include top rates of 20 paise a minute in termination fees and 65 paise a minute for carrying STD calls, account for as much as 75% of the total cost of a mobile call.

TRAI said in 2009 that the launch of the services by new operators and the introduction of per second billing had made it necessary to have a re-check of these charges. It said its discussions with mobile companies revealed that some of them wanted do away with termination charges altogether and sought wider inputs on the feasibility of a “zero termination charge”.

TRAI accepted the complaints of smaller and new operators that gain most from termination charges and sought the industry’s response of having lower charges for new entrants. Globally many regulators had allowed new entrants to enjoy lower termination charges to help remove barriers to competition as these players had little to offer in negotiations with incumbents. However, experts say that TRAI’s move is likely to divide the industry once again, with bigger, older operators with a large customer base are likely to oppose the proposals, while newer entrants and those with fewer customers will be welcoming the changes.