Why you could pay more for mobile calls

NDTV

New Delhi, 12 February 2011: Mobile bills are likely to shoot up if the Telecom Regulatory Authority of India or TRAI has its way. On Wednesday, the telecom regulator came up with its recommendations on the pricing for 2G Spectrum.

 

TRAI has hiked the entry fee for new telecom players by six times. Accordingly, new entrants into the 2G space will have to shell out Rs. 10,972.45 crore against the current Rs. 1,658 crore.

 

Also, existing player will have to pay Rs. 4571 crore for every MHz of spectrum beyond the allocation of 6.2 MHz Until now, the incumbents paid a percentage of their revenue to the government.

 

Spectrum is a scarce natural resource and it contains only a limited number of frequencies. In 2007-08, when 2G licenses were first allocated, 4.4 MHz of spectrum came as a package with the license.

 

Also, spectrum was allocated on the basis of the number of subscribers. Sources say that many operators showed inflated subscriber base to hoard spectrum. They did so to block other players from entering the market and also to keep spectrum for future needs.

 

TRAI says the revised fees should be enforced from April 2010. Operators however say the recommendations will push up telecom tariffs in the country which are by far the cheapest in the world right now.

 

Director General of Cellular Operators Association of India Rajan Mathew said, ’’At the end of the day operators will have to recover costs and customers will end up paying for it.’’ Big players like Bharti Airtel and Vodafone Essar allege that they will end up paying nearly 40 per cent more.

 

Vodafone termed the recommendations as ‘‘Flawed, illogical and discriminatory against operators....which does not make business sense as the 3G spectrum auctioned by government recently is more efficient and costs less."

 

The country’s largest telecom operator Bharti said, ’’For 2G spectrum pricing, TRAI while moving away from its earlier arbitrarily-linked 3G pricing levels, has now in many cases gone beyond 3G values.’’

 

TRAI Chairman J S Sarma said, "Telecom firms should not look at only payout charges. This is just one element of the recommendations. There are other elements which will result in huge savings for the operators.’’

 

While TRAI alone cannot call the shots on mobile bills getting bigger, telecom operators seem certain that the burden will be passed on to the consumer.