However, the industry feels that the new tariff structure will expand the cellular usage over the next few years and weed out non-serious users.

Bharti Enterprises chairman Sunil Mittal said there could be a 20 per cent drop in revenue in the short run. "But this has to be made up by increase in the number of users," he added.

Agreed Shyam Telecom director TR Dua, "cellular operators will face a short fall in revenue in the short run but in the long run it will increase the reach."

According to Essar Cellphone CEO Erich Buerkler, the proposed tariff is a step in the right direction. However, the announcements have to be backed by positive changes in the licence fee structure as well as in the regulatory environment, he added.

BT India managing director Arun Seth said the present tariff structure for cellular operators will do a great deal toreduce the cost anomaly that exists between cellular and normal phone calls. The TRAI has recommended standard airtime ceiling rate of Rs 6 per minute.

Seth was of the view that the new tariff structure will provide the right impetus for growth in the cellular phone market in India which has been of late stagnating. Most in the industry feel that the TRAI prescriptions are just one part of the story. Issues like current licence structure and the announcement of the new telecom policy will hold the key to success of the TRAI announcements. Revenue sharing as recommended in the new telecom policy will be crucial for the success of cellular operators, said Essar Cellphone chief marketing and sales Atanu Mandal.

The new tariff rates follow the international model of high rental and low usage cost, said Mandal. But success will depend on revenue sharing between operators and government.

To counter the fall in per customer revenue, which the industry presently pegs in the region of Rs 1,100 to 1,200,operators are likely to come out with separate packages for medium and large users.

Welcoming the TRAI move, Modicorp cellular business chief executive Umang felt that this will give more leeway to service providers to come out with different packages.

As for `calling party pay' system, which is to start in August this year, this will go a long way to remove the mental block in the mind of many users who are reluctant to pay for incoming calls over which they have no control, said Mandal. Most operators feel this is a positive step which will help to increase usage.

On the whole, the effort has been to encourage medium and large users, feel most in the industry. Many feel that it will take at least a month to understand the full impact of the changes in tariff rates.