The Cellular Operators Association of India and the Indian Paging Services Association have decided to move the Telecom Regulatory Authority of India (TRAI) for a revision in their service rental charges. The two associations are expected to approach the regulator before the end of this month. The cellular association, COAI, wants rental charges to be increased from Rs 156 to Rs 600 per month a four-fold increase. The paging service providers representative body, IPSA, plans to revise an August 1995 proposal to increase monthly tariffs to Rs 375 for alphanumeric pagers and to Rs 225 for numeric pagers. Paging companies are currently allowed to charge Rs 250 and Rs 150 for alphanumeric and numeric services respectively.
Sources said the move to approach TRAI, which has tariff-setting powers vested to it under the TRAI Act, 1997, has been prompted by low realisations from cellular and paging subscribers. The increase in rental charges are expected to improve revenues from low-using subscribers, who pull down average realisations.
In the metropolitan cities, the average per month revenues including the Rs 156 per month rental charge from cellular subscribers have ranged between Rs 1,000 (in cities like Chennai) and Rs 1,900 (Mumbai). The scenario in circles mostly analogous to states is worse with poor realisations due to low airtime usage.
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Last year cellular operators had requested the department of telecommunications (DoT) to increase the per month rental charge from Rs 156 to Rs 400. However, the department is yet to take a decision on the matter. Now, says a senior executive with a cellular company, the situation is different because TRAI is the tariff setting authority.
The demand to increase rentals has gathered momentum because cellular operators in the metros will have to pay a licence fee of Rs 5,000 annually per subscriber from next year, which translates into Rs 417 per month. The monthly bill of about 60 per cent of our users is less than Rs 500. That just about covers the licence fee we will have to pay from next year. Our proposal is that the rental charge at least covers the per subscriber licence fee, the cellular company executive said.
The situation in the circles is worse. With licence fee obligations of up to Rs 180 crore a year, some of the companies will need about 75,000 subscribers (paying Rs 2,000 a month) just to service the yearly licence fee. Other expenses to fund equipment purchase and operations will need many more subscribers.Representatives of paging service companies say that the industry is making a monthly loss of Rs 20 crore. While the government allowed paging operators several concessions like a relaxation of the lock-in period for foreign equity and an extension of the deadline to pay licence fees.
Pravin Kumar, IPSA president told Business Standard: We are reviving a proposal which we had put before DoT in August 1995. We sought an increase in rentals to Rs 375 for alphanumeric pagers and Rs 225 for numeric pagers. DoT agreed to Rs 250 and Rs 150 (respectively) in April 1996. Now, we will go to TRAI with our original proposal.