Trai to make per second billing must; telecom stks tumble

The stock effect

Owing to this news, the telecom sector has been in the limelight. Most of the brokerage firms are underweight on the sector and have recommended a sell rating on the telecom stocks. Enam Securities has maintained an underweight rating on telecom sector. It says that tariff cuts will intensify the pressures on the sector in near-term. It also feels that the new entrants will intensify the competition. Earning outlook is deteriorating and Q2, FY10 and FY11 earnings will disappoint. Enam is revising the EPS numbers downwards.

So, what does this mean for consumers? CNBC-TV18's Siddharth Zarabi reports.

Indian mobile tariffs, which are amongst the cheapest in the world are set to probably fall further. Trai Chairman JS Sarma who is visiting the ITU World Telecom event here in Geneva has told us that it is likely that it will be made mandatory for all network service providers in India to offer per second billing. Per second billing essentially means the fact that currently mobile calls in India are charged on a per minute basis. So, if you make a call for 10 seconds, you pay the rate per minute, you make a call for 59 seconds, you still pay it. One operator, Tata Indicom has recently gone ahead and actually started per second billing. Some other operators have also reacted. The fact is that the Trai soon proposes to issue a consultation paper, the way it takes decisions and within three to four months a final decision will be taken on this matter.

JS Sarma, Chairman, Trai, said, "We are looking at the possibility of making service providers offer to consumers per second pulse as a mandatory option to be provided. Hopefully, in a month or a month-and-a-half we might like to come out with a consultation paper."

The fact remains that in the market network service providers are already going ahead, Tatas have announced this. Reliance Communications has reacted and possibly all of this is going to lead to further affordability whether it is actually affordable for subscribers or whether there will be some more twists and hidden charges in these packages, we don't know about that. But clearly Indian mobile tariffs, which are already the cheapest in the world, are set to perhaps go further down once the Trai makes up its mind on this important regulatory change.