COAI wants termination charges reworked

New Delhi | Updated: Mar 31 2009, 05:37am hrs
GSM operators association COAI on Monday asked Trai to recalculate the mobile termination charge, saying the regulator has not considered key cost components like capex of operators while reducing the charge to 20 paise.

It (the fresh MTC as decided by 20 paise) disregards the cost elements. As per international best practices, Capex is included as relevant cost for the determination of mobile interconnection charges. The UK, Malaysia, Pakistan, Brazil, Israel consider such costs while determining MTC, COAI said in a letter to Trai. The revised interconnect usage charge, of which MTC is a part, was notified by TRAI on March 9. It reduced MTC to 20 paise from 30 paise. Termination charges are paid by one operator to another on whose network the call ends.

The new MTC charge permits only a partial recovery of the cost of ending a call through termination charge by excluding key elements of costs such as cost of capex, thereby, suggesting that the balance should be recovered by way of higher outgoing tariffs.

It will make mobile tariff costlier for the customers. NTP (New Telecom Policy) 99 says operators are free to recover their capex from rentals and origination charges, COAI director general T V Ramachandra wrote in the letter.

Earlier, COAI had said as per the calculations based on international best practices, the three-year forward looking MTC was calculated to be around 35 paise per minute and it was inexplicable how the value of 20 paise per minute had been determined.

Termination charge for all types of domestic calls like fixed to fixed, fixed to mobile, mobile to fixed and mobile to mobile was reduced to 20 paise per minute from 30 paise per minute.

Termination charge for incoming international calls are 40 paise per minute against the existing charge of 30 paise per minute earlier. The ceiling on carriage of domestic long distance calls retained at 65 paise per minute. Trai expects the non- reduction of this ceiling to encourage national long distance operators to expand into rural areas.