STD call rates set to drop

New Delhi, Feb. 24: Long-distance calls are set to become cheaper with telecom regulator Trai slashing STD interconnect charge by 50 per cent to 35 paise per minute from 65 paise.

The interconnect or network charge is a fee that one operator pays to another for carrying a call.

Operators said the charges play an important role in fixing STD tariffs.

The move, coupled with Trai’s removal of fixed termination charges and the reduction of mobile termination charges to 14 paise a minute, is expected to reduce call rates.

“The authority has reduced the ceiling of the domestic carriage charge to 35 paise per minute from the existing 65 paise per minute. This should also reduce STD call rates,” Sudhir Gupta, secretary, the Telecom Regulatory Authority of India (Trai), said.

Operators pay domestic carriage charge when their customers make an STD call on the network of another company. The calls are transmitted across the country using the network of national long-distance operators (NLDOs).

“It was observed that there is a large variation i.e., some NLDOs offer carriage charges as low as 9 paise per minute, while a few others charge at the ceiling rate which was 65 paise per minute. The potential misuse of a high ceiling is another reason that prompted a review of the carriage charge regime,” Trai adviser Arvind Kumar said.

These revised charges, which will come into effect from March 1, will be reviewed again in 2017-18.

Meanwhile, international research firm Morgan Stanley in a report said that Trai’s move to cut call connection charges might marginally impact Bharti Airtel and Idea.

“The incumbents, Bharti and Idea, may feel marginal impact on EBITDA (earnings before interest, taxes, depreciation, and amortisation), with the loss from lower local termination revenues partly offset by gain in international calls. The competitive intensity, however, would increase,” the report said.

Operators having large subscriber base gain from these interconnection charges when their customers get incoming calls.

“The key gainers are the new operators and smaller players – Reliance Jio, Telewings, Sistema, Aircel” as their subscribers will be making more call on other network than to subscribers within company’s network, the report said.

via NorthEast Calling http://ift.tt/1LDHpAC