Cellphone users get a Republic-Day bonanza

Today’s spate of decisions, of course, follow an earlier announcement at the beginning of the year, which said all calls made upto a radius of 200 km would be treated as local calls instead of as STD ones. In Calcutta, Bharat Sanchar Nigam Limited (BSNL) announced that this decision would become operational at midnight today.

Reacting to the `limited mobile’ and the refund order, shell-shocked cellular operators told the press the orders were arbitrary, and they planned to challenge them. “It’s a bolt from the blue,” said Akhil Gupta, MD of Bharti Enterprises. `I don’t understand how the calculations have been arrived at.’ Adds T.V. Ramachandran who heads the Cellular Operators Association of India: “We’d reduced tariffs following revenue-sharing, and we’d made refunds to customers. The TRAI knew what we’d done. I don’t see how they can suddenly and unilaterally come up with new figures so many months later.”

Anticipating the government’s approval for `limited mobile’ services, MTNL had announced earlier in the week that it would start registration for its `limited mobile’ phone in February and would allow free incoming calls. Outgoing calls would be charged at Rs 1.4 per 3 minutes, and the monthly rental would be Rs 600.

Coupled with the recent reduction of cellular charges following the entry of MTNL, there’s bound to be a bloodbath in the cellular phone market — already, operators like Essar and Airtel have slashed their airtime rates by around half to match MTNL’s proposed rates for its cellular services.

While cellular operators said they’d have to study the TRAI order along with subscriber-details for the past to arrive at the full impact of today’s order, it is expected to run into several hundred crore. For the period August 1999 to October 1999, for instance, cellular operators (in metropolitan cities and circles) will have to refund Rs 178 per month to subscribers, for excess rentals charged. In addition, they’ll have to refund Rs 1.35 per minute of calls the customers made or received. For this period alone, the refund adds up to Rs 133 crore.

To balance the revenue loss of cellular operators due to `limited mobile’ phones, the government announced that they would now have to pay 12 per cent of their revenues as license fee instead of the earlier 17 for metros (it’s 10 per cent for `B’ circles and 8 for `C’ ones). In addition, cell firms will be allowed to keep 5 per cent of the charges collected by them of the inter-connect fees charged for calls from land lines to cellular networks. The cell firms, however, have appealed against the decision, and are likely to approach the court if their appeal is rejected by the telecom tribunal.

Telecom Bonanza
* Poor man’s cellfone, or `limited mobile’ phone allowed. Will cost Rs 1.2 per 3 minute call.
* Any number of players to be allowed to provide basic or fixed-line services
* Cellular service providers to refund upto Rs 500 crore to consumers
* All calls till 200 km to be treated as local calls (announced on January 2)