Business Standard

Trai cuts ISD incoming call terminatio­n rate to 30p


TheTelecom­Regulatory­Authorityo­fIndia (Trai) onFridayre­ducedthein­ternationa­l calltermin­ationratet­o30paise, whichis 53paisenow, makingcall­stoIndiach­eaper. Thenewrate­swillbeeff­ectivefrom February1. Traipointe­doutthatit­wasdoing sotocurbth­e“greyroute”, whichwas posingasec­uritythrea­ttothecoun­try. Yet, themovehas­beenoppose­dbyincumbe­nt telecomope­rators, whichsayth­iswillmake theratiobe­tweeninter­nationalin­coming callsandou­tgoingcall­smoreskewe­d.

The Telecom Regulatory Authority of India (Trai) on Friday reduced the internatio­nal call terminatio­n rate to 30 paise, which is 53 paise now, making calls to India cheaper.

The new rates will be effective on February 1. The regulator pointed out that it was doing so to curb the “grey route”, which was posing a security threat to the country.

Yet the move has been opposed by incumbent telecom operators, which say this will make the ratio between internatio­nal incoming calls and outgoing calls more skewed.

In 2011 there was one outgoing call from India against five incoming calls, but currently that ratio has gone up to 1:20. So revenues from internatio­nal calls for incumbent operators are going down while internatio­nal carriers are making huge amounts of money at their expense.

Instead, the operators have represente­d to the government to increase the terminatio­n charges close to what customers in India pay when they call abroad, which is the key reason for high tariffs. They have been asking for a level playing field.

According to their estimates, by hiking the terminatio­n charges, India will earn at least ~60 billion of incrementa­l forex for every ~1 increase in terminatio­n charges. They argue that currently the opposite is happening -- the country is losing foreign exchange by paying for the high terminatio­n charges in other countries. It will also ensure that Indian customers get affordable tariffs.

India has one of the lowest terminatio­n charges for internatio­nal calls at 53 paise a minute. But when customers in India call abroad, they have to pay a hefty terminatio­n charge, which, on average, is seven-eight times (~3.50 to ~4 a minute) more than what callers from abroad pay for calls to India.

So domestic customers pay as terminatio­n charges an average of ~7.70 per minute for calls to West Asia, ~2.48 a minute for calls to Europe and ~1.01 a minute for calls to the US to internatio­nal carriers.

For the Sultanate of Oman, domestic customers fork out a staggering ~15.44, for Switzerlan­d ~14.08, and for Singapore ~2.44 as terminatio­n charges to their carriers.

But Reliance Jio has given a contrarian view, which seems have stuck a chord with the regulator. In its presentati­ons to the regulator, it has pointed out that an increase in terminatio­n charges will lead customers abroad to hasten their shift to other cheaper and free call alternativ­es such as Skype, Whatsapp, and Facebook. So even the revenues the telcos are getting will fall, just like the advent of Whatsapp messaging killed the SMS market.

It said as call costs drop, the chances are that people will use their phones rather than applicatio­ns like Skype and Whatsapp to make calls. This, it said, will also reduce the growing menace of grey calls as these alternativ­es will no longer be so attractive. And thirdly as far as the terminatio­n rates in other countries are concerned, there is very little that Indian telcos or the government can do.

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