Telcos unlikely to raise tariffs in next 6 months: TRAI

Rahul Khullar, Chairman of Telecom Regulatory Authority of India (TRAI) has said that forbearance in tariffs is likely to continue for sometime.

In an interview to CNBC-TV18, he clearly stated, "More than a month ago we made a clear announcement that forbearance will continue and it is after that that the claw back on freebies started. So, in terms of policy announcement or regulatory stance, we are clear that forbearance will continue. However, forbearance does not mean that you are looking it in other way. We will keep an eye on it but for the moment we are not going to dabble any." At the same time he added that telecom companies are unlikely to raise tariffs in the next six months. The telecom regulator had said that it wanted to review forbearance in telephone tariffs to check recent increase in prices by operators. Under the existing policy, TRAI allowed operators to fix their own tariffs that there is enough competition in the market. With the Supreme Court cancelling 122 licences, the regulator wants to review whether it should continue with forbearance or start fixing ceiling rates. Are tariff hikes justified? Khullar explains that telecom providers are trying to claw back some of the freebies that they had offered earlier. According to him, it is not as if telcos are suddenly raising headline tariffs but actual effective tariffs have been declining continuously because of this destructive competition in the market for customers. "Now, industry is in such trouble that they have to reverse it. The question is, how far do they need to go? As long as they are not too badly out of step with inflation – why should we particularly be bothered whether tariffs go up by three paise or four paise or five paise per minute," Khullar argued. The chairman also added TRAI did not want to intervene earlier when telecom companies announced headline tariff (Re 1 per minute) since the price looked fine then. Revenue sharing The Department of Telecom (DoT) has indicated that it will also consider non-mobile revenues to calculate revenue sharing. Khullar elaborates that there are two issues that are currently under examination. One is what constitutes adjusted gross revenues (AGR) for license and spectrum purposes in the context of internet service providers (ISPs) and second question is what constitutes AGR in the context of the new unified licenses regime, which will be unraveled in another 15 days to a month. Both the issues will be taken up for an open house discussion on Feb 21 or 22.