TRAI likely to rework network interconnection and termination fee structure

The regulator likely to bring down charges which may ultimately reflect in tariffs that end-consumers pay

Network interconnection and call termination charges, which a cellular operator pay to other operators for connecting and completing voice calls on their networks, is likely to change very soon. These charges have direct impact on tariffs that end-consumers pay.

The Telecom regulatory Authority of India (Trai) is planning to bring fresh recommendations on all network interconnection and call termination charges soon, according to sources at the authority.

The regulator is likely to bring down the charges which may ultimately reflect in tariffs that end-consumers pay.

However, Trai will have to start a fresh consultation before it comes out with new recommendation on this.

In its 2009 recommendations, Trai had fixed a mobile termination charge at 20 paise per minute for all local and national long distance charges. It had also raised the mobile termination charge for incoming international calls to 40 paise per minute from 30 paise, while putting a ceiling on carriage fee of 65 paise per minute for domestic long distance calls.

According to industry sources, about 15-20 per cent the operators' revenue comes from termination charges at present.

"This is a very complex issue, and the regulator will have to do it in consultation with the industry. Once it starts the consultation, we will give our suggestions. The regulator should keep it non-discriminatory, and it should not hurt the cellular telecom operator," said Rajan Mathews, director general, Cellular Operators Association of India (COAI). However, there is scope for bringing it down, he added.

Due to various legal cases and implications, the issue could not be addressed properly, even if the regulator had started consultation on review of telecom interconnection in May 2012.

However, most of the legal cases at different courts are almost settled, and the Supreme Court has also given its order last year.

Last time, when Trai gave recommendations on network interconnection and call termination charges, the regulator had faced opposition from the new and old telecom operators over the issues and methods adopted in consultation process to review network interconnection charges. Following this Trai had asked the Supreme Court to "grant suitable direction regarding the procedure and method to be followed"

Meanwhile, the regulator has, in May 2013, issued new norms imposing five paise as termination charge on each transactional short message service (SMS) and two paise on each normal SMS on operators from whose networks the message originates. The new regulation - Short Message Services (SMS) Termination Charges Regulations, 2013 - has come to effect in June, 2013. Before this, the termination charge on SMS was under forbearance.

Prior to the new guidelines, some operators like Bharti, Vodafone and Idea Cellular charge a termination fee of 10 paise per SMS based on bilateral agreement. However this move was not accepted by Reliance Communications, Tata Telservices and Aircel who refused to pay the termination charges. The matter however then went to the court.

Telcos get about 18 per cent of their revenue from value-added services, of which about 40 per cent comes from SMS.

According to COAI the bigger telcos were earning about Rs 20 crore as termination charge from bulk and transactional SMSes annually. With the new Trai norm, this will come down to Rs 10 crore. Big operators however did not have to pay much to each other as termination charges for individual SMS as they got neutralised. That is because individual subscribers who sent a message to another subscriber in 90 per cent of the cases get a reply.