TRAI rules in favour of basic phone companies

By Our Special Correspondent

NEW DELHI, JAN 8. The Telecom Regulatory Authority of India (TRAI) today sought to settle the dispute between basic and cellular phone companies by ruling in favour of the former. It also gave some sops to the cellular phone companies, which though were termed ``grossly inadequate'' by them.

In its recommendations released today, TRAI suggested that a fixed phone may also be used like a mobile phone. However, this mobility should be limited to the ``local area'', called short distance charging area in telecom parlance and broadly equal to a district. All calls from wireless in local loop (WLL) phones should be charged at the highest basic service call charge of Rs. 1.20 for a three-minute call. Companies providing this service need not apply for a separate licence nor should they be asked to pay more than the present licence fee of 12 per cent of annual income.

Rental charges would be fixed by TRAI within three months while tariff costs (other than rental and call charge) should be the same as those specified for basic services. It proposed that one company be allotted 5 mhz of frequency to accommodate four basic companies. The earlier proposal to allot 8 mhz to each company would have restricted competition to only two companies - a duopoly market structure not in the interest of consumers - because of frequency limitations.

In an apparent sop to cellular companies, TRAI suggested that their annual licence fee be brought down from 17 to 12 per cent of income by allowing them to retain five per cent of long distance revenues. They have also been permitted to provide fixed phones on their GSM cellular network.

As expected, cellular companies expressed ``deep disappointment'', but basic phone companies, including the state- owned Bharat Sanchar Nigam Limited (BSNL), have reasons to feel happy.

However, the last word on this has not been said. The Telecom Commission is supposed to take a final view of TRAI's recommendations but depending on the lobbying ability of the cellular companies, the proposal might even be taken to the Union Cabinet.

Addressing the views of ``those opposed to limited mobility'', TRAI said cellular mobile service would continue to be a premium one as it had several additional features. Besides, even before the basic phone companies are able to deploy fixed phones with limited mobility, two more cellular companies would have entered the market. The main threat to existing cellular companies will thus come from the two new cellular companies rather than fixed phones with restricted mobility, it observed.

TRAI also issued a determination on six issues relating to signing of interconnection agreement between cellular companies and BSNL. ``This brings to an end TRAI's mediation process that has lasted more than two years. TRAI expects that both parties will sign interconnection agreements at the earliest.''

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Section  : National
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