The revised interconnect charges announced by the Telecom Regulatory Authority of India may result in a 15-40 per cent rise in domestic long-distance tariffs for 17 million cellular mobility subscribers. The rise could be as high as 300 per cent for 4 million limited mobility subscribers.

The 40 million fixed-line subscribers can, however, expect a drop in long-distance tariffs from Rs 4.80 a minute to around Rs 3.

The impact

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The revised tariffs are a result of Trai's decision to impose an access deficit charge ranging between 30 paise a minute and 80 paise a minute on long-distance calls. The charges will be effective December 1.

For instance, cell-to-cell STD calls, which currently cost Rs 1.99 a minute, may increase by 30-80 paise.

Similarly, the 40 paise a minute charged by Reliance Infocomm for WLL-to-WLL STD calls could go up to Rs 1.20 a minute, if the company passes on the entire ADC burden to its subscribers. Cellular and WLL operators do not pay any ADC so far.

International long-distance calls for cellular subscribers may increase by Rs 4.25 a minute since Trai has imposed an access deficit of a similar amount on cell-to-cell ISD calls.

However, ISD calls on fixed-line phones are expected to drop marginally with the Trai reducing the ADC from Rs 5 a minute to Rs 4.25.

There will be no major changes in the local call charges for any operator, primarily because the ADC has been loaded on the long-distance tariffs.

Trai, however, says the revised interconnect regime will allow all operators to reduce overall tariffs considerably, despite increases in some segments.

For instance, even though long-distance call tariffs on cellular phones are expected to increase, Trai estimates a weighted average tariff for both local and long-distance calls at about Rs 1.17 per minute as compared with the existing Rs 1.75 per minute.

Similarly, the weighted average tariff for fixed-line subscribers, after the imposition of the new regime will be Rs 1.39 a minute as against Rs 1.70 a minute at present.

The average tariff for WLL subscribers is also expected to come down from Rs 1.70 a minute to Rs 1.39.

While Trai has imposed an access deficit charge on all telecom service providers, the net impact could be an overall reduction in tariffs, according Pradip Baijal, Trai chairman.

"The overall access deficit charge has been revised from Rs 13,000 crore (Rs 130 billion) to Rs 5,340 crore (Rs 53.4 billion). The fact that the burden of the ADC, 92 per cent of which was being borne by the fixed-line operators, has now been distributed to all operators, is expected to drive down the tariff," he said.

The ADC has been lowered taking into account the financial support given by the government to BSNL.

Trai has imposed an ADC of 30 paise a minute for inter-circle calls of up to 50 km, 50 paise for 50-200 km and 80 paise for over 200 km, which will mobilise Rs 5,340 crore (Rs 53.4 billion).

Of this, Rs 4,800 crore (Rs 48 billion) will be passed on to BSNL for providing subsidised fixed-line calls while the remaining Rs 540 crore (Rs 5.4 billion) will be split between the private basic operators. Cellular operators do not get anything since they have been allowed to offer cost-based tariffs.

In order to simplify the revenue share arrangement between various types of operators, Trai has set a uniform charge of 30 paise a minute to be paid to the terminator of the call.

Under the existing regulation, the interconnection charge varied between 30 paise and 60 paise a minute depending on the operator.