THE TARIFF rebalancing which took effect last year in the telecom sector are not likely to see a further revision from April 1, 2000 as suggested by the Telecom Regulatory Authority of India (TRAI).
TRAI sources said it has been decided that the new tariff regime, introduced in May last year, will continue at the same levels for another year. The decision to continue the telecom tariffs for another year will however require the formal seal of approval by the new TRAI board which is expected to become functional from the end of this month.
The proposal to hike the rentals further and lowering of STD/ISD rates has been deferred in view of the significant reduction in the Department of Telecommunication's (DoT) revenue in the current year. Sources said that not enough time has been given to the TRAI's estimates on elasticity of demand. The regulator had contended that a reduction in STD/ISD rates would encourage usage which in turn will set off the loss in revenue.
TRAI is of the view that the DoT would suffer a dip in revenues to the extent of only Rs 800-odd crore in the new tariff regime. The regulator was of the view that the traffic will rise after the cut in long distance rates by 10 per cent resulting in a total loss of Rs 233 crore.
However, according to recent estimates, the shortfall in revenue accruing to DoT has been in the region of Rs 2,000-Rs 2,500 crore. Moreover, the hike in rentals for subscribers which was partly rolled back for the category of low users was not welcomed by the public.
It may be recalled that STD rates were cut by around 22 per cent while ISD rates were cut by 30 per cent. The original TRAI's recommendations were diluted to a certain extent as then communications minister, Jagmohan, saw to it that there were absolutely no changes in tariffs for the rural users.
The low-users in the urban areas were also spared. The rental tariff for the urban user (low) which was proposed to go up from Rs 210 per month to Rs 290 were kept at Rs 210 and that of rural users also remained at Rs 50 against the suggested increase of Rs 90.
In its tariff order of March 9, 1999 the long distance tariffs were to come down for the next three years. It was argued that the reduction in long-distance charges would benefit the rural subscriber because a larger portion of their calls were long distance.
TRAI in its presentation had stated that 30 per cent of revenues from STD calls are contributed by STD/PCOs and VPTs.
