Editorial – October 2017

Rahul Khullar, as chairman, Trai, made ‘Benefits for Incumbent Operators’ his doctrine. This, he implemented through various anti-consumer regulations, viz, expensive SMS, perpetuation of MTC contrary to commitments to the apex court, higher USSD charges for mobile banking, and attempts to impose levies on OTT services.

Now, ever since Trai announced its IUC regulation of bringing down MTC to 6p/minute from 14p from October 1, 2017, and move to BAK mode from January 1, 2020, he has been using his position as former chairman Trai as a pulpit to attack the current regulatory dispensation with analysis and conclusions that fall flat on enquiry. Here are the facts.

When the concept of Termination Charges was first implemented from February 1, 2004, the charges for both fixed line and mobile was kept the same at 30p/minute, and was reduced to 20p for both from April 1, 2009. In October 2011, Trai under its then chairman JS Sarma in a report to the Supreme Court had said that these charges would be brought to nil from April 1, 2014. The telcos were in agreement and were told to adjust their network business plans.

After Mr Sarma’s retirement, Mr Khullar became chairman, Trai (May 14, 2012 – May 13, 2015). He took retrograde steps. SMS services, on which TC was zero, he levied 7 p/SMS, making it expensive. Bharti alone benefitted by Rs 3,000 crore a year on this SMS-TC of 7p.

When Trai under Mr Khullar issued a consultation paper for review of TC, for the first time distinction was made between fixed and mobile line. Mobile-to-mobile calls were out of “zero” TC regime, though the levy was reduced to 14 p (from 20 p). There was no reason for such a move, as all along since the regulations came into being in 2004, no such distinction was made. As per Trai’s quarterly traffic report, average incoming minutes of usage (MOU) per subscriber per month is about 200, and with about 115 crore mobile subscribers, 14 p/minute of TC means the Rs 3,220 crore per month (200 x 115 x 0.14). Between 01.04.2014 to 01.04.2015, it was 20p, and number of GSM subscribers were about 90 crore, they gained Rs 3,600 crore per month (200 x 90 x 0.20). So, total gain is Rs 139,800 crore. From April 1, 2014 to March 31, 2015 (12 months x Rs 3,600 cr = Rs 43,200 cr) and from April 1, 2015 to September 30, 2017 (30 months x 3,220 cr = 96,600 cr).

The present chairman RS Sharma has given a further period of 27 months (TC 6p/minute) from October 1, 2017 to December 31, 2019 before zero TC starts from January 1, 2020. This is a gain of Rs 37,260 crore (200 x 115 x 0.06 x 27).

Apart from merit, on which Mr Khullar’s arguments fail miserably, it is also bad in ethics for regulatory conduct.