Telcos may challenge 'misplaced' call drops penalty order

In an interview with CNBC-TV18, Rajan Mathews of Cellular Operators Authority of India (COAI) termed the TRAI's decision to ask telcos to compensate for call drops as "misplaced" and said it does not address the issue.He added that if the government removed certain bottlenecks that come in the way of installing more telecom towers, the menace of call drops could be tackled.Telecom companies would consider contesting the order, he added.Below is the transcript of Rajan Mathews’s interview with CNBC-TV18's Reema Tendulkar.Q: Do you believe this judgement is a bit harsh on the telecom operators, your reading?A: The whole regulation is totally misplaced. Forget about it being just harsh. It does not address the critical issues while it is focussed on call drops. It is not going to solve the issue by penalising the operators and putting them in an adversarial position with the consumer. So, it is going to raise more contentious issues between the consumer and us which distracts us from solving the real issue at hand.Q: But how much will be the impact on telecom operators because roughly when we do the analysis even if you assume the worst case impact that is about Rs 90 per month for every user and that is literally 50 percent of the Average Revenue Per User (ARPU) that the telecom operators enjoy. So, that could be close to about 50 percent of your ARPUs. How do you read the financial impact on the operators?A: You are right on the money. In terms of the approximate impact on the financial side, Rs 190-180 is what the ARPU is. If you do 30 day times three that is Rs 90 and that is almost half. So, clearly at a time when we can ill afford this type of an outflow are being imposed on us and remember this is only one side of it. Yesterday the Telecom Regulatory Authority of India (TRAI) also raised the penalties from Rs 50,000 to Rs 1 lakh to Rs 1.50 lakh for the quality of service issues. So, you have got double whammy. You have got on one side the quality of service issues which call drops is a component and on this you have the direct interaction and penalisation with the consumer.Q: The operators still have time till January 1, 2016 to resolve the issue. How much of the issue can be resolved in this time frame and your conversation with the government so far have some of the problem areas or bottlenecks being eased?A: The government, the honourable minister and the Department of Telecommunication (DoT) secretary have been very helpful to us in terms of identifying the areas of locations for cell towers but let me just say, this is the critical issue. In the next 60 to 90 days if the following two things, can be done we can fix the problems. What are those two?One, stop local municipalities from unjustly and inappropriately sealing our towers. I have lost 350 towers just in Delhi over the last three weeks and I have lost almost a like amount in Mumbai. This is happening in all of the jurisdictions.The second thing is give me quick permissions to put new towers on. Limit the permission process to 30-60 days so I can get on with coverage issues and the capacity issues. This is going to solve the problem.Q: Do you see the telcos raising tariff? Is it possible and do you see them doing it in order to offset the financial penalty?A: Of course we would like to do that but in a competitive environment where there are about eight players. So, it is going to be pretty difficult to talk about raising tariffs. It also flies in the face of the honourable Prime Minister's Digital India program which says we want to make things affordable and drive coverage to the one billion unconnected. Doing the issue of raising tariff fairly really mitigates against that. So, that is why we are not keen to do that.Q: One more word. Do you see the industry contesting this order?A: If we can't resolving these matters amicably with the TRAI of course we will have to review the legal recourse that is available. So, that is something we will look at.