The department of telecommunications (DoT)'s domestic long-distance network is likely to become congested after subscriber trunk dialling (STD) charges are reduced by 20-50 per cent.
The proposal to reduce long-distance call charges was made in the pricing paper released by the Telecom Regulatory Authority of India (TRAI) on Wednesday.
The department's long-distance network is already under strain during peak traffic hours. The national transmission backbone becomes congested at night. Also, all long-distance circuits on the Delhi-Mumbai route are engaged during peak business hours.
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Private basic telecom operators are expected to benefit from the reduction in long-distance rates and the expected congestion of the DoT network. Six private companies are licensed to offer long-distance services within the circles they operate in. Sources expect DoT will have to rework investment projections for its long-distance transmission network.
The department has in the past year been concentrating on building its long-distance transmission capacity rather than rolling out its network into rural areas.
It plans to implement a 2.5 gigabits per second network to handle national long-distance data transmission traffic.
Explained a senior DoT official, "The elasticity (of demand) in case of STD calls is almost one. Therefore, we expect to see voice traffic to increase. But it may not cover the (revenue) drop in tariff fully."
Harsha Vardhan Singh, economic adviser to TRAI, yesterday said the regulator had assumed an elasticity of 0.5-0.6 in its study. According to the tariff paper, the revenue impact of the proposed changes in telecom tariffs is expected to be neutral. This was disputed by DoT and MTNL officials on Wednesday.